郭文贵破产案 · MOTION · ECF #2174

元数据

当事人: 郭文贵 (Guo Wengui / Miles Guo / Ho Wan Kwok)
法院: CTB
案号: 22-50073
ECF #: 2174
类型: MOTION
立案日: 2023-09-07

原始法庭文件为英文，下方为英文全文。

全文

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. 22-05027 \* Plaintiff, \* \* v. \* \* BRAVO LUCK, LIMITED, et al., \* \* Defendant. \* LUC A. DESPINS, \* Adv. Proc. No. 23-05017 \* \* Bridgeport, Connecticut Plaintiff, \* August 29, 2023 \* v. \* \* TAURUS FUND, LLC, et al., \* \* Defendants. \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* TRANSCRIPT OF PROCEEDINGS BEFORE THE HONORABLE JULIE A. MANNING UNITED STATES BANKRUPTCY JUDGE APPEARANCES: Chapter 11 Trustee: LUC A. DESPINS, ESQ. Paul Hastings LLP 200 Park Avenue New York, NY 10166 Proceedings recorded by electronic sound recording, transcript produced by transcription service.

APPEARANCES: (Cont'd) For the Chapter 11 Trustee: PATRICK R. LINSEY, ESQ. Neubert Pepe and Monteith 195 Church Street,13th Floor New Haven, CT 06510 For U.S. Trustee: HOLLEY L. CLAIBORN, ESQ. Office of U.S. Trustee The Giaimo Federal Building 150 Court Street, Room 302 New Haven, CT 06510 For the Creditors Committee: IRVE J. GOLDMAN, ESQ. Pullman & Comley 850 Main Street Bridgeport, CT 06601 For Bravo Luck: FRANCIS J. LAWALL, ESQ. Troutman Pepper Hamilton Sanders, LLP 3000 Two Logan Square 18th and Arch Street Philadelphia, PA 19103 For Hing Chi Ngok and CHRISTOPHER J. MAJOR, ESQ. Greenwich Land, LLC: Meister Seelig & Fein LLP 125 Park Avenue New York, NY 10017 For Taurus Fund, LLC: MICHAEL T. CONWAY, ESQ. Lazare Potter Giacovas & Moyle, LLP 747 Third Avenue New York, NY 10017

| #2049 | MOTION TO COMPROMISE CONTROVERSY W/BRAVO | |---------|---------------------------------------------------| | | LUCK LTD AND MILESON GUO a/k/a QIANG GUO AND/OR | | | GUO QIANG, P.O. BOX 957 OFFSHORE INC CENTRE, ROAD | | | TOWN, TORTOLA, BVI (BRAVO LUCK LTD); 5 PRINCESS | | | GATE, G3, LONDON, UK (Qiang Guo) | | # 111 | MOTION TO COMPROMISE CONTROVERSY WITH BRAVO LUCK | | | AND MILESON GUO a/k/a QIANG GUO AND/OR | | | GUO QIANG, P.O. BOX 957 OFFSHORE INC CENTRE, ROAD | | | TOWN, TORTOLA, BVI (BRAVO LUCK LTD); 5 PRINCESS | | | GATE, G3, LONDON, UK (Qiang Guo) | | #2083 | MOTION OF CHAPTER 11 TRUSTEE, PURSUANT TO BANKR. | | | RULE 9019 FOR APPROVAL OF SETTLEMENT WITH USA | | # 24 | MOTION OF CHAPTER 11 TRUSTEE, PURSUANT TO BANKR. | | | RULE 9019 FOR APPROVAL OF SETTLEMENT WITH USA | | #2079 | MOTION FOR 2004 EXAM OF ADDITIONAL ENTITIES AND | | | INDIVIDUALS AFFILIATED WITH DEBTOR AND RELEVANT | | | BANKS (SIXTH OMNIBUS) | | #2127 | ORDER SCHEDULING STATUS CONFERENCE | | | |

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Ho Wan Kwok - August 29, 2023 4 (Proceedings commenced at 2:01 p.m.) THE COURTROOM DEPUTY: Case No. 22-50073, Ho Wan Kwok and Genever Holdings, LLC, 22-5027, Despins, et al, versus Bravo Luck Limited, et al, and 23-5017, Despins, et al, versus Taurus Fund, LLC, et al. THE COURT: Okay. 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. THE COURT: Good afternoon. MR. LINSEY: Good afternoon, Your Honor. Patrick Linsey of Neubert, Pepe and Monteith for the Trustee. THE COURT: Good afternoon. MR. GOLDMAN: Good afternoon, Your Honor. Irve Goldman, Pullman & Comley, for the creditors committee. THE COURT: Good afternoon. MS. CLAIBORN: Good afternoon. Holley Claiborn for the U.S. Trustee. THE COURT: Good afternoon. MR. LAWALL: Good afternoon, Your Honor. Fran Lawall, Bravo Luck. THE COURT: Good afternoon. MR. MAJOR: Good afternoon, Your Honor. Chris Major, Meister Seelig & Fein. We represent Hing Chi Ngok

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| | Ho Wan Kwok - August 29, 2023 5 | |----|--------------------------------------------------------------| | 1 | and Greenwich Land, LLC. | | 2 | THE COURT: Good afternoon. | | 3 | MR. CONWAY: Good afternoon, Your Honor. Michael | | 4 | Conway here for Taurus Fund, LLC | | 5 | THE COURT: Good afternoon. | | 6 | All right. We have, as I mentioned, several | | 7 | matters on the calendar this afternoon. | | 8 | Trustee Despins, I've look at the matters insofar | | 9 | as whether objections have been filed and things of that | | 10 | nature. And with regard to the Bravo Luck motion to | | 11 | compromise, I see that no objections have been filed to | | 12 | that. Am I correct on that? | | 13 | MR. DESPINS: That's correct, Your Honor. | | 14 | THE COURT: All right. So does it make sense to | | 15 | proceed with the Bravo Luck matter first? | | 16 | MR. DESPINS: Yes, Your Honor. | | 17 | THE COURT: Okay. Please proceed. Thank you. | | 18 | MR. DESPINS: Thank you. Good afternoon, Your | | 19 | Honor. Luc Despins, Chapter 11 Trustee. | | 20 | This is actually a pretty straightforward motion | | 21 | to settle the controversy between the various debtor's | | 22 | estates and Bravo Luck and the debtor's son with respect to | | 23 | the Sherry-Netherland. | | 24 | And basically you'll recall that we had brought, | | 25 | you know, three separate adversary proceedings against Bravo | | | |

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Ho Wan Kwok - August 29, 2023 6 Luck. And also had objected to the claims of the son. And there had been no answer to that or no response to that. And there was a lot of litigation and motions to dismiss, amendments, et cetera, et cetera. So to make a long story short, the parties have reached an agreement to settle this. And I believe it's pretty straightforward in the sense that what I would call the Bravo Luck parties, Bravo Luck and the son, are abandoning any arguments that they have an interest in the Sherry-Netherland apartment, directly or indirectly. They're waiving claims, et cetera, et cetera. We are withdrawing the litigation that was commenced against them. I mean everything I'm saying is subject to the settlement agreement, which is much more detailed, but that's, in a nutshell that's what's happening. So it's pretty straightforward. I would just point out that the releases are not symmetric, so that's important in the sense that they are releasing claims. We're not releasing all our claims in the world against them. So that we are releasing the claims asserted in the complaint. And again, what I'm saying is subject to the terms of settlement agreement, which is in much more detail, but conceptually I wanted to make sure the Court understood this is not a global release of claims.

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Ho Wan Kwok - August 29, 2023 7 THE COURT: I think I -- that was my thought, that it is not a global release of claims. MR. DESPINS: So unless the Court has questions, and Mr. Lawall wants to be heard, but I have nothing else at this time. THE COURT: I do want to hear from you, Counsel, Mr. Lawall, when you have a moment. I just -- there are many pending matters related to a pending objection to claim and the adversary proceedings that we haven't acted on because you've been talking, right? MR. DESPINS: Right. THE COURT: And you've made representations to the Court, even in pleadings or in court, that the parties have been working together toward resolution of these issues. So obviously you've worked hard. And you've come to a resolution, which is appreciated. That will mean, I think, assuming this is approved, that you may see, because the clerk's office has to do certain things, you know, motions terminated, or you're going to withdraw adversary proceedings, right? You're going to dismiss? Or what are you do -- what is the actual -- MR. DESPINS: Yeah. Frankly, I'm not sure of the plumbing, but there is plumbing that remains to be done in

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| | Ho Wan Kwok - August 29, 2023 8 | |----|---------------------------------------------------------------| | 1 | terms of probably withdrawing the adversary proceeding, or | | 2 | perhaps the settlement (indiscernible). I'll look at that. | | 3 | But -- | | 4 | THE COURT: Well, I've got it here. | | 5 | MR. DESPINS: Yeah. | | 6 | THE COURT: I don't recall exactly. | | 7 | But what I'm saying is if you both see some | | 8 | entries made because it appears that certain matters that | | 9 | have been pending are resolved pursuant to an approval of | | 10 | the settlement, then that will be ministerial. | | 11 | MR. DESPINS: Yes. | | 12 | THE COURT: I just want you to understand that. | | 13 | Okay? | | 14 | MR. DESPINS: Yes. | | 15 | The order provides that the plaintiff's authorized | | 16 | to execute, deliver, implement all sorts of documents or | | 17 | instruments necessary to implement this. | | 18 | THE COURT: Right. | | 19 | MR. DESPINS: I think that Mr. Lawall -- that | | 20 | there were signatures provided. There were signatures to | | 21 | the settlement agreement provided by Bravo Luck. There was | | 22 | no signature provided by the son because that's held in | | 23 | trust by Mr. Lawall. They didn't want to provide the | | 24 | signature -- | | 25 | THE COURT: But you have it? | | | |

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| | Ho Wan Kwok - August 29, 2023 9 | |----|--------------------------------------------------------------| | 1 | MR. DESPINS: Yeah. | | 2 | THE COURT: I mean, you have the actual signature? | | 3 | MR. DESPINS: That's what we've been told. | | 4 | THE COURT: Okay. | | 5 | MR. DESPINS: So that when -- if the Court | | 6 | approves the settlement, then the signature will be added. | | 7 | But to the extent there are ministerial things that need to | | 8 | happen, we will make those happen, Your Honor. | | 9 | THE COURT: Yeah. I don't know that there's a lot | | 10 | of things you need to do other than what you've just | | 11 | discussed. I just want you to be aware that when I looked | | 12 | at this, and again, I'm looking at it again now to refresh | | 13 | my recollection, but there are matters that are outstanding | | 14 | in the adversary proceedings in the main case that I believe | | 15 | now are resolved by this settlement. | | 16 | MR. DESPINS: Yes, they're all resolved. Yes. | | 17 | THE COURT: So that's the way I view it. And I | | 18 | want to make sure that neither one of you view it | | 19 | differently, because I don't want to make a mistake in my | | 20 | view. | | 21 | MR. DESPINS: That's correct, Your Honor. The | | 22 | settlement agreement is pretty detailed in terms of -- | | 23 | THE COURT: Yes, it is. | | 24 | MR. DESPINS: -- this claim is waived, that claim | | 25 | is waived, so it's very precise. I think these are self- | | | |

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Ho Wan Kwok - August 29, 2023 10 executing. But to the extent we need to do more, we will do that to implement the settlement. THE COURT: Okay. MR. DESPINS: So unless the Court has other questions -- THE COURT: I don't have any other questions at the moment. Again, I note for the record that no one has filed any written objection to the settlement. It's been on notice. It was served appropriately in accordance with the Court's review of the service of the motion and the hearing notice, so I don't see -- I should say it in the affirmative. There is nothing before the Court that would concern me to -- with regard to approving the settlement. I mean, the parties have been working together. You've come and told the Court that many times. And so I appreciate the efforts obviously of the parties in resolving these issues. And I do think the settlement agreement is detailed, but I also agree that the releases are not -- they are limited to the claims that were brought in these -- in the main case and in the adversary proceedings. So I'm fine with that. Attorney Lawall, would you like to be heard? MR. LAWALL: Yes, Your Honor. Again, good

Ho Wan Kwok - August 29, 2023 11 afternoon. Fran Lawall, Troutman Pepper, on behalf of Bravo Luck. To answer, I guess, some of your procedural questions, I think the way the settlement agreement is structured is that the three adversaries will be dismissed with prejudice. THE COURT: Right. MR. LAWALL: The proofs of claim that were filed are deemed withdrawn. By having the complaints withdrawn with prejudice, that will obviously take off your calendar the motions to dismiss. This is in the form of a typical settlement. None of the defendants are admitting any of the -- any of the assertions within the complaints. And in fact, there are specific denials. But again, this is a settlement. THE COURT: Yes. MR. LAWALL: There are some things that will happen in the Virgin Islands with litigation that was ancillary to this, which will go away as well. But again, I agree with Mr. Despins. The settlement agreement is sufficiently complex that we would rely upon the four corners of that settlement agreement. But generally I think your understanding of the essence of it is largely correct. THE COURT: And I -- and again, I only raise the

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Ho Wan Kwok - August 29, 2023 12 issue about what you may see coming across dockets to let you know that that would be ministerial from the clerk's office point of view. So for example, as you said, the adversaries will be withdrawn -- dismissed, I'm sorry, dismissed. So I don't know, are you going to file a separate Rule 7041 dismissal or is this document the stipulation of dismissal? MR. LAWALL: I think I can work that out with Mr. Despins' team. THE COURT: Fine. MR. LAWALL: And we'll -- I think we can take that off Your Honor. And we'll -- if the clerk's office doesn't automatically take care of that, we can sign whatever is necessary to effectuate the settlement agreement. THE COURT: Okay. That's helpful. MR. LAWALL: Okay. THE COURT: Thank you. MR. LAWALL: Okay. THE COURT: It may be unfortunately. But you know, it can be as simple as a stipulation, a two-line stipulation, that under Rule 7041(a)(1), (a)(2), or whatever it is the parties stipulate to dismissal of the adversary proceeding with prejudice and then it's self-effectuating and the clerk's office doesn't have to do anything other than close that adversary proceeding in the ordinary course

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Ho Wan Kwok - August 29, 2023 13 of business. MR. LAWALL: Understood, Your Honor. Whatever the clerk's office needs, we'll get it. THE COURT: Okay. Thank you. I appreciate that. MR. LAWALL: Thank you, Your Honor. THE COURT: And then with regard to the motions to dismiss, I don't even -- I think we've just continued the hearings on those, right? MR. LAWALL: Yes. Yes. THE COURT: Okay. MR. LAWALL: They've all been pushed. I forget whether there were any ancillary motion practice. But again, my expectation is because they were all under the consolidated adversary everything effectively falls off the docket. THE COURT: I agree with you. Okay. I just wanted to make sure. That's how I view it. If there's any issues from the clerk's office perspective, someone will reach out and let you both know. How's that? MR. LAWALL: Not a problem. THE COURT: Okay. All right. So again, I do appreciate the efforts. We've been talking about this for some time. And I do find that under the bankruptcy rule and the standard that's been applied by courts in connection with a settlement or compromise under Rule 9019, that the

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Ho Wan Kwok - August 29, 2023 14 settlement falls within the range of reasonableness. I think it's a -- it is a positive step. Although I understand, you know, no one's -- you're all doing what you can under the circumstances to move things forward and I think that's very positive. No one has filed any written objections to the motion to compromise. And under our local rules the reason it has to be -- the motion has to be filed not just in the adversary proceedings, but in the main case, is so that all parties are served. And they were served and no one has filed any written objections. So for all those reasons, the motion to compromise filed both in the main case and the adversary proceedings are granted. I have the proposed order here and it looks fine to me. It does attach the settlement agreement as Exhibit 1 to the order, which is absolutely fine. I think that's actually preferable to have it there so someone can look at it if they need to. And I think that I don't need to do anything else at the moment unless you think otherwise, Attorney Lawall? MR. LAWALL: I think we're good, Judge. THE COURT: Okay. Thank you very much. I appreciate that. MR. LAWALL: Your Honor, my business with the

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| | Ho Wan Kwok - August 29, 2023 15 | |----|---------------------------------------------------------------| | 1 | Court is done today. May I be excused? | | 2 | THE COURT: Absolutely. Thank you very much. | | 3 | MR. LAWALL: Thank you, Your Honor. | | 4 | THE COURT: All right. So the first two matters | | 5 | on the calendar, ECF 2049 in the main case, and ECF 111 in | | 6 | the adversary, 22-5027, are granted for the reasons stated | | 7 | on the record. And the proposed orders will enter. | | 8 | Now, the other settlement agreement has an | | 9 | objection, Trustee Despins. And then there's also the | | 10 | motion for 2004 examination, I think there's an objection. | | 11 | I don't know if that's been resolved. | | 12 | MR. DESPINS: That's correct, Your Honor. | | 13 | THE COURT: That has an objection as well? | | 14 | MR. DESPINS: Yes. | | 15 | THE COURT: Okay. And then the order scheduling | | 16 | the status conference in connection with the motion to | | 17 | remediate areas of the Sherry-Netherland, do you want to | | 18 | talk about that now or do you want to -- | | 19 | MR. DESPINS: Sure, we can. | | 20 | THE COURT: Okay. That's ECF 2127 in the main | | 21 | case. The only reason that was set for a status conference | | 22 | was because someone had brought to my attention that there | | 23 | was -- there were two things, well, actually I guess three | | 24 | things. | | 25 | The motion was filed under Section 363, so I | | | |

Ho Wan Kwok - August 29, 2023 16 assume it was filed under, but I could be wrong, that it was filed under 363 because you're talking about use of estate property? MR. DESPINS: Correct, Your Honor. THE COURT: Okay. Under our local rules, and it's not as clear as it could be, but normally, any motion seeking relief under 363 is automatically set for a hearing. And this was filed under the contested matter procedure. So I don't know how you want to -- if you want to wait for a response period to go by, that's fine. Or it can be automatically set for a hearing in which there will be an objection deadline, but that -- that is one of the reasons it was brought to my attention. MR. DESPINS: Thank you, Your Honor. You're correct. And we had -- pursuant to that contested matter rule, we had set forth as an exhibit an objection deadline of September 13th. And we're content with that -- THE COURT: Okay. MR. DESPINS: -- as long as the hearing, if there's no objection, takes place soonish thereafter. THE COURT: Well, we can -- we can do one of two things. We can issue a notice of hearing right now setting an objection -- I don't mean right now, but today or tomorrow -- setting an objection deadline of September 13

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Ho Wan Kwok - August 29, 2023 17 and then a hearing a few days after that. Or we can wait until the objection deadline and set a hearing. But there's going to be a hearing regardless, so to me it seems to make sense to issue a notice of hearing with the objection deadline of September 13. MR. DESPINS: That's right, Your Honor. THE COURT: Okay. MR. DESPINS: Better to do that. Yes. THE COURT: Okay. So we'll do that. And let me just look at the calendar as far as when the actual hearing would be held. I mean, we have matters on the calendar in the afternoon of September 19th, but -- and I don't know how long they would last, but it could last at least an hour or more in the afternoon. We could either do it later that afternoon or we could do it on Wednesday the 20th, whatever you prefer. MR. DESPINS: If we could do it on the 19th, that would be preferable, Your Honor. THE COURT: Okay. So I would schedule that. I probably wouldn't schedule it before 3:30 because the matter on at 2:00 is either going to be contested or it's going to last for two minutes. I don't know. So how -- or you can -- we can schedule it for 3:00. Or we can schedule it for 2:00 and you just have to

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Ho Wan Kwok - August 29, 2023 18 wait. MR. DESPINS: That's fine, Your Honor. THE COURT: So what time? Would you like 2:00 then? MR. DESPINS: Two o'clock is fine, Your Honor. THE COURT: All right. So we'll schedule it at 2:00, but there is another matter that would go forward first if it -- if it is not resolved. Okay? MR. DESPINS: That other matter is not in this case. THE COURT: No. MR. DESPINS: Okay. THE COURT: No, it's not in this case. That's what I'm saying. MR. DESPINS: Okay. THE COURT: It's another case. So I can either schedule yours at 2:00 as well -- MR. DESPINS: That's fine. THE COURT: -- and then you'll just have to wait. Okay. All right. So let's do that. We're going to schedule what -- the underlying motion is ECF 2113. We're going to issue a notice of hearing on that motion for September 19th at 2 p.m. with an objection deadline of September 13. That's all we need to do with that. Then that -- then our status conference, we've

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Ho Wan Kwok - August 29, 2023 19 held the status conference with regard to that matter. The only other thing the U.S. Trustee's Office may want, I have no idea, Attorney Claiborn, but that motion that's seeking to remediate different issues at the Sherry- Netherland apartment also seeks the employment. So I don't know if you want the order to refer to Section 327 or something too. I have no idea. But maybe you can all work that out before we have a hearing. And maybe if you all come in and there's no problem, you'll go first at 2 p.m. Okay? MR. DESPINS: That's a good incentive. THE COURT: All right. So with regard to the status conference that was held today that -- the status conference has been held. There's no need for any -- no further status conferences will be scheduled and a notice of hearing will issue on ECF No. 2113. Okay? So then how would you like to proceed next? MR. DESPINS: We'll go to Mahwah at this point. THE COURT: Go right ahead. MR. DESPINS: Thank you, Your Honor. So Your Honor, this is a motion to approve a settlement with the Department of Justice. That's under document 24 in the adversary proceeding. And I have already testified as to this, but I think it's important that we set the stage again on this because last time that was not the

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| | Ho Wan Kwok - August 29, 2023 20 | |----|----------------------------------------------------------------| | 1 | main focus. I wanted the Court to know about it, but | | 2 | clearly that was not the purpose of that hearing. | | 3 | So the first question is why enter into a | | 4 | settlement with the DOJ? Second question is what does the | | 5 | settlement do or not do? And so let me try to address that. | | 6 | The first question is why? | | 7 | As we state in the motion, the DOJ has expressly | | 8 | targeted the Mahwah mansion as a -- that's not a verb -- | | 9 | forfeitable asset and they've actually identified that | | 10 | asset. We did not know about it. So we have to be candid | | 11 | with the Court. We did not know about that asset until the | | 12 | indictment was released. | | 13 | And, however, the Department of Justice, their | | 14 | tools are sort of limited in the pre-conviction phase in the | | 15 | sense that they cannot obtain title to this property now or | | 16 | do much with it before there's a conviction, which is a | | 17 | final conviction. Given that the trial is not going to last | | 18 | -- not going to start until April I think, at least until | | 19 | April of next year, obviously, the DOJ and we were aware of | | 20 | what was going there and we're really concerned about this | | 21 | very valuable asset being left in limbo for lack of a better | | 22 | term. | | 23 | So, however, because they identified this asset as | | 24 | a potentially forfeitable asset, we did not want to begin | | 25 | any adversary proceeding which could be perceived as hostile |

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| | Ho Wan Kwok - August 29, 2023 21 | |----|------------------------------------------------------------------| | 1 | towards the DOJ because obviously it's important we believe | | 2 | to work with them as cooperatively as possible. Why? | | 3 | Because they have all sorts of tools that we don't | | 4 | have. We don't want them to be fighting us and us being at | | 5 | cross purposes with them with respect to this asset, and | | 6 | this is where we came up with this idea of -- first of all, | | 7 | we did our homework. We believe that this asset through the | | 8 | relief we're seeking in the adversary proceeding is an | | 9 | estate asset. We're convinced of that. The Court will have | | 10 | to determine if that's the case or not. That's for another | | 11 | day. | | 12 | But we approached the DOJ and said we want to go | | 13 | forward with this adversary proceeding to try to establish | | 14 | that this is an asset of the estate. And eventually, if the | | 15 | Court rules in our favor, to sell this asset to liquidate it | | 16 | for the benefit of holders of allowed claims. | | 17 | And so we had this discussion about, okay, how is | | 18 | that going to play out, because their view is that they have | | 19 | superior claims. And I'm not going to go into all the | | 20 | details on this, but we pointed out and we cited in the | | 21 | motion some case law, because there's a lot of cases on this | | 22 | where Chapter 11 trustees or Chapter 7 trustees are battling | | 23 | against the DOJ over issues like that as to who has first | | 24 | dibs on an asset of the -- and I'm saying in those cases the | | 25 | alleged wrongdoer -- and, you know, obviously we want to |

Ho Wan Kwok - August 29, 2023 22 avoid that. And we also wanted to avoid the following, which is we filed this adversary proceeding. In my dreams, we prevail. We sell the assets and the DOJ comes in and says thank you very much, we will take that money, and thank you for your work, and that's the end of it. We could not have that. This estate cannot be in a position where it's financing any other activity. It has to net neutral. And I believe move than net neutral, and I'll get to that piece in a second. So that we negotiated the fact that if we prevail, that's very important, only if we prevail. This settlement agreement does not dictate the sale of the property because it provides that certain things will happen if we prevail. So if we prevail and we sell the asset, we can use the net proceeds to pay all the expenses that the estate will have incurred. At that time, we thought we would incur not only legal fees, but security fees, a broker to sell the property, a mortgage if -- there's no mortgage on the property, but if there are people that have mechanics liens that need to be paid, that of course comes off the top. So that creates a concept of net proceeds. And the net proceeds under that stipulation, we're kicking down -- that down the road, which is to be determined. And I'll

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| Ho Wan Kwok - August 29, 2023 23 | |-----------------------------------------------------------------| | come back to why there's not more progress on that. So the | | net proceeds are very important. | | And what I said is, okay, that's great. We're | | going to get all our expenses back. That's good. But this | | case is not being run for the professionals for the case. | | There has to be a benefit to the estate. That's where we | | came in with the deemed expense of a million dollars. | | So that assuming for a second that we prevail, the | | mansion is sold, we get all the expenses paid, and the DOJ | | and us cannot agree on the distribution of the net proceeds, | | we're getting a million dollars to the estate guaranteed. | | And it says in there to be paid to the holders of allowed | | claims, so an allowed claim in your court, so it has to be | | an allowed claim, allowed claims of victims. And, you know, | | people pointed out, well, victims is not defined. | | That's not an accident. Meaning, I want to have a | | shot at convincing the DOJ that the victims -- first of all, | | you have to have an allowed claim. You cannot receive a | | penny of this unless you have an allowed claim as determined | | by Your Honor. But if you have an allowed claim, the issue | | of who's a victim or not, that's -- I would like that to be | | subject to further discussion. | | But the bottom line is this estate will end up | | with a million positive, if we're right that this property | | is part of the estate. And we feel pretty strongly that is | | |

Ho Wan Kwok - August 29, 2023 24 the case, but of course Your Honor will have to rule on that. So the estate is not worse off because the fees and expenses are covered. It's better off by a million dollars. And it can be better off by a lot more than that if we are successful in convincing the DOJ that the distribution of proceeds from this property -- and by the way, we're going to try that with other -- you know, for example, I've mentioned the cash that's being frozen right now, \$630 million we -- that's not today's issue, but the game plan here, based on other cases where the DOJ has sought and obtained forfeiture of assets, is for the Chapter 11 Trustee to wear two hats, Chapter 11 Trustee and forfeiture receiver. And it all comes back to this court for distribution. And I know there are issues there. And they know that too, meaning the DOJ. They're not naive. They know that. The question is, okay, who's a victim? In their book, a victim might be only the victim of certain alleged schemes. But, you know, I can see that there are other people in this case that Mr. Goldman represents that also are victims. For example, Bru Ma(ph), you don't know her, but I'm using her as an example, because if you ever read her

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Ho Wan Kwok - August 29, 2023 25 proof of claim, you'll see that there's really bad -- that bad things are being alleged there. Clearly she would say I'm a victim. So the point is, we're not asking the Court to determine who's a victim today. The only point is that this would go to the victims of the debtor, TBD as to what that means, but that's going to be a clear benefit to the estate as long as they have an allowed claim, which Your Honor will need to determine. So you might say, well, if you're able to get the million, why didn't you negotiate the full package? And the reason is very clear, and that's stated in the motion. The DOJ cannot have -- there's a very strict procedure for the DOJ to do that. There's a forfeiture team under the DOJ, and they need to get the approval of the Attorney General to agree to things like that have been done. And I believe one of them was done before Your Honor or a case that you may have inherited from another judge, but this has happened before. In that case, they went all the way to the Attorney General and got the approval. They're not going to do that and cannot do that now until they have a finding of guilt that is final against the debtor or the other defendants. So that is why we could not go further than that.

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Ho Wan Kwok - August 29, 2023 26 but I would -- and I don't want to, you know, oversell, but I think that this is a blueprint for future discussions. Of course there are no agreements as to that. They have not given us any indication they would consider that. The point though is that I think it's very good for the estate to have that in place, to have this as the first step, to make sure that we are no worse off, and plus we're better off by a million dollars. Again, if we prevail. If we don't prevail, it's like any case that we bring. If we don't prevail, we don't prevail. And so that's the risk we take. Now, this settlement agreement, when it says that the extra million dollars, the deemed expense, will be distributed to the holders of allowed claims that are victims, you're not, I want to be clear about this, you're not approving that distribution today, meaning that the bankruptcy code needs to be complied with. The objection by Taurus, which was kind of confusing, said, oh, what about secured creditors? If there are secured creditors, one, if there are secured creditors on the property, they will be paid off the top of that property, meaning out of the proceeds. Second, if there are secured creditors in the case, and we know of none, I'm pretty sure of that, I mean, at least none have been alleged to date, then, you know, you

Ho Wan Kwok - August 29, 2023 27 cannot confirm a plan that provides that secured creditors get paid after unsecured. So we want to be clear that approval of the settlement agreement is just approval of a way forward. You're not signing off on any plan, any future plan, and all that. So if you want to put in that section subject to applicable law, including the bankruptcy code, that's fine with us. We're not trying to prejudge that. What we're trying to prejudge is that this estate is going to get a million dollars on top of the expenses so that it cannot be said that we just did this, you know, to spin our wheels. You know, there's a net benefit to the estate and that was critical here. So that's a long description, but I think that covers the entire settlements. I want to leave, you know, Your Honor, with the following thought, right? This is not an approval of any distribution to anyone. This is not the approval of a sale of the property. That will happen only if we prevail on the alter ego or inequitable ownership claims. And, therefore, any objection on that is premature, because if we lose on that, none of this matters. And also there's another benefit here, which is Case 22-50073 Doc 2174 Filed 09/07/23 Entered 09/07/23 09:52:07 Page 27 of 85

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| | Ho Wan Kwok - August 29, 2023 28 | |----|-----------------------------------------------------------------| | 1 | that it's possible that the DOJ will not gain -- get a | | 2 | conviction against Mr. Kwok. That's not our -- it's not in | | 3 | my domain. I have no views on that. I know nothing of it. | | 4 | I'm not a criminal lawyer, so I'm not going to opine on | | 5 | that, but that happens every day. And, therefore, this | | 6 | settlement, it says, you know, if they don't obtain a final | | 7 | conviction and forfeiture, all this settlement goes away, | | 8 | meaning it's all our money again if we prevail. | | 9 | So that sets that into motion today and it allows | | 10 | us to do what we did through the preliminary injunction, | | 11 | which Your Honor granted, which is to protect the property | | 12 | in the meantime, which is critical. | | 13 | So I believe that for all these reasons this is | | 14 | clearly to the benefit of the estate. It's a blueprint for | | 15 | future collaboration with the DOJ. This has been done | | 16 | before in other cases. | | 17 | And by the way, the other cases where this has | | 18 | been done, there's a clear order that says the bankruptcy -- | | 19 | when the DOJ's agreed to this, and they have not yet, to be | | 20 | clear, agreed to any of this -- but there's a clear | | 21 | procedure that says the bankruptcy court shall determine | | 22 | holders of allowed claims. Sometimes there's an allocation, | | 23 | X dollars can only go to the following types of creditors, | | 24 | that's a settlement with the DOJ. | | 25 | We're not anywhere near that here, but I want to | | | |

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Ho Wan Kwok - August 29, 2023 29 make sure Your Honor knows that this is not the first time that these types of agreements have been done, except that I think this is the first time that it's been done prior to a conviction and where they actually have obtained forfeiture. In the other cases, generally, they won, they got a conviction, they got a forfeiture order, and then there's either a battle with the trustee or a negotiation with the trustee and the estate to try to resolve things on a consensual basis. So unless Your Honor has questions, that would be really my presentation on this. I'm happy to answer any questions. Obviously, I want to cover any issues raised by Taurus here. THE COURT: The only question I have at the moment is, if, if this settlement is approved, does it -- does it get filed in the criminal action? I mean, how does this work as far as people? Does the judge in the criminal action know? I mean, I don't know if the judge in the criminal action cares. MR. DESPINS: Yeah. THE COURT: I'm just asking a question. MR. DESPINS: Yeah. That's a good question. I'm not sure I know the answer other than to say that my understanding is the DOJ was not going to seek approval of this in the criminal court, so I'm not sure if they would

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| | Ho Wan Kwok - August 29, 2023 30 | |----|---------------------------------------------------------------| | 1 | file something there or not. | | 2 | THE COURT: Okay. | | 3 | MR. DESPINS: They understood that we needed to do | | 4 | that with Your Honor, but more than that, no. | | 5 | THE COURT: Okay. Thank you. | | 6 | MR. DESPINS: Thank you, Your Honor. | | 7 | THE COURT: Attorney Conway, would you like to be | | 8 | heard? | | 9 | MR. CONWAY: Thank you, Your Honor. Michael | | 10 | Conway, Lazare Potter Giacovas & Moyle, for Taurus Fund, | | 11 | LLC. | | 12 | Obviously you've read the papers, but I want to | | 13 | just address the gaping hole that Mr. Despins just referred | | 14 | to, and that is there has been no identification of the | | 15 | victims here. | | 16 | What the settlement calls for is creating a res | | 17 | that certain creditors of the bankruptcy estate can claim | | 18 | against, others cannot. We don't know who can and who | | 19 | can't. | | 20 | And the fundamental question on any motion like | | 21 | this is how is it fair and equitable? We can't answer that | | 22 | question now for the simple reason that we don't know which | | 23 | creditors can or can't claim against it. The obvious | | 24 | solution would have been for them to come to an agreement on | | 25 | who can claim against the res, who is a victim as they put | | | |

Ho Wan Kwok - August 29, 2023 31 it? You know, we obviously take the position that it's premature to start divvying up our property, our client's property, before there's been any finding, but that's not really relevant here. But the fundamental concept is that there are people who put their money into this property and none of them had any idea and still don't really think they have a claim in the bankruptcy estate. If Your Honor were to find at the end of this case that the bankruptcy estate gets the house, then they'd have a claim to file. And there's no protocol which says, okay, well, if that's the case, then people who invested their money into this house can file a late-filed claim, what have you. There's no identification of whether somebody with a personal injury claim -- I think I saw something on the claims registration, I didn't read all the claims -- but I saw something described as a personal injury claim. Is that person going to have a claim against this res? We don't know. There's no protocol here in this settlement motion. And there needs to be in order to determine whether it's fair and reasonable to the creditors of this estate, whether it's fair and reasonable to the Taurus Fund, for one. But the Taurus Fund obviously is made up of the

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| | Ho Wan Kwok - August 29, 2023 32 | |----|-----------------------------------------------------------------| | 1 | people who funded the Taurus Fund. Those people are going | | 2 | to come in here in this case and they're going to tell you | | 3 | don't take away my house. You know, this is my money. You | | 4 | know. I know that the Trustee and the Government want to | | 5 | say, you know, you were defrauded by Mr. Kwok, but I don't | | 6 | believe I was defrauded. I don't think you should take away | | 7 | my property. And if you do take the property away, then how | | 8 | are they going to be able to get their money back, because | | 9 | they're then going to need a process. | | 10 | So I guess the general conclusion, and again, we | | 11 | rest on the papers that were filed, which point out that | | 12 | there's a distinct prejudice against the loss of rights in | | 13 | the forfeiture proceeding that Taurus Fund is suffering. | | 14 | Because we no longer will have the right, if, as Mr. Despins | | 15 | points out, there's no finding there against Mr. Kwok, and | | 16 | the forfeiture doesn't go forward, they won't get their | | 17 | house back, which they would be able to get if this process |

THE COURT: I almost followed you until the end there. I'm sorry. So you're saying your client's prejudiced because if the Government doesn't succeed in its charges it won't get their house back because Mr. Despins will have -- the Trustee of the estate will have an interest in the property? But don't I have to make that determination, which I haven't made yet?

played the normal course.

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Ho Wan Kwok - August 29, 2023 33 MR. CONWAY: Yes. And it's -- it is -- this is all -- we're all -- everybody's putting the cart before the horse here in that the hypothetical is this, Your Honor. This case gets finished first. Mr. Despins sells the house. There's a fund of money that's sitting there. Okay. That sounds great to everybody but the people who bought the house. Now there's a finding in the criminal proceeding that, you know what? There was no fraud here. That house never should have been listed in the indictment. Those people who bought the house should get the house back. There's no more house. Now there's a fund of money. THE COURT: But you'd have the ability -- I understand what you're saying, but you have the ability to object to any -- what you're saying, and I -- you're saying you're putting the cart before the horse, but I don't know if that's accurate yet. Because unless and until Mr. Despins is successful in his claims, the house isn't an asset of the estate. What he appears to be doing, to me, and you can disagree and I'm happy to hear you on it, is he's attempting to have a mechanism in place to resolve what would be, what could be, could be, competing interests between the Government and this bankruptcy estate. My understanding of the reading of the papers is

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Ho Wan Kwok - August 29, 2023 34 that this is really a settlement that -- whose provisions won't go into effect unless and until certain things happen. And if Mr. Despins loses, right, and he doesn't -- and he doesn't prevail, then the estate has no interest. If the Government loses and they can't seek the property in forfeiture, then the Government loses, and then your clients haven't lost anything. So while I understand your argument, I'm having a little trouble with it insofar as I think your rights are still being protected. You still will have a right. First of all, you're going to have a right to -- the preliminary injunction is issued, right? You're going to have a right to file a pleading. You're going to have a right to do discovery, do whatever you want to do in the adversary proceeding, and then we still have to have a trial, at which point you're going to represent the defendants. And you're going to, you know, argue that Trustee Despins is wrong. And you're to be able to present all your evidence and do all that. And then the Court's going to have to rule. You also have a right -- you'd also have a right at some point, it seems to me -- right now, the Trustee's claims are alter ego and beneficial equitable ownership, right? You're saying today that there's people that put

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| | Ho Wan Kwok - August 29, 2023 35 | |----|-----------------------------------------------------------------| | 1 | money into the house that have a right to recover | | 2 | essentially that money. You might be right. I don't know. | | 3 | But you'd have to put that information forward, right? We | | 4 | don't have any of that information at this point. And the | | 5 | only information that we have is the information that was | | 6 | found in the preliminary injunction, right, those findings | | 7 | that were in the preliminary injunction. | | 8 | So I'm not sure how this is negatively impacting | | 9 | your clients at this moment. | | 10 | MR. CONWAY: If I may, Your Honor? | | 11 | THE COURT: Yes. | | 12 | MR. CONWAY: And I -- the point where you said | | 13 | that you were confused, when we draft briefs, you know, we | | 14 | put our best arguments first and our lesser important | | 15 | arguments last, that was our last argument because we felt | | 16 | there was a hypothetical problem. | | 17 | The more important one was the one I started with, | | 18 | was the fact that the victims have, you know, have not been | | 19 | identified. | | 20 | What the Trustee is attempting to do here is | | 21 | identify a res and saying that allowed claims will be | | 22 | allowed to recover from that res. | | 23 | What we're suggesting here is that in order to | | 24 | satisfy the fair and reasonable requirement, they're going | | 25 | to have to say what would you have to do to bring an allowed | | | |

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Ho Wan Kwok - August 29, 2023 36 claim in this situation? And if you did that, I think you'd also, in whatever order you would issue, have to include a procedure which allows for the people who determine they have a claim at the end of our case, would have a right, for instance, to file a proof of claim of that -- THE COURT: Well, that's easy. That part is easy. MR. CONWAY: It certainly is, if it was in the order. THE COURT: But the part of setting a deadline for filing claims with regard to an asset that was not deemed to be an asset of the estate, that's easy. I mean, that part, when you talked about that initially, I said, okay, well, that's a -- that's a valid point, but that's easy. I mean, that can be done. MR. CONWAY: That's the easiest part of what I'm suggesting. The second part is not hard. I think the Trustee has indicated that they haven't reached an agreement because it's difficult. It's not difficult to identify who would have an allowed claim. I think it's a simple matter of saying anybody who is claimed to have given money to the debtor that was used for the purpose of buying this house would have an allowed claim. But the other claimants in the bankruptcy who may have a personal injury claim against the

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Ho Wan Kwok - August 29, 2023 37 debtor do not. THE COURT: I hear what you're saying. But again, why would I need to do that now? Why would I need to do that before the, before and if, because there may not be a determination that this property is property of the estate. So why would I need to go through that process now? MR. CONWAY: Because I don't think that the code allows for this motion to be granted until it's shown that it's fair and reasonable, and -- THE COURT: Well, it's -- I'm not sure -- the standard is does it fall below the range of reasonableness, that's the compromise standard that the courts all talk about. And what I -- why I'm not hearing from you why your client is being harmed at the moment is because nothing's really happening right now. What's happening is this settlement agreement is conditioned upon events happening in the future which may or may not happen. So if Mr. -- if Trustee Despins loses, then there's no settlement agreement. Nothing's going to happen. There isn't going to be a million dollars in the estate. There aren't going to be repayment of fees. There isn't going to be a res from which certain creditors could assert a claim that this court would have to determine is an allowed claim. I wouldn't have to go through all that, right, if he loses?

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Ho Wan Kwok - August 29, 2023 38 So I'm still -- I'm struggling a little bit with how is this harmful to you at the moment? When I say you, I'm talking about your clients obviously. MR. CONWAY: Understood. I've done the same thing today myself. Your Honor, I guess maybe the easiest way to do this would be for me to suggest my objection is a limited objection then, that's nothing in any order that's issued from this motion that would prejudice the rights of the various parties who may have an allowed claim relating to that property, and nothing that would allow -- nothing in the order that would allow people that don't have a claim relating to that property to claim against any res that's created, and nothing that would prevent a late claim from being filed. Those protections, if they -- if they were in place -- THE COURT: Well, it wouldn't be a late claim, right, because we'd set up a process for the claims to be filed, number one. Number two, the claims will have to be filed. And so like any proof of claim in a bankruptcy case, they'll have to be supported by evidence saying that it would establish it to be a claim, to which the Trustee or any other party could file an objection, and then there still

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Ho Wan Kwok - August 29, 2023 39 might have to be a determination made by this court whether or not that claim is an allowed claim or a disallowed claim. That's the process, right? So I don't -- there wouldn't be an issue of a late-filed claim with regard to this specific asset because it hasn't been -- it wasn't an asset of the estate yet. And it may never be. MR. CONWAY: It may never be. And that's why I'm suggesting that I rephrase my objection to a limited objection suggesting that as long as there's nothing in an order that's contrary to what you just said, then perhaps nothing is being decided here that we have to worry about today. THE COURT: Well, maybe you and Trustee Despins can take a look at that order and see whether or not you can come to agreeable language. But what I'm -- what I understand that I'm being asked to do is approve a process that is -- an agreement between two parties that has certain conditions in the future that have to be met. Those conditions haven't been met yet. So what my understanding, and if you look at the case law where there has been this tension between a bankruptcy estate and a forfeiture action, it usually does occur after the fact, and then it becomes -- it has a lot --

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Ho Wan Kwok - August 29, 2023 40 no matter when it happens, it has issues. However, this process is saying, look, we don't know if it's going to happen. But if it is, this is how it will play out. And these are what these two parties have agreed to. I think that fits within the range of reasonableness at this point in time. I don't think that you, your clients lose any rights to contest -- well, I know they don't. Your clients don't lose any rights to contest the claims that Trustee Despins has to prove to this court and get a judgment in order for that asset to be an asset of the estate. He has to do that. There is a preliminary injunction in effect, but there still hasn't been a trial on the merits. So we still have to have that happen, number one. Number two, with regard to the claims issues, there is -- I don't see an issue from a bankruptcy court perspective of setting up a process for claimants to file claims in this, you know, in the -- in the case, in the -- against the estate with regard to an asset that was never an asset but now is. Okay? But it still flows through the same process, just like all the other claims that's already -- that are already filed in this case, which is -- which are the process is as follows.

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Ho Wan Kwok - August 29, 2023 41 Just because someone files a, and I think you know this, just because they file a proof of claim doesn't mean that that claim is an allowed claim. It still has to go through the process. And if someone objects to it, then the Court has to make a determination as to whether that claim is a claim that's allowed under Section 502 of the code or disallowed under Section 502 of the code. So that comes down to the distribution issues, not -- because you have to have an allowed claim to receive a distribution. So I understand what you're saying, but I'm not convinced right now that your client is being harmed at this point in time. So I don't know if there's anything else that you want to say. But if you want to take a moment to talk to Trustee Despins about it? I mean, you know, the preliminary injunction had some requirements associated with it. And I saw the document I think that you filed last night -- MR. CONWAY: Yes. THE COURT: -- about there's no insurance on the property. Well, in a bankruptcy case, you know, the United States Trustee's Office would immediately move to dismiss a case where there's no insurance over estate assets. Now, there hasn't been a determination that this is an estate asset yet, but, but, the preliminary injunction

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| | Ho Wan Kwok - August 29, 2023 42 | |----|------------------------------------------------------------------| | 1 | in connection with your -- the arguments that you made that, | | 2 | you know, the Taurus Fund shouldn't be -- should be able to | | 3 | use the property in the manner in which the Taurus Fund | | 4 | believes it is allowed to, it doesn't seem to me in the | | 5 | context of the preliminary injunction that the Taurus Fund | | 6 | can have a property worth -- I don't know what it's worth, | | 7 | right? People have thrown around numbers. I didn't have to | | 8 | make a finding of a value, but somebody did and said it's, | | 9 | you know, I don't know -- | | 10 | MR. DESPINS: Twenty-nine. | | 11 | THE COURT: -- how many millions? | | 12 | MR. DESPINS: Twenty-nine. | | 13 | MR. CONWAY: They paid high 20s, but we're trying | | 14 | -- the insurance policy that we've asked for is 40, covers | | 15 | 40. | | 16 | THE COURT: Okay. So, you know, I think you need | | 17 | to have insurance. | | 18 | MR. CONWAY: Oh, yeah. And, Your Honor, you'll be | | 19 | -- | | 20 | THE COURT: And I think that is, you know, with | | 21 | regard to the property and its contents. I mean, that -- | | 22 | there are issues there. | | 23 | MR. CONWAY: And, Your Honor, this obviously | | 24 | doesn't directly affect the motion, but just for your own | | 25 | benefit, the holdup was that your injunction order is being | | | |

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Ho Wan Kwok - August 29, 2023 43 incorporated into this so that anybody who uses the property has to agree that they'll do it pursuant to your injunction order. The insurance carrier wants that, and proof that anybody managing the property has separate liability insurance, which is all apparently being provided to the carrier today, so that they can write the property. Forty- million dollars -- THE COURT: Good. MR. CONWAY: -- I understand for the liability and then \$10 million for property. So I think we're -- I think everything will happen and be satisfactory to Your Honor and to the Trustee. THE COURT: And when you say satisfactory, I just want to be clear about that, it's not my satisfaction. It's the satisfaction of the bankruptcy code and the rules and the need to protect assets, right? I mean, one of the reasons the Trustee was appointed in this case was because of allegations that have been made by many parties that there were all these assets out there that were never disclosed. And that's why trustees are appointed in a Chapter 11 case to investigate those affairs and see whether or not those assets can be brought into an estate for the benefit of creditors. Trustee Despins filed this adversary proceeding,

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Ho Wan Kwok - August 29, 2023 44 sought a temporary restraining order and preliminary injunction, which were granted in part. Not every form of relief that was requested was granted, but a substantial part of the relief requested was granted. The reason that the insurance was part of that injunction is I don't know how you can protect the status quo if there isn't insurance. You could say, well, there wasn't insurance. That's not protecting the status quo. Well, then somebody could go burn down the house tomorrow, right, and that's not protecting the status quo. So in any event -- MR. CONWAY: We're on the same page. THE COURT: -- that sounds like you've made great progress on that. MR. CONWAY: We're on the same page. THE COURT: And hopefully you've been talking with the Trustee about security services and things of that nature as well. MR. CONWAY: We did have a conversation about that and, you know, there's been a security service team on site since before the hearing. And, you know, security protocol is in place, so I'm not overly concerned about that either. We're discussing that now. THE COURT: Well, from your filing, it -- not yesterday, but the previous filing, where you did comply by

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Ho Wan Kwok - August 29, 2023 45 filing what was in the contents of the house, the mansion, I mean, there's obviously substantial sophisticated security equipment throughout the whole place. I mean -- MR. CONWAY: Yes. THE COURT: -- I don't even know what it is, but I think I said 59 cameras or something. I mean, there was substantial security equipment at the property, so it didn't seem to be burdensome for -- and I'm not saying you said it was burdensome -- MR. CONWAY: No. THE COURT: -- I'm just saying it doesn't seem to be burdensome for the Taurus Fund to make sure -- MR. CONWAY: We wanted it and still want it. THE COURT: -- that this property is secure. MR. CONWAY: We wanted it before and we still want it now, Your Honor. So, yeah, it's not burdensome. It's what we want. THE COURT: Okay. MR. CONWAY: So, you know, I think we're all on the same page. Again, I don't have anything more to say about the motion that's on right now other than to say that I'm happy to try and talk to the Trustee about the form of an order. But if he's not willing to talk to me, as long as it does not prejudice the rights down the road as

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Ho Wan Kwok - August 29, 2023 46 articulated by me today, I want to make sure that anybody who claims through the Taurus Fund to have an interest here can make it, file a proof of claim, and say that person with a personal injury claim should not take from this res. So as long as those issues are not prejudiced, those rights are not prejudiced, I have nothing more to say, Your Honor. THE COURT: Okay. Thank you. Trustee Despins? MR. DESPINS: Yes, Your Honor. So conceptually you're absolutely right, Your Honor, that if we prevail there should be a bar date. And we have not done that yet, but we will have to do that for various pockets that we're finding. For example, HCHK. If we prevail on that, these folks, without prejudging whether they have claims or equity or not, they should have a right to try to file a claim. So they will be -- unfortunately, there's going to be, there's going to be a lot of work, but we'll need to have a new bar date for -- and that's why I'm putting that to the side for now -- but if we prevail on this, people should be able to file a claim if they have a claim and their claim be processed by the Court. But if we prevail on this, people are not going to have a claim against the res. The finding by the Court

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Ho Wan Kwok - August 29, 2023 47 would be this is an asset owned by the debtor. If that's the case, everyone is in the soup together, meaning that they all share. And I'm not trying to have Your Honor prejudge that, but the point is I'm not going to put in an order something that says, oh, and they'll have a right to file a claim and they will be the only ones who have a right to file a claim against that res. No. If the asset is owned by the debtor, as we believe it is, the proceeds will be shared among all unsecured creditors that have allowed claims, including the people who, and I'm not even buying that for a second that they invested in the house, but let's pretend that that's what happened, including those people, if they have allowed claims. So that's not an issue at all. Also, I question, you know, Mr. Conway's standing. It shows you what's going on here. It's like, oh, the victim. You know, he represents the technical owner of this property, but he's talking on behalf of the people he's interfacing with, which are Kwok people. So I want to be very -- I'm sorry to be strident about this, but this insurance thing is a huge issue. They don't have insurance. That tells you that the owner that I bet you didn't even know they didn't have insurance because Kwok runs it. And, you know, this whole thing about Taurus

Ho Wan Kwok - August 29, 2023 48 being the owner is just, we'll prove that. But the point is there should be no one on that property right now other than security guards when there's no insurance, zero. These Kwok people who are going there to have, to do whatever, they should not be in there when there's no insurance. Because remember the Lady May, Your Honor, we forget sometimes the parts of the case, but remember that they tried to get insurance and nobody would -- yeah, they had very good conversations with insurance companies, but at the end insurance companies said, Kwok, no insurance. This happened after March 15th. So god bless Mr. Conway if he's able to get insurance with full disclosure of what's going on, but I'm not comforted by the fact he's having good conversation, that's great, but until there's -- until there's insurance, no one should be in that house. No one. And I'm sorry to be strident about this, Your Honor, but this was part of the relief we sought. You said you did not deny it. You would -- but this is a critical issue. If he gets insurance tomorrow, god bless him, then they can go back. But in the meantime, there should be no one on that property when there's no insurance in place. And also the fact there's no insurance tells you everything you need to know about the case. It's just this is

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Ho Wan Kwok - August 29, 2023 49 insanity. And so, Your Honor, this is part of our preliminary injunction. I know that's not before you, but you did reserve the right under your preliminary injunction order to order the relief that you did not grant. This relief should be granted today. If he gets insurance tomorrow, fine, they can all -- not all by the way. We're having a dispute over the way your order should be read. You know, Mr. Conway is of the view that all these friends can come in 20 at a time only and then they can come out and another 20 can come in an hour later, and then another 20 an hour later as long as there's no more than 20 at a particular time. This is exactly what we were concerned about, the college dorm syndrome. If they can pick the 20 people that they want to have access, god bless those people. Again, that's if they have insurance. But it's the 20 and that we're going to stick to that. We cannot have a rotation where people come in, 20 come in one day, leave, another 20 come in the next day. The owner has no interest in that. This is all to protect the Kwok regime and that should not be happening, Your Honor. I want to make sure this point is clear. I thought it was clear in the order that there was a 20

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| | Ho Wan Kwok - August 29, 2023 50 | |----|---------------------------------------------------------------| | 1 | person, not on a rotating 20, because then it becomes like | | 2 | uncontrollable. Who are all these people? | | 3 | But certainly today, when there's no insurance in | | 4 | place, there should be no one on the premises. I would | | 5 | really urge Your Honor to order that relief immediately. | | 6 | Thank you. | | 7 | THE COURT: Thank you. | | 8 | Any response, Attorney Conway? | | 9 | MR. CONWAY: Yeah. A couple of points there. | | 10 | Both offensive. | | 11 | The property was purchased and then went through a | | 12 | major rehabilitation. It hasn't been finished yet. It | | 13 | stopped because of all this. Every contractor that's gone, | | 14 | set foot there, has had to provide insurance. There's been | | 15 | insurance for every person that's done work at that | | 16 | property. I don't know if the security company has its own | | 17 | certificate of insurance. I haven't seen that, but I would | | 18 | imagine they probably do. | | 19 | You know, it's not a matter of, oh, well, there's | | 20 | no consideration of insurance. The property is not ready | | 21 | yet for its intended purposes. It's intended purpose, and | | 22 | this goes to the second point, was to be used by the | | 23 | putative owners of Taurus Fund. | | 24 | THE COURT: Then why are people coming and going? | | 25 | MR. CONWAY: They're not coming and going. That's | | | |

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Ho Wan Kwok - August 29, 2023 51 just coming out of his mouth. That's not what's -- THE COURT: Well, no. We saw some evidence about that during the hearing. I mean, we saw people coming in and out of the, which wasn't controverted, coming in and out of the house in numbers. And we saw two people talking about the fact that it's -- well, we saw more than two people. We saw several video clips where different people from different parts of the country talked about using the house, the mansion, as their base, and that they were thanking the debtor for making that available to them. And there were people coming and going. And if there are people -- if there are people coming and going who are not these people that are working that you say are insured, then that is a problem. And I understand everything you're saying, but there's no evidence in the record right now to support anything you're saying. The only evidence in the record supports the fact that people are coming and going from this house. That they -- that the evidence established that the individuals who started talking about using the mansion for a clubhouse or a base didn't even know about the mansion until April 9th. That was -- that was their words. And no one else came in here and said anything to the contrary. No one.

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Ho Wan Kwok - August 29, 2023 52 You didn't -- I mean, I understand you appeared the morning of and you -- MR. CONWAY: I tried. THE COURT: Yeah. But you didn't bring any witnesses. You didn't -- where's your people? MR. CONWAY: I tried to -- THE COURT: Where's anybody from Taurus Fund that has filed any kind of things that say I am the so-and-so of Taurus Fund. These are my responsibilities. I make sure that I have insurance, do not have insurance. That I'm only allowing this. I mean, you've had time now. You've had a little bit of time. And by the way, if you -- if you watched the timing in this adversary proceeding, it was filed on July 11th. It's August 29th. And the temporary restraining order didn't go in effect until August 1st, so there's been time. And we had a trial. And as I said, you know, your clients, whoever they are, made a determination not to pen the mail I guess when they got served with these things. And Mr. Bennett, now that you represent him, I mean, his wife was served. I haven't seen anything that he's filed. He's not here. I don't see anybody else in the courtroom. Mr. Bennett, is Mr. Bennett here?

Ho Wan Kwok - August 29, 2023 53 (No audible response) THE COURT: Your entity has to work through a human being, at least one. And so that human being has to do something or not do something. But to say there aren't people coming and going, the evidence that's in the record right now does not support that statement. The evidence in the record supports the statement that there are people coming and going and that there's no insurance at the property. MR. CONWAY: Well, the evidence in the record was about four events that took place long before the hearing. The Trustee just said to you that this is a college dorm with 20 people going in every hour. That's not -- there's no evidence to support that. You've got to grant me that, Your Honor. THE COURT: Well, he didn't say there were 20 people going in every hour. He said he doesn't want 20 people going in every hour. He doesn't want a group of 20 coming in, then leaving, and another group of 20 coming in, then leaving. That's what he was saying. MR. CONWAY: Nor does anybody else. THE COURT: He wasn't talking about the interpretation of that provision of the preliminary injunction. MR. CONWAY: Right.

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Ho Wan Kwok - August 29, 2023 54 THE COURT: But all I'm saying to you is we need to have someone responsible be responsible, right? MR. CONWAY: Absolutely, Your Honor. THE COURT: And -- MR. CONWAY: And Your Honor issued an order saying that nothing further should be filed with respect to the injunction hearing the day after -- the night of the hearing or the day after the hearing, so -- THE COURT: Well, I also said that you could move for -- you could file a motion if you wanted more than 20 people there. You could. It says that. It says in the order somewhere. I can pull it up. MR. CONWAY: And if we do, I'm sure we will. We have so far, right now, we're trying to get everything settled. We're not trying to have people there at all right now. We're trying to get this -- all the administrative issues resolved here. You know, to my knowledge, there are not movement people going in and out right now. We're trying to make sure that everything gets squared away. The issue is not one where, you know, I've been told, oh, my god, they want to have this event there. You've got to get the judge's permission to do it. There's nobody that said that. There's no reason to come to Your Honor and make a motion to have more than 20 people there

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Ho Wan Kwok - August 29, 2023 55 right now. But the fact of the matter is that if Your Honor were to say, well, it has to be the same 20 people throughout this case, what you've done is you've said I'm giving the property to the Trustee in advance of the decision in this case, because the people who invested in this property are not 20 people. There may be two people who want to use it next month. There might be ten people who want to use it the following month. But it's not going to be used as a base of operations for a hundred people. THE COURT: What do you mean the people that invested in this entity? I mean, you're an entity. So you have -- you're out there -- your clients are out there fund- raising or raising money for the operations of the LLC? MR. CONWAY: Your Honor, it shouldn't be that difficult to visualize why the Taurus Fund, LLC was created as a special purpose vehicle to buy a property by the fund that was subscribed to by its investors. The people who -- THE COURT: But who are its investors? MR. CONWAY: The people who took the money and put it into the fund. THE COURT: I understand. But they have names I would assume and identifies. MR. CONWAY: They certainly do, Your Honor. THE COURT: Okay.

Ho Wan Kwok - August 29, 2023 56 MR. CONWAY: And so they're the ones who want to -- THE COURT: So they need to come here and make their case. MR. CONWAY: Well, they don't have to come here. The fund can come here and say here's what we offered them. We said if you -- if you want a -- us to go out and buy this house so that you can use it, here's what we'll do. We'll buy the house with your money. THE COURT: But the evidence to the -- the evidence that was submitted at the preliminary injunction doesn't support what you just said, because the two people that talked about and did the tour of the land, the lands, the grounds, said they didn't even know about the mansion until August, April 9th, excuse me, so how would they have invested in something to use it as a clubhouse or a base? MR. CONWAY: Those people weren't members of G Clubs. Those people were members of the movement that were making a video for the purpose -- THE COURT: So you're saying G Club is the investors? MR. CONWAY: G Club Internationals is the one that invested money. THE COURT: In the Mahwah -- you mean it funded the purchase of the Mahwah mansion? Case 22-50073 Doc 2174 Filed 09/07/23 Entered 09/07/23 09:52:07 Page 56 of 85

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Ho Wan Kwok - August 29, 2023 57 MR. CONWAY: Absolutely. THE COURT: Okay. MR. CONWAY: Specific people, specific investments, it will all come out in this case. THE COURT: Okay. MR. CONWAY: I can't prove my case without being specific. THE COURT: I agree. MR. CONWAY: To a point. THE COURT: I agree. MR. CONWAY: The Trustee should be held to the same standard, but I certainly will be. THE COURT: Well, he put forth substantial evidence that no one controverted. MR. CONWAY: Well, I asked him specifically where did Mr. Kwok get the money to do this? He said, well, Mr. Kwok doesn't do it that way. He just gets money from other people and, therefore, it's his. That's not evidence. That's just speculation. THE COURT: That's not -- that wasn't -- MR. CONWAY: That's exactly what he said. THE COURT: It may be your conversation, but that's not what happened in the courtroom. MR. CONWAY: That's exactly what happened when he was on the stand. When I asked him where the money came

Ho Wan Kwok - August 29, 2023 58 from, he said, I don't know. That's just not the way Mr. Kwok does business. And I don't know where the money came from. He speculates. I will put forth the actual evidence in this case. We're not here to debate what the evidence will be. We're not here to try the case today, Your Honor. The point is that the people who, when they put the money in, thought that they would have the right to go and sleep at the house shouldn't be prevented from going and sleeping at the house. And that's just the same as if -- THE COURT: Then you'll have to file a motion and they'll have to come to tell me why they should be able to sleep at the house. MR. CONWAY: Well, then you might as well just grant the motion in its entirety, because you're taking the house away. THE COURT: No, I don't agree with you. I don't agree. I gave that -- I don't agree with you. What we -- what happened was the preliminary injunction issued to attempt to preserve the status quo. And according to the testimony and the evidence submitted, none of these people that have been going in and out of the mansion even knew about the mansion before April 9th. MR. CONWAY: It wasn't in use. Why would they know about it? Everybody agrees and should agree because

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Ho Wan Kwok - August 29, 2023 59 the evidence is absolutely crystal clear that they bought the house and started rehabbing it. And that the house was not ready. THE COURT: Who's they? Who's they? You keep saying they. I don't know who they is. MR. CONWAY: Well, Taurus Fund bought the house. THE COURT: Okay. MR. CONWAY: Taurus Fund hired contractor after contractor after contractor. I've seen the invoices. I've seen the work. They were doing this work. They haven't even finished the work yet. THE COURT: Then why are people going in and out if the work isn't finished? MR. CONWAY: Because the work that needs to be done doesn't prevent people from going in and out. They're not having people in and out like we saw on the screen from months ago. They're having people right now going in and out that are security, people staying there who are security. People who are going in and out now are people trying to make sure that the house is secure and run properly. But right now -- THE COURT: Are those people employees of the Taurus Fund? MR. DESPINS: No. MR. CONWAY: Those people are employees of a

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Ho Wan Kwok - August 29, 2023 60 management company. THE COURT: And is the management -- MR. CONWAY: The Taurus Fund is an LLC. THE COURT: I understand what the Taurus Fund is. But they have obligations as an LLC. They can't just -- MR. CONWAY: To hire a management company. THE COURT: All right. So who's the managing company? MR. CONWAY: I'm going to give the Trustee by September 1 all the information about the security company and the management company. We're trying to make sure now that there is absolutely nothing that the Trustee or this court can take issue with. That everybody agrees to everything that's in the preliminary injunction order. It's all -- you know, Your Honor, we're trying our best to do exactly what we were ordered to do and what -- exactly what the Trustee says he wants. THE COURT: I understand. I understand that. All I'm saying is I raised -- you filed a document. And I appreciate you filed the document because it was required by the preliminary injunction order, but it says there's no insurance. That's concerning. Okay? That's very concerning. As I said, the United States Trustee's Office, if, if there had been a determination, which there is not at

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| | Ho Wan Kwok - August 29, 2023 61 | |----|----------------------------------------------------------------| | 1 | this point, that this asset was an asset of the estate, the | | 2 | United States Trustee's Office would run into this courtroom | | 3 | and say you have to dismiss this case immediately. There is | | 4 | no insurance. The rights of the estate aren't being | | 5 | protected and this case cannot continue. | | 6 | And we have that happen a lot. I mean, that's one | | 7 | of the requirements is that there has to be insurance. | | 8 | Okay? | | 9 | So you're now telling me you're going to get | | 10 | insurance and you have to -- but Trustee Despins is saying, | | 11 | well, until you get insurance, nobody should be able to come | | 12 | in and out of the building. You say, well, the only people | | 13 | coming in and out of the building are people who are | | 14 | insured. Well, I don't know that. | | 15 | MR. CONWAY: No. I'm saying that that's what has | | 16 | been the case. I don't think any of the contractors are | | 17 | doing work right now. I think right now the people who are | | 18 | at the premises are security. | | 19 | THE COURT: Okay. | | 20 | MR. DESPINS: No. | | 21 | THE COURT: Well, that would be good. And | | 22 | hopefully they're keeping a log on all the things that the | | 23 | preliminary injunction has asked them to do. | | 24 | MR. CONWAY: And I've asked whether that was being | | 25 | kept before. I was told it was. I'm going to make sure | | | |

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| | Ho Wan Kwok - August 29, 2023 62 | |----|----------------------------------------------------------------| | 1 | that the log is as detailed as possible going forward. | | 2 | But, Your Honor, as Mr. Despins also said, this | | 3 | case and all the stigma around it makes getting insurance | | 4 | more difficult. So asking for us to get a \$40 million | | 5 | policy in 24 hours, which is what would have happened | | 6 | essentially, is difficult. I think everybody can see that. | | 7 | I think we're going to have that policy either | | 8 | today, they may have it now, I've been here in court, but | | 9 | the only -- the only stumbling blocks were that they wanted | | 10 | the confirmation that this -- that the preliminary | | 11 | injunction requirements were agreed to by the people who are | | 12 | going to be on that premises. They signed that. I think | | 13 | that that's something that both Your Honor and the Trustee | | 14 | should welcome. They also wanted the evidence of other | | 15 | business insurance by the management company. | | 16 | So I don't see how anything that has happened | | 17 | here, this, you know, a matter of a couple of days since the | | 18 | order issued, should be a concern. We're doing our best. | | 19 | And I think we're going to succeed. If we can't, Your | | 20 | Honor, I'm an officer of the court, I'll the Trustee, look, | | 21 | I tried, I can't get it. Let's go back to the judge and see | | 22 | what we need to do. | | 23 | THE COURT: All right. With regard to the | | 24 | settlement with the United States, what I'd like you both to | | 25 | do is I'd like you to confer on the form of a proposed |

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| | Ho Wan Kwok - August 29, 2023 63 | |----|---------------------------------------------------------------| | 1 | order. And if you can't agree, then I'd like you to both | | 2 | submit your proposed orders by 5 p.m. tomorrow. And I'll | | 3 | take a look at them. And I'll decide which one, if either, | | 4 | I'll enter. Or I'll make, you know, comments to them and | | 5 | tell you that's what the order is going to say. | | 6 | As I stated already, the test is does this | | 7 | settlement fall below the range of reasonableness? | | 8 | And because I am not convinced or I'm not | | 9 | persuaded at this point that there's any harm to your client | | 10 | if this settlement agreement is approved under the terms and | | 11 | conditions that exist right now, which is nothing's going to | | 12 | happen unless and until Mr. Despins is successful on a trial | | 13 | on the merits, and, you know, I guess I don't recall what it | | 14 | says about that, but, you know, final, non-appealable order, | | 15 | whatever the situation may be, then I don't see how your | | 16 | client's being harmed. | | 17 | So I do think that this settlement is within the | | 18 | range of reasonableness. | | 19 | I'm going to give you an opportunity -- and you | | 20 | stated and I appreciate that maybe your objection is more | | 21 | limited than you thought originally, because if the order | | 22 | can provide for language that works for your clients, then | | 23 | you might be okay with it, but you might not. So I'm going | | 24 | to let you both take the opportunity to figure that out. | | 25 | And then you file on the docket of the case by 5 p.m. | | | |

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Ho Wan Kwok - August 29, 2023 64 tomorrow whether there's an agreed order or there's two separate orders and we'll go from there. Okay? MR. CONWAY: I think that's very fair, Your Honor. Thank you very much. THE COURT: All right. Thank you. MR. DESPINS: Your Honor? THE COURT: Yes. MR. DESPINS: This argument that somehow they're working really fast in getting insurance, that's interesting, but anybody that owns a \$29 million house should have insurance long before Your Honor told them to show that they had insurance. So, Your Honor, I renew my request until -- and if he wants a 24-hour, you know, standstill on that, that's fine, but there should be a very short fuse where there should be a complete prohibition on anyone other than security people and the Trustee representative to go to this house until they have insurance. It's just a fundamental issue. Thank you, Your Honor. THE COURT: Yes. And I understand your concern and I'm going to give him until 5 p.m. tomorrow to show you and the United States Trustee's Office that the property is insured. And then if not, you'll have to file something, Mr. Despins, after that time frame saying you want an

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| | Ho Wan Kwok - August 29, 2023 65 | |----|-------------------------------------------------------------| | 1 | immediate order prohibiting people from going on the | | 2 | property or in the property other than security until and | | 3 | unless insurance is obtained. Okay? | | 4 | MR. DESPINS: Thank you, Your Honor. | | 5 | THE COURT: All right. Thank you. | | 6 | MR. CONWAY: Your Honor, may I be excused? | | 7 | THE COURT: Yes. Thank you. | | 8 | All right. So then the only other matter on the | | 9 | calendar is the Rule 2004 examination motion. | | 10 | And I think, Attorney Major, you're here on that | | 11 | as well, is that correct? | | 12 | MR. MAJOR: Yes, Your Honor. | | 13 | THE COURT: Okay. All right. | | 14 | Mr. Linsey, are you going to start? | | 15 | MR. LINSEY: Yes. May I approach, Your Honor? | | 16 | THE COURT: Yes, you may. | | 17 | MR. LINSEY: Thank you. | | 18 | The Trustee's sixth omnibus 2004 exam motion seeks | | 19 | to extend the Trustee's Rule 2004 investigation to | | 20 | additional relevant banks where the Trustee's investigation | | 21 | suggests that relevant transactions have occurred and to | | 22 | additional entities and individuals who were employed or | | 23 | otherwise involved with the debtor's financial affairs via | | 24 | certain associated entities. | | 25 | To date, Rule 2004 has been one of the most | | | |

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Ho Wan Kwok - August 29, 2023 66 effective tools for the Trustee to investigate the debtor's finances. As the Court is aware, the debtor has pursued his business activities through a complicated and convoluted web of dozens, if not hundreds, of associated entities and individuals. Money and property have flowed through that web to the point that there are tens of thousands, if not hundreds of thousands, of individual transfers that are reflected in financial records. As such, it is imperative that the Trustee's Rule 2004 examination be able to undertake a holistic review of the debtor's financial affairs. The only objection to the sixth 2004 exam motion is the objection that was filed by Greenwich Land and Hing Chi Ngok, who I'll refer to as the Greenwich Land parties. The basis for their objection is that the Trustee's Rule 2004 examination relates to issues relevant to the pending adversary proceeding that Trustee has brought against the Greenwich Land parties. The Court has already considered Greenwich Land's position and twice decided it against the position in favor of the Trustee. In the first instance, Mei Guo and HK USA made a substantively and nearly identical objection to the Trustee's second omnibus 2004 exam motion. That was back in

| | Ho Wan Kwok - August 29, 2023 67 | |----|---------------------------------------------------------------| | 1 | December. And the Court ruled that while the Trustee may | | 2 | not seek Rule 2004 discovery from parties to pending | | 3 | adversary proceedings, the Trustee is free to continue his | | 4 | investigation with respect to non-parties, even to the | | 5 | extent that matters may relate to pending adversary | | | | | 6 | proceedings. | | 7 | That decision is at docket no. 1184 in the main | | 8 | case. So that means that this issue was decided almost ten | | 9 | months ago. | | 10 | Then several months ago, in May, Greenwich Land | | 11 | and Hing Chi Ngok again objected on this identical basis | | 12 | citing their own pending adversary proceeding. | | 13 | At that time, Trustee's counsel explained to the | | 14 | Greenwich Land parties that the Court has already ruled on | | 15 | this issue, but the parties insisted on objecting anyway. | | 16 | And so the Court decided that same issue again. | | 17 | Unsurprisingly, the Court decided it the same way. | | 18 | The Trustee may continue his 2004 investigation as | | 19 | to non-parties even if some of the subject matter may bear | | 20 | on a pending adversary proceeding. | | 21 | The first point that the Trustee made in response | | 22 | to Greenwich Land's last objection is the first point that | | 23 | we make here, which is that this issue is law of the case. | | 24 | The complexities of this Chapter 11 case are manifest. The | | 25 | number of docket entries exceeds many other Chapter 11 cases | | | |

Ho Wan Kwok - August 29, 2023 68 in this district by an order of magnitude. If this case is to proceed in an orderly manner, parties should not be free to relitigate decided issues at will, much less on multiple occasions. Beyond that, the Court was right the first time it ruled. And the Court for that matter was right the second time it ruled. I hesitate to go too far down the rabbit hole here because I don't want to take the Greenwich Land parties' bait, but they have selectively quoted and cited authority in their objection to stand for a proposition that simply doesn't exist, that continuing a Rule 2004 investigation with respect to non-parties that may have some subject matter overlap with pending adversary proceedings is not allowed. The case law does not stand for that proposition. In fact, the case law contradicts it and that's why Your Honor has twice ruled what Your Honor ruled. There's one more concerning feature of the objection that was filed by the Greenwich Land parties and that is the way that it discusses the investigation that is sought to be continued by the sixth Rule 2004 motion. Just looking at the summary of that investigation as it's described, as it excerpts from the subpoenas and requests for production, one would think that the Rule 2004 motion is being conducted solely to investigate Greenwich

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| | Ho Wan Kwok - August 29, 2023 69 | |----|----------------------------------------------------------------| | 1 | Land parties' alleged assets. In fact, looking at the RFPs | | 2 | themselves, one finds that they implicate a range of assets | | 3 | that go well beyond the Greenwich Land parties' claimed | | 4 | assets. For example, and these are just examples, the RFPs | | 5 | also implicate the property at the Sherry-Netherland Hotel. | | 6 | We just settled the Bravo Luck adversary proceedings today. | | 7 | If this 2004 exam is really a substitute for | | 8 | adversary proceeding discovery, why would we possibly be | | 9 | seeking discovery, an investigation that implicates those | | 10 | matters? | | 11 | The same thing with the Lady May. The Lady May is | | 12 | listed in their RFPs. The Lady May has already been sold. | | 13 | We're not -- we're not listing things for fun. | | 14 | We're not listing things as a substitute for Part 7 | | 15 | discovery under the Federal Rules of Bankruptcy Procedure. | | 16 | The reality here is, and this court has lived with | | 17 | this case long enough to know, the Trustee's finances or | | 18 | rather the debtor's finances are an intricate, supremely | | 19 | complicated spider web. And to unravel his business and his | | 20 | assets you can't hack chunks out of the web and expect | | 21 | everything to fit together. There has to be a holistic | | 22 | review. I think that the Court's two prior rulings have | | 23 | recognized that. | | 24 | Beyond that, the Greenwich Land parties argue | | 25 | about issues that are related to discovery in the pending | | | |

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| | Ho Wan Kwok - August 29, 2023 70 | |----|----------------------------------------------------------------| | 1 | adversary proceeding. And while I want to be very clear, | | 2 | the Trustee disagrees with the Greenwich Land parties' | | 3 | position as to what they're entitled to and what they're not | | 4 | entitled to in the adversary proceeding, the proper way to | | 5 | litigate a discovery dispute in an adversary proceeding is | | 6 | not to object to a 2004 exam motion. | | 7 | Finally, I will just briefly note that even if the | | 8 | Court overrules the Greenwich Land parties' objection, | | 9 | there's already prejudice to the estate here. The objection | | 10 | will delay the granting of the 2004 exam motion and thus the | | 11 | issuance of subpoenas by several weeks. | | 12 | And this reminds me of being in high school when | | 13 | my parents would say you've got to do your math homework | | 14 | every week because what you learn next week builds on what | | 15 | you do this week, the Trustee's investigation is the same | | 16 | way. The subject matter, the people that we're issuing | | 17 | subpoenas to under this motion, the terms of the RFPs, the | | 18 | subject matter, that's all -- a large portion of it is | | 19 | subject matter that the Trustee has learned through his | | 20 | existing 2004 exam investigation. And to the extent that | | 21 | that 2004 exam investigation is delayed, the delay builds on | | 22 | itself, everything takes longer, everything's more | | 23 | expensive, the docket entries continue to click, the | | 24 | administrative expenses continue to build. | | 25 | So we would ask that Your Honor grant the sixth | | | |

Ho Wan Kwok - August 29, 2023 71 2004 exam motion, overrule the objection, and make clear that this time Your Honor's ruling should be respected and further objections in this -- in this respect should not be -- should not be filed. And I'm happy to answer any questions the Court may have. THE COURT: Thank you. I do not have any questions at this time. MR. MAJOR: Thank you, Your Honor. Chris Major, Meister Seelig & Fein representing Hing Chi Ngok and Greenwich Land, LLC. I want to address the point that counsel for the Trustee led and closed with, with the idea that we should be prohibited from objecting to the motions. And we didn't cost the Trustee weeks. We filed our objection on August 18th. It's August 29th and the matter is being heard. We have not just the right, but the obligation to make a record in the case. Also I want to protect our clients' rights to make future objections, for example, evidentiary objections at trial. If the Trustee tries to spring evidence that he's collected in the 2004 about the issues in the adversary proceeding, and he doesn't turn them over to us and then tries to put them in at trial, I don't want the Trustee,

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Ho Wan Kwok - August 29, 2023 72 when I object to say, well, you didn't object to our sixth omnibus motion. So I think it's entirely appropriate that we asserted our objection. The issues are similar, not identical, but, and for that reason I will be brief. I'm mindful of what the Court's prior orders are, but I have to make the record. I can't just say, well, the Court did this and, therefore, we'll just acquiesce with it. Because if we're in front of an appellate tribunal or in front of any trial court and I make an objection I don't want to hear a waiver argument. So it's an objection that I felt we were obligated to make and I think it's entirely appropriate. As I said, I'll be particularly brief on the legal issue. I'm mindful of the Court's prior rulings. There's no dispute about the existence of the pending procedures rule, which is this rule against taking discovery under 2004 for use in an adversary proceeding. There's no dispute that the discovery that is sought in this sixth omnibus motion for 2004 discovery addresses issues in the Greenwich Land adversary proceeding. And counsel for the Trustee took exception to the fact that our objection focuses on all of the discovery requests relating to Greenwich Land and doesn't mention the others, well, Your Honor, the filing, I believe, the omnibus motion, when you include the subpoenas, it's like over 300

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| | Ho Wan Kwok - August 29, 2023 73 | |----|----------------------------------------------------------------| | 1 | pages I believe. It's at least over 200 pages. | | 2 | So certainly we weren't going to spend a lot of | | 3 | time talking about issues that are outside our very narrow | | 4 | in this bankruptcy proceeding, which is the Greenwich Land | | 5 | adversary proceeding. | | 6 | So we were of course, and appropriately so, | | 7 | focused on the request to the extent they mentioned | | 8 | Greenwich Land. And even in the body of the Trustee's sixth | | 9 | omnibus motion, Greenwich Land is mentioned as the reason | | 10 | for seeking discovery from one of the targets. | | 11 | So I think that the key legal issue, and I'll be | | 12 | very brief here, is, again, not the existence of the prior | | 13 | pending proceeding rule, or that these subpoenas are seeking | | 14 | information concerning the issues in the Greenwich Land | | 15 | adversary proceeding, those are undisputed, but what the | | 16 | Trustee says is, well, we can get discovery relating to the | | 17 | adversary proceeding as long as we're not getting it from | | 18 | you. | | 19 | And I just want to put into the record two | | 20 | quotations from cases that we cite. | | 21 | Number one is In re Bennett Funding Group, Inc., | | 22 | which is 203 B.R. 24. It's from the Northern Bankruptcy | | 23 | Court in the Northern District of New York. It's a 1996. | | 24 | At page 29 of that decision the Court wrote, "Thus, a | | 25 | Trustee like a creditor must look to Federal Rules of | | | |

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| | Ho Wan Kwok - August 29, 2023 74 | |----|--------------------------------------------------------------| | 1 | Bankruptcy Procedure 7026 et seq. after an adversary | | 2 | proceeding is commenced for discovery as to both entities | | 3 | affected by the proceeding and issues addressed in this | | 4 | proceeding." | | 5 | The second case, In re Southeastern Materials, | | 6 | Inc., 2010 Westlaw 5128608, from the Middle District of | | 7 | North Carolina. It's a 2010 case. At page 3 of that | | 8 | decision, the Court wrote, "In order to prevent injustice | | 9 | and to ensure the parties in bankruptcy adversary | | 10 | proceedings have the same rights as parties to a federal law | | 11 | suit in a non-bankruptcy context, it is important to ensure | | 12 | the procedural safeguards of the discovery process provided | | 13 | in Federal Rules of Civil Procedure 26 through 37, | | 14 | incorporated by reference in Federal Rules of Bankruptcy | | 15 | Procedure 7026 through 7037, are not avoided by permitting a | | 16 | Rule 2004 examination while an adversary proceeding is | | 17 | pending." | | 18 | Your Honor, we also, with respect to that legal | | 19 | argument, rest on the other case law that we cite and | | 20 | discuss in our objection. | | 21 | I want to touch on -- I mentioned at the top that | | 22 | this situation is similar, but not identical, to where we | | 23 | were back in June when we objected to the fifth omnibus | | 24 | motion for Rule 2004 discovery. | | 25 | There's another inequity here with what the |

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| | Ho Wan Kwok - August 29, 2023 75 | |----|---------------------------------------------------------------| | 1 | Trustee is proposing to do, which is discovery -- the | | 2 | Trustee advocated for and achieved an extremely quick | | 3 | discovery schedule in our adversary proceeding. That's | | 4 | coming to a close. He's come into court now and said he | | 5 | wants to take 2004 discovery relevant to the issues in the | | 6 | Greenwich Land proceeding, adversary proceeding. | | 7 | We're going to be cut off from being able to take | | 8 | any discovery. We're not -- we're not allowed to | | 9 | participate in the discovery he's taking concerning the | | 10 | issues in the adversary proceeding that we're defending, and | | 11 | he'll be able to continue to do that. I guess his position | | 12 | is he can do that right up to the time through trial. And | | 13 | if he finds something he can try to use it, we will of | | 14 | course object to that. | | 15 | But what he's calling an investigation as it | | 16 | relates to Greenwich Land is discovery for claims he's | | 17 | already made and preliminary relief he's already obtained, | | 18 | and so I think that the appropriate way to do this would be | | 19 | discovery that the parties can participate in. | | 20 | So, Your Honor, those are our arguments. I'm | | 21 | happy to answer any questions the Court has. | | 22 | THE COURT: Thank you. No. I don't have any | | 23 | questions at the moment, but thank you. | | 24 | MR. MAJOR: Thank you, Your Honor. | | 25 | MR. LINSEY: Very quickly, Your Honor? | | | |

Ho Wan Kwok - August 29, 2023 76 THE COURT: Yes. MR. LINSEY: First of all, again, the adversary proceeding discovery disputes are an issue for the adversary proceeding. We disagree with the characterization of discovery on negotiations in the adversary proceeding, but if there are disputes, then I expect either party has the -- any party has the ability to bring them there. But with respect to the brief discussion of the case law, Your Honor substantively considered this issue. To the extent the *Bennett* case sounds familiar, it's because it's one of the cases that Your Honor cited in Your Honor's last decision, and Your Honor noted in the parenthetical after that cite that that was a prohibition on 2004 discovery as to a party to the pending proceeding, not as to a non-party. With respect to the *Southeastern Materials* case that was cited, it's easy to take a snippet from a case without a context. I'll take a snippet from the *Southeastern Materials* case. "A handful of decisions have considered the allowable scope of a Rule 2004 examination where it related civil or criminal proceedings are taking place or are likely to occur in another court, the general rule in these cases is that the existence of or a potential for collateral litigation is insufficient reason to deny an

Fiore Reporting and Transcription Service, Inc.

examination." That's from that case, Your Honor.

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Ho Wan Kwok - August 29, 2023 77 Your Honor looked at these cases. This is not a -- there's not a Second Circuit ruling that's directly on point here. What the cases boil down to is the purpose of the discovery examination to substitute for discovery -- rather the 2004 examination is to substitute for discovery in an adversary proceeding under Part 7 of the rules to gain some strategic advantage or are they a proper examination, holistic examination, of a debtor's finances. And I believe in this case, given the record that has built up to date, it's exceptionally clear that what we're undertaking is the latter. THE COURT: Thank you. MR. LINSEY: Thank you. THE COURT: Attorney Major, any response? MR. MAJOR: Your Honor, with respect to the case law, we've accurately described what the courts have held. And the two that I read are not the only cases. We've cited several cases in the brief that support our argument. THE COURT: And I understand that. Thank you. And I have seen that you've cited other cases, so I understand that. Okay. With regard to this motion, the Court is going to take the matter under advisement. But I think the ruling will not -- I mean, I'm not going to take a substantial amount of time to rule, but I will rule after

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| | Ho Wan Kwok - August 29, 2023 78 | |----|---------------------------------------------------------------| | 1 | going back and reviewing your arguments and looking at the | | 2 | documents and the cases one more time. Okay? | | 3 | Is there anything further we need to address this | | 4 | afternoon? I think that's the last matter on the calendar. | | 5 | MR. DESPINS: That's correct, Your Honor. | | 6 | THE COURT: Nothing else from any party? | | 7 | MR. DESPINS: Actually, Your Honor, let me take a | | 8 | chance at this. And the question is, is there a procedure | | 9 | before Your Honor to seek relief in the middle of a | | 10 | deposition where there are issues that arise? Because in | | 11 | some courts -- | | 12 | THE COURT: There's no -- we don't have a, you | | 13 | know, a procedure that I could point to that says this is | | 14 | what you do, but what has happened in the past is the | | 15 | parties contact the courtroom deputy and ask the Court to | | 16 | have an emergency hearing. | | 17 | MR. DESPINS: Okay. | | 18 | THE COURT: And if the Court's available, the | | 19 | Court can do that. Then if not, then what the Court has | | 20 | said to parties is continue with as much of the deposition | | 21 | as you can. Hold whatever questions or issues there are | | 22 | until the Court can actually conduct that hearing. | | 23 | Now, that's not I know ideal because that means | | 24 | you'd have to reconvene for a deposition or an examination, | | 25 | but -- | | | |

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Ho Wan Kwok - August 29, 2023 79 MR. DESPINS: Okay. THE COURT: -- there is no time -- you know, the Court isn't always available unfortunately. MR. DESPINS: Understood. That's helpful. Thank you. THE COURT: So I don't know how you'd want to proceed, but there have been occasions where both of things has happened. Parties have called, court was available, able to have an emergency hearing. But there's also been occasions where the parties have called, the Court has not been available, and then we'd have to have scheduled a specific hearing to address that issue as soon as possible. I think that's all I can tell you. We don't have a process in place in our local rules or anything like that. MR. DESPINS: Okay. Thank you. Very helpful. Thank you. THE COURT: Okay. Thank you. There are some matters that are -- that are not on the calendar today that are what I would say somewhat ministerial. Like, there's a motion to redact that's been filed. Redactions are usually granted, so that probably will be addressed in the next few days. Otherwise, I think that the majority of matters in the main case and in the adversary proceeding are either set for hearing or there are response dates coming up.

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| | Ho Wan Kwok - August 29, 2023 80 | |----|-----------------------------------------------------------------| | 1 | Oh, that was the other thing I was going to say. | | 2 | Mr. Major, you may not know this either. | | 3 | But the district court in Connecticut, when a | | 4 | motion is filed in what you would call a civil action, | | 5 | plaintiff and defendant, has an automatic 21-day response | | 6 | period that just gets set. And so we follow that rule. So | | 7 | immediately upon a pleading in an adversary, the CM/ECF | | 8 | system populates this language that says, I don't remember | | 9 | what it says, but it says something like response due 21 | | 10 | days and then it calculates the date I think. | | 11 | What I have said to people, and our local rules | | 12 | don't address it, but we're in the process of looking at our | | 13 | local rules again, is if someone believes that there should | | 14 | be some other date for a response, or there's some emergency | | 15 | issue, or an extension of that response date, then that | | 16 | doesn't preclude anyone from filing something asking for | | 17 | that relief. Okay? | | 18 | It's a -- I think, you know, in the bankruptcy | | 19 | context it often is the 21 days cannot always apply as | | 20 | neatly as it does in a district court action. And I'm not | | 21 | saying it applies neatly in a district court action all the | | 22 | time either because I'm sure there are circumstances where | | 23 | someone would want something either before that. | | 24 | But I wanted to make that clear to the parties, is | | 25 | that that 21-day period is automatically populated. The | | | |

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Ho Wan Kwok - August 29, 2023 81 Court has nothing to do with that. It's just it's there. It's part of the program, and following the district court rules, which we follow.

So there may be a circumstance where any party could seek to change that date or get some form of a status conference or something prior to that. You're not -- no party is precluded from seeking that. Whether it's going to be granted or not is a wholly different issue.

But I've noticed recently that there have been some motions filed where, you know, I could understand why a party would want some other form of relief and not have to wait for the 21 days, but nothing's necessarily been filed, so I just wanted parties to understand that. Okay?

MR. LINSEY: Your Honor, that reminded me of an issue. In the HCHK adversary proceeding, there is -- without getting in to the substance of it, there's a recently filed motion for extension of time for a pleading deadline. It indicates that the Trustee has no objection. We are planning to file a response. That response should be filed this week. I say that only because I'm aware that, you know, that has the same 21-day thing in the docket text as Your Honor noted typically occurs, but also it is, you know, typically or oftentimes we see motions for extension granted in advance of the 21-day deadline. So I just wanted to mention to Your Honor there is going to be a response

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| | Ho Wan Kwok - August 29, 2023 82 | |----|--------------------------------------------------------------| | 1 | forthcoming this week for the Trust -- | | 2 | THE COURT: I thought there already was an | | 3 | objection to that extension of time. | | 4 | MR. LINSEY: There's an objection that's indicated | | 5 | in the motion, but we will be filing a substantive -- | | 6 | THE COURT: Oh. Okay. I understand. | | 7 | MR. LINSEY: -- objection explaining the grounds. | | 8 | THE COURT: I understand. | | 9 | MR. LINSEY: And I just -- | | 10 | THE COURT: I understand what you're saying. | | 11 | MR. LINSEY: We're not going to hold -- we're not | | 12 | going to -- we're not going to string them out 21 days to do | | 13 | that. We're going to get that on file. | | 14 | THE COURT: I understand. Okay. I appreciate | | 15 | that. | | 16 | MR. LINSEY: Thank you. | | 17 | MR. DESPINS: And, Your Honor, the issue you | | 18 | raised in the leave to appeal context is kind of dangerous | | 19 | in the sense that the docket will say you have 21 days, and | | 20 | it gives you the date as you indicated, but the Bankruptcy | | 21 | Rule, 8004, says you have ten days. | | 22 | THE COURT: I know. | | 23 | MR. DESPINS: So that's like -- | | 24 | THE COURT: That's part of the problem. | | 25 | MR. DESPINS: Yeah. | | | |

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Ho Wan Kwok - August 29, 2023 83 THE COURT: The box, everything doesn't fit into the box. MR. DESPINS: Yeah. THE COURT: Right? So that's part of the problem. MR. DESPINS: But we didn't take any chance. We applied that 10-day rule. THE COURT: No. That is part of the problem. And we're going to review that. And I've said that to the bar -- not I, everyone that -- all the judges who are involved with the standing committee on local rules have raised issues saying, you know, a lot of times -- there isn't a local rule that says anything about the 21 days because it's a district court rule. It just says the district court rule's adopted. But we might need to say something that says unless provided by applicable statute or rule or order or otherwise ordered by the Court, blah, blah, blah. You know. I think that -- so you all think about that, make your -- tell us what the rules should say and we'll try to do that. Okay? But we are thinking about it is the point. And I just wanted, you know, someone who, you're not here all the time, you're not worrying about the district court rules necessarily. It doesn't preclude any party from seeking something prior to that 21 days. Whether they'll get it or not is a wholly different question. Okay?

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Ho Wan Kwok - August 29, 2023 84 MR. MAJOR: Yeah. Your Honor, I apologize if I've made myself seem like an out of towner, but I've been admitted in this district for -- THE COURT: No. I don't mean it like that. MR. MAJOR: -- a long time. THE COURT: I just mean I don't think you're coming into the bankruptcy court very often and having to worry about the interplay or our local rules and the district court rules. That's all. MR. MAJOR: I just want to make a point Your Honor in response to your comment. And I might be coming, appear to be coming out of left field with this because this is not at all what you had in mind, but because the Trustee complained about delay that we caused by objecting, I just want to make sure that the record's clear that the Trustee filed the sixth omnibus motion on us Friday, August 11th. The motion indicates that the objections were due the next Friday, August 18th, and we complied with that. So we didn't take the 21 days to put our objection in. THE COURT: I agree. And I saw that you complied with the objection deadline in the motion. So we have some unfortunate, you know, there's an unintended consequence of trying to have uniformity, because it doesn't always work. Everything doesn't fit into the

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Ho Wan Kwok - August 29, 2023 85 same box. And, you know, we could probably spend weeks going through the local rules figuring out all the things that don't fit into the box. But in any event, I just say that so parties are aware that it -- I don't want anyone to think that that means they couldn't seek relief in some way, shape or form prior to the 21 days. Whether or not you get it is a wholly different issue. Okay? All right. Well, that concludes the hearings today, so -- (Proceedings concluded at 3:47 p.m.) I, CHRISTINE FIORE, Certified Electronic Court Reporter and Transcriber, certify that the foregoing is a correct transcript from the official electronic sound recording of the proceedings in the above-entitled matter. 19 September 6, 2023 20 Christine Fiore, CERT 21 Transcriber