郭文贵破产案 · TRANSCRIPT · ECF #2539

元数据

当事人: 郭文贵 (Guo Wengui / Miles Guo / Ho Wan Kwok)
法院: CTB
案号: 22-50073
ECF #: 2539
类型: TRANSCRIPT
立案日: 2024-01-31

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, \* \* Debtors. \* LUC A. DESPINS, CHAPTER 11 \* Adv. Proc. No. 23-05023 TRUSTEE, \* \* Plaintiff, \* v. \* \* Bridgeport, Connecticut LAMP CAPITAL LLC, et al., \* January 23, 2024 \* Defendants. \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* TRANSCRIPT OF PROCEEDINGS BEFORE THE HONORABLE JULIE A. MANNING UNITED STATES BANKRUPTCY JUDGE APPEARANCES: For the Chapter 11 Trustee: NICHOLAS A. BASSETT, ESQ. Paul Hastings LLP 200 Park Avenue New York, NY 10166 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. **Fiore Reporting and Transcription Service, Inc. Shelton, CT 06484 (203)732-6461**

APPEARANCES: (Cont'd) For Lamp Capital and ROBERT J. GRAND, ESQ. Infinity Treasury ROBERT RUSH MILLER, ESQ. Management: Lax & Neville LLP 350 Fifth Avenue Suite 4640 New York, NY 10118 For the 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 Hudson Diamond NY, LLC, JAMES M. MORIARTY, ESQ. Hudson Diamond Holding, LLC AARON ROMNEY, ESQ. Leading Shine NY Ltd. and Zeisler & Zeisler, P.C. Mei Guo: 10 Middle Street, 15th FL Bridgeport, CT 06604

| # 2475 | Interim Application for Compensation First Interim Fee Application for Pallas Partners, LLP, Other Professional, Fee: \$318,591.60, Expenses: \$4,953.04 | |--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | | # 4 | Pretrial Conference | | # 18 | Motion for Default Judgment by the Court Pursuant | | | To Fed R. Civ. P.55(b)(2) against Lamp Capital LLC | | | And Infinity Treasury Management, Inc. | | # 30 | Motion to Set Aside Default Filed by Aaron Romney | | # 42 | Motion to Set Aside Default Filed by Robert J. Grand | | | |

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Ho Wan Kwok - January 23, 2024 4 (Proceedings commenced at 1:05 p.m.) THE COURTROOM DEPUTY: Case No. 22-50073, Ho Wan Kwok, and Adversary No. 23-5023, Despins versus Lamp Capital, LLC, et al. THE COURT: All right. Good afternoon, everyone. If we could have appearances for the record, starting with the Chapter 11 Trustee, please. MR. DESPINS: Good afternoon, Your Honor. Luc Despins, Chapter 11 Trustee. MR. BASSETT: Good afternoon, Your Honor. Nick Bassett from Paul Hastings, counsel for the Chapter 11 Trustee. And Your Honor, I wanted to note that our co- counsel, Mr. Lindsey, was planning to be here, but unfortunately was in a car accident on the way to the courtroom. THE COURT: Oh. MR. BASSETT: He is okay. THE COURT: Well, that's good. I'm glad to hear that. MR. BASSETT: But due to that, unable to be here like he had planned to be. THE COURT: Okay. Thank you. MS. CLAIBORN: Good afternoon. Holley Claiborn for the U.S. Trustee.

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Ho Wan Kwok - January 23, 2024 5 THE COURT: Good afternoon. MR. GRAND: Good afternoon. Robert Grand from Lax & Neville, for Lamp Capital and Infinity Treasury Management. THE COURT: Good afternoon. THE COURTROOM DEPUTY: I'm sorry. I didn't catch your last name? MR. GRAND: Grand, G-R-A-N-D. THE COURT: And Mr. Grand, we, in this courtroom, everything is audio. So if I can't hear you, I'm going to ask you to speak up because it's the only way we can keep a record in this case. All of our records are audio recordings. Okay? MR. GRAND: Yes. Thank you. THE COURT: Thank you. MR. MILLER: Your Honor, by video, Robert Miller, of Lax & Neville, for Lamp Capital and Infinity Treasury. THE COURT: Good afternoon. MR. MORIARTY: Good afternoon, Your Honor. MR. ROMNEY: Good afternoon. MR. MORIARTY: Sorry. Good afternoon, Your Honor. James Moriarty, from Zeisler & Zeisler, for Hudson Diamond New York, LLC, Hudson Diamond Holding, LLC, Leading Shine New York, Limited, and Mei Guo.

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| | Ho Wan Kwok - January 23, 2024 6 | |----|-------------------------------------------------------------| | 1 | THE COURT: Good afternoon. | | 2 | MR. ROMNEY: Good afternoon, Your Honor. Aaron | | 3 | Romney, Zeisler & Zeisler, for the same parties. | | 4 | THE COURT: Good afternoon. | | 5 | Mr. Moriarty, Mr. Romney, is anyone from Mr. | | 6 | Vartan's office going to be here today? | | 7 | MR. ROMNEY: No, Your Honor. | | 8 | THE COURT: Okay. Then I just wanted to note for | | 9 | the record that Mr. Vartan and Ms. Wernick filed notices of | | 10 | appearance on behalf of Holdings and Ms. Guo, but not on | | 11 | behalf of New York, Hudson Diamond New York, even though | | 12 | they filed -- they signed a pleading recently, I think it | | 13 | was the response, where they filed -- it was signed on | | 14 | behalf of all three parties, all three defendants, Hudson | | 15 | Diamond Holdings, Hudson Diamond New York, and Ms. Guo, so | | 16 | we need that to be remedied. Okay? | | 17 | MR. ROMNEY: Understood, Your Honor. | | 18 | THE COURT: All right. | | 19 | MR. ROMNEY: We'll get their appearances in I | | 20 | imagine by the end of the day. Thank you. | | 21 | THE COURT: That's fine. I just want to make | | 22 | sure, because the notices of appearance only appear -- they | | 23 | only reflect an appearance on behalf of Holdings and Ms. | | 24 | Guo, where the subsequently filed pleading is signed by Mr. | | 25 | Vartan on behalf of all three of the defendants. | | | |

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Ho Wan Kwok - January 23, 2024 7 MR. ROMNEY: Understood, Your Honor. I believe, just the background of that, was that their pro hac applications for Holdings and Ms. Guo had been granted prior, whereas, the pro hac application for New York was just granted yesterday. THE COURT: Well, maybe. Okay. Maybe that's the reason then. Okay. Fine. Thank you. Just when you -- we just want to make that -- we want to have that remedied so that the record is accurate. MR. ROMNEY: Thank you, Your Honor. THE COURT: Okay. Thank you. All right, then, on the calendar today, in the matter, are -- is the interim application for compensation. And then the originally scheduled pretrial conference, which is always scheduled by the Court Clerk's Office when a summons is issued in connection with an adversary proceeding. And obviously we then have motions to address in the adversary proceeding. So Mr. Bassett, are we proceeding with the application for compensation first? MR. DESPINS: Yes, Your Honor. I'll handle that. THE COURT: Oh, okay. Sorry. Okay. Go ahead, Trustee Despins. MR. DESPINS: Okay. Your Honor, this is the application, docket No. 2475, of Pallas Partners, that was

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| | Ho Wan Kwok - January 23, 2024 8 | |----|--------------------------------------------------------------| | 1 | filed on December 27th. And the relief sought in that | | 2 | application of compensation, the amount of 318,591. But | | 3 | that was for practically a one-year period from January to | | 4 | November, end of November. And also reimbursement of | | 5 | expense of 4,952.80. | | 6 | Now, the U.S. Trustee had some comments on the | | 7 | application and she actually negotiated a reduction of the | | 8 | fees for Pallas from 318,591 to 305,791, a reduction of | | 9 | 12,800, and a reduction of expenses of 4,927, because those | | 10 | expenses were the expenses of the barrister and that he will | | 11 | seek reimbursements for his fees separately. | | 12 | And, Your Honor, you never deal with that firm, | | 13 | Pallas, so I think it's worth spending just two minutes on | | 14 | it, you know -- they're our U.K. counsel in the UBS | | 15 | litigation. | | 16 | And over the last year, you know, they've assisted | | 17 | us in trying, you know, trying to get attorney-client | | 18 | privileged reports from the law firm that represented Mr. | | 19 | Kwok and the other -- the other plaintiffs in that | | 20 | litigation against to UBS. | | 21 | They've also assisted us recently in filing a | | 22 | motion to seek a stay of that litigation. | | 23 | Because the point that we're making is that it | | 24 | makes no sense to go forward with that litigation in a | | 25 | situation where there's a disagreement as to who controls | | | |

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Ho Wan Kwok - January 23, 2024 9 that litigation, in the sense that our view, based on your decision, is that the Trustee owns Ace Decade and Dawn State. But there's a law firm in the U.K. appearing on behalf of Ace Decade. They won't say who's -- who they're taking instructions from, but they say they represent Ace Decade and they're opposing us. So we filed this motion for a stay in the U.K. courts basically saying we need to resolve this issue once and for all as to who owns Ace Decade, and also to avoid the transfer that Yvette Wang did of the shares of Ace Decade back in January of 2023. You may recall that. So we filed an adversary proceeding before Your Honor seeking that relief that will take its own course. You know, I don't know if Ms. Wang will default or not, but -- so the defendants are Ace Decade, Ms. Wang, and also a gentleman that is now the holder of the stock of Ace Decade who is located in Switzerland. So that's what's happening. That's the worst that they've enjoined for us in the U.K. And unless Your Honor has questions, we would ask the Court to approve the application as modified per the U.S. Trustee discussions. THE COURT: I do not have any questions at the moment. Thank you. Ms. Claiborn?

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Ho Wan Kwok - January 23, 2024 10 MS. CLAIBORN: Your Honor, just to add to the record, the statement that I filed that confirms the presentation Trustee Despins just gave is at ECF 2502. And to put a finer point on the heart of it that deals with expenses, the barrister, Paul Wright, will be seeking reimbursement of those expenses with his own fee application that will be filed in the future. So it's not going to be awarded as part of this fee application. THE COURT: Is there a revised, proposed order? MS. CLAIBORN: I haven't yet seen one. I'm assuming that Trustee Despins' camp is in the process of putting them together. MR. DESPINS: Yeah. Your Honor, we don't have one right now, but we'll submit it to the Court after showing it to Attorney Claiborn. THE COURT: Okay. MS. CLAIBORN: Thank you. THE COURT: That's fine. With regard to the interim application for compensation, I have reviewed the application for compensation and the fees. And now the expenses are going to be sought separately, so I'm just dealing with the fees, Attorney Claiborn, is that correct? MS. CLAIBORN: There is a small award of expenses.

Ho Wan Kwok - January 23, 2024 11 It's \$26. THE COURT: Okay. So I think that's reasonable. MS. CLAIBORN: But the rest of it will be subject to a future application by the barrister, Paul Wright. THE COURT: Okay. Thank you. Then the fees and the \$26 in expenses that are going to be sought to be approved, that are sought to be approved, not going to be, that are sought to be approved, I find are reasonable and necessary under the circumstances of this case and the related proceedings in the U.K. The application was properly served. The notice of hearing was served. No one filed any objection to the application for compensation. The objection deadline was January 16, 2024. There were no objections filed. There was no -- there were no responses filed. Nothing was filed in connection with the interim application for compensation. As noted on the record by the Chapter 11 Trustee and the Office of the United States Trustee, there is a reduction in the fees that were sought in dollar amount in the application and that the parties will be submitting a revised proposed order that will memorialize that agreement. And I did see that the United States Trustee's Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 11 of

Office did file a statement of no objection with regard to the reduced fees that appears at 2502 on the docket of this Chapter 11 case.

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Ho Wan Kwok - January 23, 2024 12 So for all those reasons, the interim application for compensation is granted and the revised proposed order will be submitted to the Court. You can submit it to the courtroom deputy email box. You don't need to file it on the docket. But just make sure, as I think Trustee Despins already said he would, that Attorney Claiborn will be shown the order and cc'd on the submission of the order to the Court. So that application is granted. MR. DESPINS: Thank you, Your Honor. THE COURT: Thank you. So then the pretrial conference that's on the calendar, really, as I said already with regard to the adversary proceeding commenced against the defendants Lamp Capital and others, that's the original, scheduled, pretrial conference. Obviously, there's a lot of things that have already happened in this pretrial -- in this adversary proceeding, excuse me, and we don't necessarily have to have a pretrial conference in the vein that we would normally talk about, has anybody filed a responsive pleading, what are discovery issues, and are we going to enter into a pretrial order, when we have other matters. I already know what the status of the adversary proceeding is in general. Obviously, defaults have entered.

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| | 111 | |----|--------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 13 | | 1 | And now on the calendar is a motion for a default | | 2 | judgment and two motions to set aside default. | | 3 | So Attorney Bassett, I assume that you would | | 4 | obviously like the Court to enter a default judgment, but | | 5 | you also acknowledge that motions to set aside the defaults | | 6 | have been filed and are on the calendar, correct? | | 7 | MR. BASSETT: Yes. That's correct, Your Honor. | | 8 | Obviously, we'll take up the motion for default | | 9 | judgment against Lamp Capital and Infinity Treasury | | 10 | Management today, as well as their response to that, | | 11 | accompanied by a Rule 55(c) motion to set aside default. | | 12 | And we also, as the Court noted, had the motion to set | | 13 | aside default by Defendant Leading Shine. | | 14 | There are also the other three defendants, Mei Guo | | 15 | and the two Hudson Diamond entities, who have filed a motion | | 16 | to dismiss. | | 17 | I have actually conferred with Attorney Moriarty | | 18 | and we have -- we're both in agreement that pending that | | 19 | motion to dismiss, the case should proceed forward as to | | 20 | those defendants in both of our views and, therefore, our | | 21 | plan was to coordinate as to a litigation schedule and have | | 22 | something to submit to the Court shortly. | | 23 | But other than that, I don't think there's | | 24 | anything else that needs to be done today by way of a | | 25 | pretrial conference. | | | |

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| | 111 | |----|---------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 14 | | 1 | THE COURT: Okay. Thank you. | | 2 | Does anyone else wish to be heard on the pretrial | | 3 | conference issues as opposed to the specific motions on the | | 4 | calendar? | | 5 | MR. ROMNEY: No, Your Honor. | | 6 | THE COURT: Thank you. | | 7 | All right. So I'm not going to schedule any | | 8 | further pretrial conferences at this time. The parties can | | 9 | always request a conference, which may or may not be | | 10 | granted, but, there's no need, given the activity in the | | 11 | adversary proceeding, to schedule a further pretrial | | 12 | conference at this time. | | 13 | So Attorney Bassett, obviously, the calendar | | 14 | appears -- the motion for default judgment appears first, | | 15 | but there's the motions to set aside default as well, so how | | 16 | do you propose to proceed? | | 17 | MR. BASSETT: I would propose, Your Honor, and, | | 18 | obviously, subject to the Court's preferences, to go ahead | | 19 | and proceed with the motion for default judgment because | | 20 | sequentially that's how the pleadings were filed, the papers | | 21 | were filed on the docket. | | 22 | The response to that motion by Lamp Capital and | | 23 | Infinity Treasury Management really sort of responds by | | 24 | raising the 55(c) issue, so, therefore, I can address the | | 25 | default, you know, the response, the arguments and response | | | |

Ho Wan Kwok - January 23, 2024 15 to the 55(c), and then, you know, counsel could respond to that, and then we could address Leading Shine second, if that works for the Court. THE COURT: All right. Go right ahead then. MR. BASSETT: Your Honor, may I approach the podium? THE COURT: Yes, please. MR. BASSETT: Again, Good afternoon, Your Honor. And for the record, it's Nick Bassett from Paul Hastings on behalf of the Chapter 11 Trustee. Your Honor, the -- I would say both of the matters that we have before the Court today are unfortunately part of what is becoming a disturbing trend in these cases. It is a trend in which an entity that the Trustee has alleged to be a shell company of the debtor, and which has all kinds of connections to the debtor and to other parties and individuals who have appeared in pleadings and in evidence throughout the course of the year plus of these cases, are selectively deciding when to participate in these cases and when not to. 21 In both cases, we have defendants here who were previously served with 2004 discovery, were previously served with subpoenas, those subpoenas were ignored. In the case of Lamp Capital, they were held in contempt of court and liable for the Trustee's fees. They Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 15 of

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| | 111 | |----|------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 16 | | 1 | never appeared. They never did anything. And Lamp Capital, | | 2 | by the way, is a company that, as the Court will recall and | | 3 | as we have put out in our papers, actually paid the debtor's | | 4 | counsels' fees to file this bankruptcy case. They remain | | 5 | silent. They refuse to participate. They did not allow the | | 6 | Trustee to get discovery to which he was entitled. We | | 7 | served a complaint and, again, nothing, no response. | | 8 | They now belatedly appear and ask to be heard late | | 9 | when convenient for them. | | 10 | This trend, Your Honor, shows an utter contempt | | 11 | for the rule of law, for the procedures of this court, and | | 12 | for the Court's authority. It has to stop. | | 13 | The motion for default judgment that the Trustee | | 14 | filed as to Lamp Capital and Infinity Treasury Management | | 15 | should be granted because all of the requirements for a | | 16 | default judgment have been satisfied. | | 17 | First of all, and I don't think there's any | | 18 | question about this, the complaint was properly served. The | | 19 | complaint was filed on October 26th, 2023. The summons was | | 20 | issued on October 31st, 2023. | | 21 | And the complaint was served the same day, | | 22 | pursuant to Federal Rule of Civil Procedure 4(b)(1)(B), | | 23 | which authorizes service on a -- on a corporation or an LLC | | 24 | by delivering service of process to its agent authorized by | | 25 | appointment or law to receive process. | | | |

Ho Wan Kwok - January 23, 2024 17 Here, the Trustee served the complaint and summons on each of Lamp Capital's and Infinity Treasury Management's registered agents. In the case of, this is out in the papers, in the case of Infinity Treasury Management, the Trustee did received correspondence from the registered agent in response saying that Infinity Treasury Management was no longer licensed to do business in Delaware. But that registered agent remained the registered agent of Infinity Treasury Management according to Delaware State Records and, therefore, pursuant to Delaware law, a statute which we cite in our papers, service is effective because that registered agent remained the registered agent at the time of service. And again, I don't believe there's really a dispute about that, so service was proper. It's also no dispute that a default occurred. The answer deadline, based on the service of the summons and the complaint and their issuance on October 31st, was November 30th, 2023 under Federal Rule of Bankruptcy Procedure 12. That deadline was unquestionably not met. Now, the last element for a default judgment is for the Trustee to demonstrate that its complaint makes a prima facie showing that its claims are sufficient as a matter of law. And the Trustee's complaint here far exceeds Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 17 of

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| | 111 | |----|--------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 18 | | 1 | that showing to demonstrate that Lamp Capital is both -- or | | 2 | is the alter ego of the debtor, or alternatively that the | | 3 | debtor beneficially owned and controlled Lamp Capital. | | 4 | The Court is familiar with this standard from many | | 5 | past adversary proceedings we've already had in this case, | | 6 | but the standard for determining whether or not an alter ego | | 7 | exists under Delaware law includes two primary elements. | | 8 | The first of which is to show that the entity in | | 9 | question operated as a single economic unit with the person | | 10 | who allegedly uses that entity as its alter ego. As the | | 11 | Court is aware, there are a list of factors that are | | 12 | considered. None of those factors is dispositive and they | | 13 | are also not exhaustive. | | 14 | The second element of the alter ego analysis under | | 15 | Delaware law is to show that there's an element of injustice | | 16 | or unfairness that has been perpetuated by the use of the | | 17 | entity as the alter ego. | | 18 | Both of those requirements are amply satisfied by | | 19 | the allegations in the Trustee's complaint as to Lamp | | 20 | Capital and Infinity Treasury Management. | | 21 | First of all -- and by the way, the thrust of the | | 22 | claim in the complaint is that Lamp Capital is the debtor's | | 23 | alter ego -- and I'll get to this later -- but Infinity | | 24 | Treasury Management is named as a defendant because it is | | 25 | nominally the sole member of Lamp Capital and, therefore, we | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24&l |----|---------------------------------------------------------- | | Ho Wan Kwok - January 23, 2024 19 | 1 | need an order from this court causing Infinity Treasury | 2 | Management to turn over its interest in Lamp Capital to the | 3 | estate. | 4 | As to Lamp Capital and the allegations that it | 5 | operated as a single economic unit with the debtor, Lamp | 6 | Capital was created by the debtor with his own counsel in | 7 | September 2020. As I said, the sole member of Lamp Capital | 8 | is Infinity Treasury Management. A sole shareholder of | 9 | Infinity Treasury Management is the debtor's son. | 10 | Lamp Capital at all times operated from the same | 11 | address as the debtor's other shell companies, including | 12 | Golden Spring and HK (USA), both of which have already been | 13 | adjudged to be the debtor's alter egos. | 14 | Lamp Capital, as alleged in the complaint, | 15 | operated through the same individuals acting at the debtor's | 16 | direction, who have taken instruction from the debtor for | 17 | his other shell companies. That includes Daniel Podowsky | 18 | and Max Krasner with whom the Court is intimately familiar | 19 | based on other allegations and other evidence presented in | 20 | this case. | 21 | The complaint alleges that Lamp Capital did not | 22 | operate as a business or generate any revenue. The sole | 23 | purpose of Lamp Capital rather was to make and receive | 24 | transfers on behalf of the debtor. It effectively was a | 25 | shell company used to fund the debtor's lavish spending and t;br>Entered 01/31/24 13:29:55 Page 19 of 111 | -------------------------------------| | | | | | | | | | | | | | | | | | | | | | | | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 20 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 20 | | 1 | his shell game that he has used to keep assets from | | 2 | creditors. It's essentially his piggy bank. | | 3 | Lamp Capital, as alleged in the complaint, in | | 4 | fact, made transfers to fund the debtor's luxurious | | 5 | lifestyle, including transfers that funded the debtor's use | | 6 | of the Bombardier private jet, which is the subject of | | 7 | another adversary proceeding, and also the Lady May, which | | 8 | this court has already determined the debtor owns. | | 9 | In addition, Lamp Capital has funded prepaid debit | | 10 | cards for the debtor's family. | | 11 | And finally, as I mentioned before, Your Honor, | | 12 | Lamp Capital, in fact, funded the debtor's own expenses to | | 13 | commence this Chapter 11 case. | | 14 | Based on those allegations and others in the | | 15 | complaint, I think there's no doubt that we've more than | | 16 | satisfied our pleading burden to demonstrate that Lamp | | 17 | Capital is, in fact, the alter ego of the debtor. | | 18 | And by the way, the second requirement of the | | 19 | alter ego analysis that the entity be used for a fraudulent | | 20 | or otherwise unjust purpose is also satisfied. | | 21 | Again, Lamp Capital, consistent with a number of | | 22 | the other entities that this court is familiar with that are | | 23 | involved in this case, was used as an instrumental part of | | 24 | the debtor's shell game in order to help fund his lifestyle, | | 25 | pay his expenses, transfer funds to his other companies, to | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 21 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 21 | | 1 | his family, to his relatives. It was an instrumental part | | 2 | of keeping assets from his creditors and that more than | | 3 | satisfies that second requirement of the alter ego analysis. | | 4 | In response to the motion for default judgment, | | 5 | Your Honor, the defendants I would say don't really -- they | | 6 | don't really respond to the motion for a default judgment | | 7 | per se other than to assert their Rule 55(c) motion to | | 8 | vacate the default. | | 9 | And as the Court is now well familiar from | | 10 | argument we've had in the HK -- HCHK adversary proceeding, | | 11 | there, in the Second Circuit, are three primary elements | | 12 | that a court will consider in determining whether a movant | | 13 | has satisfied its burden of demonstrating good cause to | | 14 | vacate a default. | | 15 | The first is whether the default was willful. The | | 16 | second is whether the movant has a meritorious defense. And | | 17 | the third, which need not be considered if there is no | | 18 | meritorious defense, is whether there is prejudice to the | | 19 | plaintiff. I'll take each of those elements quickly in | | 20 | turn. | | 21 | As to willfulness, despite what you would see in | | 22 | the papers and despite arguments that have been made by | | 23 | others, under Second Circuit law there is no requirement to | | 24 | show bad faith, which I don't know that that matters, | | 25 | because I would argue there is bad faith here anyway. But |

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| | 111 | |----|---------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 22 | | 1 | clearly under Second Circuit law bad faith is not required. | | 2 | Rather, what the courts look at, and you can look | | 3 | at the Bricklayers case, Second Circuit from 2015 that we | | 4 | cite in our papers, is it requires conduct that is, quote, | | 5 | "Not satisfactorily explained deliberate conduct. Conduct | | 6 | that is not excusable based on mere mistake or negligence." | | 7 | In response -- in their motion for -- to vacate | | 8 | the default judgment, Your Honor, all Lamp Capital and | | 9 | Infinity Treasury Management do is they have asserted in a | | 10 | brief filed by counsel, with no supporting affidavit, no | | 11 | statement from any individual, no sworn testimony from any | | 12 | representative of these entities, they have simply stated | | 13 | that notwithstanding that service was proper, they did not | | 14 | have actual notice of the complaint and, therefore, they | | 15 | were unable to respond on time. | | 16 | Your Honor, under the circumstances of these | | 17 | defendants and of this case, that is woefully insufficient | | 18 | for these defendants to satisfy their burden to demonstrate | | 19 | that the default was not willful. | | 20 | Again, service was proper. | | 21 | And critically here, Your Honor, these defendants | | 22 | are not at all strangers to this Chapter 11 case. They are | | 23 | ultimately owned by the debtor's son who undoubtedly, no | | 24 | question, has knowledge about this Chapter 11 case. Lamp | | 25 | Capital also funded the case by paying Brown Rudnick's legal | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 23 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 23 | | 1 | fees prior to the case's commencement. | | 2 | Lamp Capital and Infinity Treasury Management have | | 3 | been named in numerous pleadings that the Trustee has filed | | 4 | in adversary proceedings and otherwise. | | 5 | Based on those circumstances, there is no credible | | 6 | argument that these entities had no idea that this | | 7 | litigation was commenced. | | 8 | And what's most telling about all of this is that | | 9 | not only is there no affidavit, no sworn declaration, but | | 10 | the brief submitted by counsel that simply says they didn't | | 11 | have actual notice doesn't contain any of the background or | | 12 | surrounding information. | | 13 | There is nothing at all in the brief about how or | | 14 | when these defendants ultimately did receive actual notice | | 15 | of the complaint because obviously they have it now, they're | | 16 | here. | | 17 | There's no statement about who all of a sudden | | 18 | alerted, allegedly, Lamp Capital and Infinity Treasury | | 19 | Management to this complaint. | | 20 | We had a meet and confer with counsel on December | | 21 | 22nd I believe it was, or thereabouts, when he first | | 22 | contacted the Trustee, after the deadline to respond to the | | 23 | complaint, and we asked when were you first contacted about | | 24 | this engagement, and by whom, and the response was they had | | 25 | no answer. | | | |

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Ho Wan Kwok - January 23, 2024 24 Your Honor, there are basic details that absolutely need to be explained for these defendants to even come close to meeting their burden on the first factor. Turning to the second factor, Your Honor, this is whether there's a meritorious defense to the causes of action, the case law on this element is very clear that something more than a conclusory denial is required. Defendants, rather, must come forward with evidence to show their defense. You can look at the *Bailey's Express* case that we cite, quote, "Formulaic recitations of affirmative defenses fall short." In that case, the defendant filed an answer with its motion to lift the default, along with nine affirmative defenses, the Court still said that was not enough because it was simply boilerplate denials. Cases are legion in supporting that same proposition. *State Street Bank*, Second Circuit 2004, 374 F.3d. 158, same concept. *Sony Corporation*, Second Circuit 1986, all these are cited in our papers, same concept. Here, Your Honor, we don't have any facts of any kind to suggest that, you know, Lamp Capital and Infinity Treasury Management are actual operating companies that have independence from the debtor, that have, you know, bank accounts that they use for particular purposes or, you know, lines of operations that they use for investing, employees,

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 25 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 25 | | 1 | all the basic facts that any real, legitimate, independent | | 2 | entity would know, you see none of that. | | 3 | I think that's extremely telling because there is | | 4 | no person there. There is no individual who could come and | | 5 | testify to those facts, both because that person doesn't | | 6 | exist and because it wouldn't be true. Because it didn't do | | 7 | anything. It was a slush fund for the debtor. | | 8 | What you have instead in response to the complaint | | 9 | in the 55(c) motion, are effectively 12(b)(6) failure to | | 10 | state a claim arguments. | | 11 | And I think that's significant because A, it's | | 12 | telling about the fact that there's no defense on the facts, | | 13 | and B, it is absolutely 100 percent appropriate for the | | 14 | Court to consider and decide those types of arguments on a | | 15 | 55(c) motion. Courts do it all the time. That's the entire | | 16 | point. | | 17 | In determining whether a meritorious defense | | 18 | exists as a matter of law, the Court has to look at if these | | 19 | defenses that are raised, legal defenses, whether they | | 20 | actually have merit or not. | | 21 | If you look at the State Street Bank case that I | | 22 | cited, Second Circuit 2004, there is an extensive, several | | 23 | page analysis of the legal issues and arguments raised by | | 24 | the movant in its 55(c) motion. The Court analyzed them and | | 25 | said that denial of the motion was proper because a thorough |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 26 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 26 | | 1 | analysis of those defenses reveals that they fail. And | | 2 | that's the case for each of the defendant's arguments here. | | 3 | They argue that Infinity Treasury Management is | | 4 | not a proper defendant to the complaint because the Trustee | | 5 | pleads few allegations against it. | | 6 | But Your Honor, as I described, the Trustee's | | 7 | argument and theory in the case is that Lamp Capital is the | | 8 | debtor's alter ego and that Infinity Treasury Management is | | 9 | the nominal owner of Lamp Capital. | | 10 | Infinity Treasury Management is obviously a | | 11 | defendant in the complaint because the Trustee needs relief | | 12 | against it. It is holding property, i.e., an ownership | | 13 | interest in Lamp Capital that has to be turned over. That's | | 14 | fundamental bankruptcy turnover law. Of course they're a | | 15 | defendant. | | 16 | The defendants also argue, they make -- they make | | 17 | a couple of arguments that this court has heard in the past | | 18 | and already rejected. | | 19 | One of them is the argument that under Delaware | | 20 | law, there, by definition, cannot be an alter ego finding | | 21 | here because the debtor is not alleged to have been the | | 22 | nominal owner or an officer or director of these entities. | | 23 | The Court already addressed that in HK (USA) and | | 24 | rejected it. There is no such requirement under Delaware | | 25 | law that that type of relationship exist in order for an |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 27 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 27 | | 1 | entity to be found to be the alter ego of another. | | 2 | They also argue, Your Honor, that this case is | | 3 | distinguishable from the HK (USA), and they argue that that | | 4 | must be some reason for the claims here to fail. But this | | 5 | argument, Your Honor, proves nothing. | | 6 | As they correctly point out, yes, the cases are | | 7 | different. HK (USA) was a shell company that held title to | | 8 | a single asset of the debtor. Lamp Capital is an entity | | 9 | that the debtor used as a shell company to fund his lavish | | 10 | lifestyle, to use it as his personal piggy bank. | | 11 | The debtor had at least two types of shell | | 12 | companies that he used as part of his shell game to avoid | | 13 | creditors. One classic entity is HK (USA), which held title | | 14 | to an asset. Or Greenwich Land, which we've alleged did the | | 15 | same for his home in Connecticut. Or Bravo Luck, which held | | 16 | title to the apartment in New York. | | 17 | Other types of entities are those that he used as | | 18 | his slush funds to transfer assets to and from other shell | | 19 | companies to pay for expenses. One of those, a significant | | 20 | one of those, is Lamp Capital. Different facts, but no less | | 21 | an alter ego. | | 22 | The final defense that they raise in the nature of | | 23 | a motion to dismiss for failure to state a claim is the in | | 24 | pari delicto in Wagoner rule defenses, which, again, this | | 25 | court has already considered and rejected in the HK (USA) | | | |

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| | 111 | | | | | | |----|----------------------------------------------------------------|----|--|--|--|--| | | Ho Wan Kwok - January 23, 2024 | 28 | | | | | | 1 | adversary proceeding. | | | | | | | 2 | As the Court correctly concluded, those defenses | | | | | | | 3 | do not apply to a defense, sorry, to a claim brought by the | | | | | | | 4 | Trustee under Section 544(c) of the Bankruptcy Code on | | | | | | | 5 | behalf of creditors. Moreover, the insider exception to the | | | | | | | 6 | in pari delicto doctrine also applies in this case. | | | | | | | 7 | So Your Honor, for all of those reasons, there is | | | | | | | 8 | no meritorious defense. All the arguments essentially have | | | | | | | 9 | either been rejected by this court previously, or very | | | | | | | 10 | clearly fail on their merits because the Trustee has more | | | | | | | | | | | | | |

than satisfied his pleading burden of demonstrating that if his allegations are true, he is entitled to relief as a matter of law.

Because of that, the case law is very clear that the Court need not even consider whether there's prejudice to the Trustee. Cases, again, are legion in that regard. The *Bricklayers* case that I mentioned before. The *Bailey's Express* case. *Global Metallurgical* cited in our papers, 327 B.R. 182. All of those cases, and many others, stand for that proposition.

However, if the Court were to consider prejudice, I think there is no doubt that there is, in fact, prejudice to the Trustee here. And what you'll see in the papers is, well, delay alone cannot be prejudice.

But, here, we're talking about a lot more than

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 29 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 29 | | 1 | simply delay. We're talking about gamesmanship by parties, | | 2 | as I said at the outset, who are selectively deciding when | | 3 | to avail themselves of this court, when to participate in | | 4 | the legal process, and when not to. | | 5 | And that's especially significant here where you | | 6 | have defendants who are asserting, essentially pleading, | | 7 | arguments that the Trustee has failure -- has failed to | | 8 | state a claim for relief in his complaint. | | 9 | And those same defendants are the ones who ducked | | 10 | 2004 discovery and subpoenas previously, which the Trustee | | 11 | is entitled to as a matter of law and pursuant to court | | 12 | orders, and would have been able to use the results of in | | 13 | pleading his complaints. | | 14 | They can't duck the discovery obligations that | | 15 | they owe to this court and to the Trustee and then come in | | 16 | belatedly later and ask for the mercy of the Court and to | | 17 | participate. | | 18 | Notably, we heard nothing from the defendants when | | 19 | they first reached out to us, or through today, about how | | 20 | they were going to cure the contempt order that they're | | 21 | already under, which they obviously can't do at this point | | 22 | anyway. | | 23 | But Your Honor, there is real prejudice if the | | 24 | Court allows this type of conduct to persist. The | | 25 | obstruction that the Trustee has seen from day one in this | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 30 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 30 | | 1 | case is only going to continue and it's only going to get | | 2 | worse. | | 3 | And we also have significant concerns about | | 4 | spoliation of discovery given that these parties have | | 5 | refused to comply in the past. | | 6 | I don't know why the Court would think that | | 7 | they're likely to comply with their discovery obligations in | | 8 | this adversary proceeding, so there is prejudice under these | | 9 | circumstances. | | 10 | But, as I said, it need not be found by the Court | | 11 | to enter a default given that the other elements have not | | 12 | been satisfied. | | 13 | Your Honor, that's all I have at the moment, | | 14 | unless the Court has any questions. | | 15 | THE COURT: I'm just looking to see if I have any | | 16 | questions. I think I do not, but I would just like to | | 17 | confirm that. I do not have any questions at this time, | | 18 | Attorney Bassett. Thank you. | | 19 | MR. BASSETT: Thank you, Your Honor. | | 20 | THE COURT: Who's going to respond first. | | 21 | MR. GRAND: Your Honor, Robert Grand -- | | 22 | THE COURT: Okay. | | 23 | MR. GRAND: -- from Lax & Neville on behalf of | | 24 | Lamp and Infinity Treasury. | | 25 | THE COURT: You just need to speak more clearly | | | |

Ho Wan Kwok - January 23, 2024 31 and closely to the microphone, sir, because I cannot hear you. MR. GRAND: Sure. I can approach over there if that makes it easy. THE COURT: Sure. Thank you. MR. BASSETT: And Your Honor, just to be clear, I did not address the Leading Shine 55(c) motion yet because that's not -- THE COURT: Right. MR. BASSETT: -- subject to our motion for a default judgment. THE COURT: We're just dealing with the default judgment motion right now. MR. BASSETT: Thank you, Your Honor. MR. GRAND: Do you want me to respond to that part, or do you want to have -- THE COURT: Well -- MR. GRAND: -- Trustee's counsel address the Leading Shine motion? THE COURT: -- I want the parties who should be responding to the motion for a default judgment to respond, which are Lamp Capital and Infinity. MR. GRAND: Good afternoon, Your Honor. Again, Robert Grand from Lax & Neville on behalf of Lamp Capital and Infinity Treasury Management. Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 31 of

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Ho Wan Kwok - January 23, 2024 32 So I just want to start with Trustee's counsel's first assertion that these defendants did not essentially respond to the default judgment motion, but only advocated in favor of the application to set aside the default. The reason why the arguments were set forth that way is because the law is clear that when a motion for -- to set aside a default is filed before the default judgment is entered, the standard that the Court should apply in determining whether the default should be set aside is governed by Rule 55(c), not Rule 60(b), which governs default judgment. And the law, Second Circuit law, is clear from the *Enron* case 20 years ago, through cases in this court, and in the District of Connecticut issued within the last year, that the standards, while the factors are the same, whether or not the default was willful, whether or not the plaintiff will suffer prejudice if the default is set aside, and whether or not the defendant has asserted a meritorious defense, all the factors are the same, when addressing a Rule 55(c) motion, the Court applies those standards much less rigorously than if a judgment had already been entered and the defendant is seeking to set aside a default judgment.

So from that framework, the motion to set aside the default addresses those factors, and also was submitted,

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 33 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 33 | | 1 | the brief that we submitted was submitted also in opposition | | 2 | to the default judgment. | | 3 | But really we don't need to get to the default | | 4 | judgment aspect of it because we first need to decide | | 5 | whether or not the default should be set aside. It's a two | | 6 | step process. | | 7 | So as we set forth in our papers, it seems clear | | 8 | that when applying those standards and giving the deference | | 9 | that courts give to resolving cases on their merits, rather | | 10 | than through defaults, that these defendants have met each | | 11 | of those -- have satisfied each of those factors and that | | 12 | they weigh in their favor. | | 13 | There's no possible way that the failure to | | 14 | respond to the complaint in this case can be determined to | | 15 | be willful because, as we set forth in our papers, the | | 16 | defendants had no notice of the complaint. | | 17 | THE COURT: What do you mean by that, had no | | 18 | notice of the complaint, they were served with the | | 19 | complaint. | | 20 | MR. GRAND: Well, with respect to Infinity | | 21 | Treasury Management, the Trustee alleges that he served | | 22 | their registered agent in New Jersey -- in Delaware. The | | 23 | registered agent in Delaware responded to the Trustee's | | 24 | counsel and said -- | | 25 | THE COURT: I understand. | | | |

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| | 111 | |----|---------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 34 | | 1 | MR. GRAND: -- that Infinity Treasury Management | | 2 | is not active. We don't have any contact information for | | 3 | them. We can't find them. | | 4 | THE COURT: I understand. | | 5 | MR. GRAND: We can't deliver this complaint to | | 6 | them, so we're returning it to you. | | 7 | THE COURT: I understand that. | | 8 | MR. GRAND: So Infinity Treasury Management -- | | 9 | THE COURT: But under law, your corporation has an | | 10 | obligation to have an agent for service of process. And if | | 11 | your corporation, your client, didn't correct that issue, | | 12 | then that's your client's problem. | | 13 | The law doesn't say that that doesn't result -- | | 14 | show me a case where it says the law says that that equals | | 15 | your argument, that it's not notice even though this agent | | 16 | was served, the agent that your client listed as the agent | | 17 | for service of process? | | 18 | MR. GRAND: The issue is notice, not service. | | 19 | Nobody -- | | 20 | THE COURT: No. The issue isn't notice. Where's | | 21 | the issue of notice, Counsel? It was served. | | 22 | MR. GRAND: Right. | | 23 | THE COURT: It has to be served under the Federal | | 24 | Rules of Civil Procedure -- | | 25 | MR. GRAND: Right. | | | |

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| | 111 | | |---|---------------------------------------------------|----| | | Ho Wan Kwok - January 23, 2024 | 35 | | 1 | THE COURT: -- with a complaint, which you were | |

under Rule 4, right?

MR. GRAND: Correct.

THE COURT: Okay. So where do you get to notice?

MR. GRAND: Notice is the -- is whether or not the

default was willful, you have to have notice of a complaint. THE COURT: You were served with the -- are you --

MR. GRAND: But nobody from the company ever

received it, so they didn't --

THE COURT: And who -- that's your company's problem.

Show me a case that says what you just said. I'd like to see it.

MR. GRAND: Sure. In *Nature's First* case that we cite, which is at --

THE COURT: Okay. Hold on a second. I really -- I'm serious. It's no problem. I want to see exactly what you're citing, so I want to make sure we're all on the same page.

MR. GRAND: Page 5 of our brief, Your Honor. THE COURT: I don't want the brief. I'm going to look at the case -- MR. GRAND: Okay. THE COURT: -- so hold on a second.

MR. GRAND: Sure.

Ho Wan Kwok - January 23, 2024 36 THE COURT: Okay. So what is the cite of your -- of the case, please. MR. GRAND: 436 F. Supp. 2nd. 368 at 374-375, it's a District of Connecticut case from 2006 in which -- THE COURT: Hold on a second. Let me get there. *Nature's First*. MR. BASSETT: Could I have the paragraph number of the brief, please. MR. GRAND: It's on page 5. I think it's paragraph 12 where this argument is addressed. THE COURT: Okay. So tell me where in the brief, I'm sorry, Counsel, in the opinion -- MR. GRAND: On pages 374-375. THE COURT: Okay. Give me one second, please. MR. GRAND: And that case was a default judgment actually, and that default judgment was vacated, where the defendant was aware that the action had been filed against -- was not aware, excuse me, that the action had been filed against it until after the plaintiff had obtained a default judgment. THE COURT: Okay. Hold on a second, please. 373 and 374? MR. GRAND: 374-375. THE COURT: So I'm looking at 373 where it says the affidavit submitted by the defendant, and there were no Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 36 of

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 37 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 37 | | 1 | affidavits submitted by the defendant in connection with | | 2 | these motions, denied that service was made. That's what | | 3 | the -- on page 373, this decision says, before you get to | | 4 | your 374 and 375. | | 5 | So Judge Dorsey found that he relied on an | | 6 | affidavit by a defendant that denied service was made. I'm | | 7 | looking at the first, full paragraph on page 373 of Nature's | | 8 | First, Inc. vs. Nature's First Law, Inc. | | 9 | So that's a factual issue that's not present in | | 10 | this case. You haven't denied that service was made. No | | 11 | one has denied that service was made. And none of the | | 12 | defendants have filed any affidavits to support the | | 13 | assertions in response to the motion for default judgment. | | 14 | So go ahead, what else have you got? | | 15 | MR. GRAND: Well, there's another case that we | | 16 | cited there too, the Global Mining, Global Gold Mining case. | | 17 | THE COURT: Okay. Give me a moment. What's the | | 18 | cite on that? | | 19 | MR. GRAND: That case is 983 F. Supp. 2d. 378 -- | | 20 | THE COURT: 983 -- | | 21 | MR. GRAND: -- at 387. There are also several | | 22 | other cases, Your Honor. | | 23 | THE COURT: Hold on. 983 F. Supp. 2d at what? | | 24 | MR. GRAND: 387. It's a Southern District of New | | 25 | York case which was affirmed by the Second Circuit. | | | |

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| | 111 | |----|--------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 38 | | 1 | THE COURT: Well, there was a lack of personal | | 2 | jurisdiction in that case according to this decision that | | 3 | I'm looking at, so there was a finding that there was a lack | | 4 | of personal jurisdiction. | | 5 | Where in this case do you want me to look? | | 6 | MR. GRAND: They're showing that -- that case held | | 7 | that a showing under default was inadvertent, is sufficient | | 8 | to -- | | 9 | THE COURT: Tell me where, what page? | | 10 | MR. GRAND: 387. | | 11 | THE COURT: Okay. Just give me a moment, please. | | 12 | So 387, the bottom of 386 onto page 387, starts | | 13 | because the lack of personal jurisdiction mandates vacature | | 14 | of the default judgment under Rule 60(b)(4), the remaining | | 15 | arguments are rendered moot. That's the -- that's the | | 16 | section that you're citing me to. | | 17 | So what else do you want me to read there? | | 18 | MR. GRAND: Your Honor, I don't have that case in | | 19 | front of me unfortunately, but I -- there are multiple | | 20 | cases, multiple cases, that I'm happy to bring to Your | | 21 | Honor's attention that -- | | 22 | THE COURT: Well, you've already brought them to | | 23 | my attention in your brief. | | 24 | MR. GRAND: Well, I have -- | | 25 | THE COURT: I'm asking you right now, I asked you | | | |

Ho Wan Kwok - January 23, 2024 39 specifically, what case holds what you just stated, which is that you have a -- you have to have a lack of notice, not service? That was my question to you. Because there is no assertion in any of these pleadings that you've filed, that any of the defendants have filed, that they weren't served with the complaint. And there's no -- and there are no affidavits of any of the defendants. And the time to do all that has already passed. MR. GRAND: Respectfully, there's no -- there's no requirement under -- THE COURT: Well, how am I going to find a fact that your client didn't have notice if your client isn't going to swear that they didn't get notice and that they weren't served? How am I going to find -- I already found, the default already entered based upon the review of how service was made under the Federal Rules of Civil Procedure and the applicable rules of the state law governing how service needed to be made on these defendants. So your job then would be to controvert that. And your argument to the Court at this point is not that you -- it's not that you weren't served, it's that you didn't have actual notice. And so I asked you where in the cases that you've cited does it hold, does the Second Circuit Court of Appeals Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 39 of

Ho Wan Kwok - January 23, 2024 40 hold, that you have to have actual notice, and you haven't been able to show me one yet. MR. GRAND: Your Honor, if -- I can -- I can certainly deliver those cases. We did not have -- THE COURT: It's not an issue of delivery. You're here right now. MR. GRAND: I understand. THE COURT: This is the argument. MR. GRAND: We didn't have an opportunity to submit a reply. We got these opposition papers on Friday night and, you know, that was one day, one business day, before the hearing. I'm happy to -- THE COURT: The default entered -- when did the default enter, Counsel? The default entered -- MR. GRAND: In the middle of December I believe. THE COURT: I'll tell you. We'll go back and figure it out. MR. GRAND: I think the default entered on December 14th. MR. BASSETT: That's right. THE COURT: Yeah. December 14th. It's January 23rd. MR. GRAND: Yes. THE COURT: So you've had time. MR. GRAND: To? As soon as we were engaged, we Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 40 of

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 41 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 41 | | 1 | reached out to the Trustee's counsel and conversing with | | 2 | them. | | 3 | THE COURT: We don't know when you were engaged. | | 4 | And by the way -- and Lamp Capital already | | 5 | appeared in the main case. They were represented by counsel | | 6 | at the beginning of this case in 2022. | | 7 | So when you say as soon as you were -- you know, | | 8 | you have to think a lot about -- | | 9 | MR. GRAND: In this -- not in -- in this case? | | 10 | THE COURT: In the main case, Counsel. The | | 11 | adversary proceeding is another case within the main case. | | 12 | MR. GRAND: Right. Right. In a proceeding in New | | 13 | York before it was transferred here. | | 14 | THE COURT: No, no, no, no, no, no. In here in | | 15 | Connecticut. I can go back to the main case in this -- in | | 16 | Mr. Kwok's Chapter 11 case and I can find for you, it will | | 17 | take me a few minutes, but I can find for you the notice of | | 18 | appearance that was filed on behalf of Lamp Capital. Okay? | | 19 | They already appeared in Mr. Kwok's case and then suddenly | | 20 | decided to withdraw their appearance. | | 21 | So no, not when it was in New York. When it was | | 22 | in this court when Mr. Kwok was the -- was the debtor in | | 23 | possession before the Trustee was appointed. | | 24 | MR. GRAND: I mean, look, Your Honor, as I | | 25 | explained, we were engaged at the end of December -- | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 42 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 42 | | 1 | THE COURT: I'm not suggesting anything about you. | | 2 | MR. GRAND: We're new. We're getting -- | | 3 | THE COURT: I'm saying the facts are what the | | 4 | facts are, right? | | 5 | MR. GRAND: Right. | | 6 | THE COURT: When you came into the world to become | | 7 | part of this, the facts surrounding Lamp Capital already | | 8 | existed. You had no control over that. I understand that. | | 9 | MR. GRAND: Right. | | 10 | THE COURT: I'm not suggesting anything to the | | 11 | contrary. However, facts existed. Lamp Capital funded the | | 12 | retainer of the debtor's in possession's counsel. That was | | 13 | all disclosed to this court in pleadings filed under penalty | | 14 | of perjury. Okay. Then Lamp Capital also had appearance of | | 15 | counsel in Mr. Kwok's case. | | 16 | So I understand the arguments that you're making. | | 17 | But my question to you was, which I still don't | | 18 | have an answer to, so I'm beginning to believe there isn't | | 19 | an answer, which is where is a case that says that you have | | 20 | to have actual notice, because I have never seen one. | | 21 | Because otherwise -- | | 22 | MR. GRAND: I can supply you with one. | | 23 | THE COURT: -- you would defeat the whole purpose | | 24 | -- | | 25 | MR. GRAND: I don't have -- | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 43 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 43 | | 1 | THE COURT: -- you'd defeat the whole purpose of | | 2 | Rule 55, that's what you'd be -- | | 3 | You're saying I have to have actual notice? Then | | 4 | what's the point of Rule 55? There's no point. | | 5 | You're taking the policy of Rule 55 and throwing | | 6 | it out the window and saying -- and there's nothing in any | | 7 | Second Circuit case that I've seen that says that the | | 8 | defendant has to have actual notice. It makes no sense, | | 9 | Counsel. It makes absolutely no sense. | | 10 | Because that's the whole reason you have an agent | | 11 | for service of process. You are a corporate entity. You | | 12 | have to file certain documents and follow corporate | | 13 | regulations and statutes in order to be granted the benefits | | 14 | of being a corporate entity. And one of those burdens of | | 15 | being a corporate entity is you have to have an agent for | | 16 | service of process. | | 17 | And to be -- and to come here and say, well, we | | 18 | didn't have an agent for service of process in place | | 19 | anymore, that's the company's problem. | | 20 | MR. GRAND: That's not what I -- that's not what | | 21 | -- | | 22 | THE COURT: Well, that's what you just said. | | 23 | MR. GRAND: No. | | 24 | THE COURT: You just said -- | | 25 | MR. GRAND: No. | | | |

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| | 111 | | | | | |----|---------------------------------------------|-------------------------------------------------------------|--|--|--| | | | Ho Wan Kwok - January 23, 2024 44 | | | | | 1 | THE COURT: | No, you did. Because you said | | | | | 2 | | counsel's even admitted that he got a response from the | | | | | 3 | | agent of service of process who says they don't have a -- | | | | | 4 | they're not their registered agent anymore. | | | | | | 5 | MR. GRAND: | No. That's not what they said. | | | | | 6 | THE COURT: | What did they say then? | | | | | 7 | MR. GRAND: | They said that we can't find Infinity | | | | | 8 | Treasury Management. | They are no longer active in Delaware. | | | | | 9 | | And we don't have any contact information for -- to deliver | | | | | 10 | the complaint -- | | | | | | 11 | THE COURT: | Right. | | | | | 12 | MR. GRAND: | -- that you served on us. | | | | | 13 | THE COURT: | All right. But that doesn't mean that | | | | | 14 | it wasn't served. | | | | | | 15 | MR. GRAND: | So they're a defunct entity. I didn't | | | | | 16 | -- | | | | | | 17 | THE COURT: | It doesn't mean it wasn't served. | | | | | 18 | MR. GRAND: | We're not contesting service. | | | | | 19 | THE COURT: | Well, then you don't -- | | | | | 20 | MR. GRAND: | I can -- | | | | | 21 | THE COURT: | -- have an argument on notice. | | | | | 22 | Where's the -- show me a case. | | | | | | 23 | MR. GRAND: | I don't have it in front of me today. | | | | | 24 | THE COURT: | Well, that's -- | | | | | 25 | MR. GRAND: | Your Honor -- | | | | | | | | | | |

Ho Wan Kwok - January 23, 2024 45 THE COURT: -- today's the day. MR. GRAND: -- we did not have an opportunity to submit -- THE COURT: Today's the day. MR. GRAND: I can happily supply you with -- THE COURT: I don't want you -- I don't -- this -- MR. GRAND: -- multiple cases that stand for that proposition. THE COURT: Okay. Well, I think you're wrong. And you go ahead and make the rest of your argument then. MR. GRAND: Okay. So that argument is, obviously, those two defendants, which we believe are inactive companies, could not have responded to a complaint that they never actually received, so the failure to do so was not willful. And then it's upon learning about that complaint, they, the entities, sought to retain counsel and immediately sought to defend against the merits of the case. So when it comes to the next factor, legal prejudice, there's really no meaningful delay here in this case that would fall under -- that would cause that factor to weigh in favor of the Trustee. Excuse me for one minute. As we explained in our papers, as soon as we were engaged, reached out to Trustee's counsel, and sought to get

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| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 46 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 46 | | 1 | more time to respond to the complaint. This was Friday, on | | 2 | December 22nd, the Friday before the Christmas holiday. And | | 3 | when we finally did connect later in that day, my colleague | | 4 | was unavailable. | | 5 | And in any event, Mr. Lindsey, Trustee's counsel, | | 6 | said that if we wanted to discuss any of the merits in terms | | 7 | of getting more time, the default, any of the procedural | | 8 | posture of the case, we'd need to loop in New York counsel, | | 9 | the Paul Hastings folks. | | 10 | So Mr. Lindsey followed up with an email to me on | | 11 | Saturday night, the next night, looping in Trustee's | | 12 | counsel. We reached out to them on the 26th, the day after | | 13 | Christmas, sought to have a conversation. And I think I | | 14 | sent an email. And 15 or 20 minutes after I sent the email, | | 15 | before I heard a response, the motion for default judgment | | 16 | was filed. | | 17 | We did speak the next day. And when we conferred | | 18 | the next day, we, you know, said that we were appearing on | | 19 | behalf of Infinity and on behalf of Lamp, sought additional | | 20 | time to respond to the complaint, sought to have the Trustee | | 21 | withdraw the default because the defendants were intending | | 22 | to defend the case on the merits, and the Trustee declined | | 23 | to do that. | | 24 | We then filed our move to get admitted as quickly | | 25 | as we could during the holiday week, filed our appearances |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 47 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 47 | | 1 | as quickly as we could, and timely filed our motion for -- | | 2 | to set aside the default well in advance of the deadline | | 3 | that the Court had set to respond to the motion for a | | 4 | default judgment. | | 5 | So there's really no meaningful delay here that | | 6 | would cause any prejudice to the Trustee should they have to | | 7 | reopen the default and prosecute the case on the merits. | | 8 | And, indeed, the case law is clear that having to prosecute | | 9 | a case on the merits is not sufficient prejudice when | | 10 | opposing a motion to vacate a default. | | 11 | And so, you know, the other prejudice that the | | 12 | Trustee argues it will suffer in terms of what the standard | | 13 | is, excuse me, is that the non-defaulting party here must | | 14 | show that it will -- its ability to prosecute its case will | | 15 | be impeded by either the loss of evidence, or increased | | 16 | difficulties with discovery, or a greater opportunity for | | 17 | fraud and collusion, and there's no showing here of any of | | 18 | those things. I mean, the -- | | 19 | THE COURT: Hasn't your client already been held | | 20 | in contempt by this court for failure to comply with | | 21 | discovery, Counsel? | | 22 | MR. GRAND: Yes. | | 23 | THE COURT: Okay. | | 24 | MR. GRAND: And if we -- and that's -- I | | 25 | understand that, but that hasn't -- but opening the default | | | |

Ho Wan Kwok - January 23, 2024 48 won't -- the Trustee needs to show that opening the default will result in additional, you know, loss of discovery, and that sort of makes no sense. I don't have -- you know, I don't -- we were not involved, you know, a year ago when Infinity -- or when Lamp was served was this Rule 2004 subpoena. I don't know why it didn't respond one way or another. But we're here now. We're happy to respond to those discovery requests and to do discovery in the context of the case as a party. So I -- there's really no evidence or showing that -- that there's going to be any -- just the opposite. Now that -- now that -- you know, I mean, look, the Trustee has already, you know, uncovered -- THE COURT: Couldn't your client have already provided all the information to the Trustee in order to purge itself of contempt? You now -- you now want the default set aside so that they're going to have to serve discovery requests to which you're going to oppose? That's what your -- that's what your argument is? MR. GRAND: No. My argument is that we will -- we will participate in discovery and comply with whatever's ordered. THE COURT: Well, you're already in contempt of court with regard to discovery, so when are you going to Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 48 of

Ho Wan Kwok - January 23, 2024 49 comply? MR. GRAND: If the -- if Your Honor wants Lamp to comply, we can -- THE COURT: Wait a minute. Let me just stop you right there. If I want? I have -- there's a court order holding your client in contempt for failure to comply with discovery. Don't you think that burden's on you? MR. GRAND: Yeah. And I'm -- what I'm saying is that Lamp Capital will produce documents -- THE COURT: When? When? MR. GRAND: I mean, we have -- we're -- I have to find out what's there. We have to -- THE COURT: Shouldn't you have done that already? MR. GRAND: We're barely in this case, Your Honor. The first thing we need to do is try and set aside the default. THE COURT: It doesn't matter. Under the Federal Rules of Civil Procedure you have initial disclosure obligations, don't you? MR. GRAND: Yes. But -- THE COURT: Yeah. MR. GRAND: -- we're -- I mean, we can -- we're happy to produce those documents. We're happy to look at it. We were not involved when that subpoena was served. I'm not even -- Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 49 of

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Ho Wan Kwok - January 23, 2024 50 THE COURT: I didn't say you were. Counsel, I started by saying before, I understand there are facts that were here in effect that you had nothing to do with. I understand that. But the problem is that doesn't help you. It's there's still the facts. And you can't ignore that those facts exist. MR. GRAND: I'm not trying to ignore them. We need to wrap our hands around them -- THE COURT: Well, then -- but you -- but you haven't -- MR. GRAND: -- which we haven't had sufficient time to do that. THE COURT: What's your -- what's your plan to get your client out of default -- out of contempt? MR. GRAND: Our first plan is to get the client out of default, as Your Honor just mentioned. Once the -- THE COURT: Well, you've already been in contempt well before default. MR. GRAND: I recognize that. And again, I appreciate that there's a lot that's happened in this case before we came on the scene. And I agree we can't control what happened in the past. All we can say is that we are here now on behalf of those two entities and will comply with court orders. We'll comply with discovery obligations. And we'll participate in

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 51 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 51 | | 1 | discovery in a meaningful way. We have -- we're here. | | 2 | THE COURT: Well, I don't know what you mean by | | 3 | that, because you're already subject to a court order. | | 4 | This isn't going to be a situation where the | | 5 | Trustee's going to have to propound discovery and then | | 6 | you're going to get to seek a protective order or a quash, | | 7 | that's not going to happen, Counsel. Your client is already | | 8 | in contempt. | | 9 | MR. GRAND: We understand. | | 10 | THE COURT: So then I don't know what you mean -- | | 11 | MR. GRAND: In other words -- | | 12 | THE COURT: -- when you say you're going to | | 13 | participate in meaningful discovery. I don't understand | | 14 | what that means. You either turn over everything they've | | 15 | already requested, which is subject of the contempt, or you | | 16 | don't. I mean, that, it's that simple. | | 17 | MR. MILLER: Your Honor, may I be heard? | | 18 | THE COURT: No, you may not. | | 19 | MR. MILLER: This is Robert Miller. | | 20 | THE COURT: You've already got one lawyer | | 21 | representing your clients. No. | | 22 | So go ahead, Counsel. | | 23 | MR. GRAND: I mean, as I said, we're just in this | | 24 | case. | | 25 | If the default is not going to be vacated then I'm | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 52 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 52 | | 1 | -- then, you know, I don't know, you know. If there's a | | 2 | judgment that's going to be entered, you know, I don't know | | 3 | where that leaves the discovery obligations. If we're in | | 4 | the case -- | | 5 | THE COURT: The motion -- the contempt order was | | 6 | issued in the main case, so it has nothing to do with | | 7 | whether or not the default gets set aside in this case. | | 8 | Your client is in contempt of this court for failing to | | 9 | comply with discovery obligations under the Federal Rules of | | 10 | Bankruptcy Procedure. | | 11 | MR. GRAND: If Your Honor sets a time, we will do | | 12 | our best to comply with discovery obligations. | | 13 | THE COURT: We don't need -- I don't need to set a | | 14 | time. | | 15 | MR. GRAND: We'll do -- | | 16 | THE COURT: I already set a time -- | | 17 | MR. GRAND: So we will -- | | 18 | THE COURT: -- by the way I think in the original | | 19 | order. | | 20 | MR. GRAND: So we'll do our best to obtain those | | 21 | documents now. | | 22 | But the first thing that we're trying to do in | | 23 | this case, in this adversary proceeding, is set aside the | | 24 | default so that the clients, the entities, can defend the | | 25 | case on the merits. And in that context, we will provide |

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| | 111 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 53 | | 1 | discovery as soon as we can get our hands on this case. We | | 2 | just -- we just appeared. We've just been put in this case. | | 3 | We recognize that a lot has gone on. | | 4 | THE COURT: You didn't just appear though. | | 5 | MR. GRAND: We did. | | 6 | THE COURT: You did. You as lawyers, I agree. | | 7 | MR. GRAND: Yeah. Yes. | | 8 | THE COURT: But Lamp Capital didn't. | | 9 | MR. GRAND: I understand that. And as I said, I | | 10 | can only control what we can control as lawyers now that | | 11 | we're in the case. So I -- we are here. The entities | | 12 | intend to defend the case. And the entities -- | | 13 | THE COURT: And, okay, so let's get to that. | | 14 | What's your meritorious defense? | | 15 | MR. GRAND: So the meritorious defense in this | | 16 | case is that it's -- when it comes to piercing the corporate | | 17 | veil under Delaware law it's very difficult to do. The | | 18 | Trustee in this case tries to sort of lump Lamp and Infinity | | 19 | in with the HK case, and the facts are completely different, | | 20 | as the Trustee acknowledges. | | 21 | In the HK case, the entity had one asset that had | | 22 | already been judicially determined to be beneficially owned | | 23 | by the debtor. That case and that decision was a summary | | 24 | judgment decision after discovery had taken place. There | | 25 | was no dispute that the entity had no officers, directors, | | | |

Ho Wan Kwok - January 23, 2024 54 didn't -- it did not comply with any corporate formalities. It's completely different than the facts of this case. THE COURT: And what has your client done? MR. GRAND: Lamp has officers and directors. Lamp has had bank accounts. THE COURT: Where is that? MR. GRAND: HK didn't. THE COURT: Where is that in the record by the way? Where is any evidence that that's -- it's accurate. MR. GRAND: It's alleged in the complaint. THE COURT: Okay. So you're going to stand on the allegations in the complaint. You're not going to submit any other kind of evidence. You're not going to have anyone from Lamp Capital come testify to support the assertions that this wasn't just an entity that just -- that funds flowed through? MR. GRAND: That's not required for purposes of this motion. THE COURT: I didn't say it was required. I asked you whether you were going to do that? MR. GRAND: We'll defend the merits of the case when we get into it. THE COURT: That's why I asked you what's your meritorious defense? I still don't know what it is. What is it? Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 54 of

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| | 111 | |----|--------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 55 | | 1 | MR. GRAND: That they have -- that they -- that | | 2 | the Trustee will not necessarily be able to establish that | | 3 | Lamp Capital is an alter ego of the debtor. | | 4 | THE COURT: That's not a defense. That's just a | | 5 | denial. What's your defense? | | 6 | MR. GRAND: That's a -- that's a defense. | | 7 | THE COURT: No. That's a denial, Counsel. | | 8 | MR. GRAND: Yeah. | | 9 | THE COURT: What's your defense? | | 10 | MR. GRAND: But that's -- that's sufficient. | | 11 | THE COURT: No. I don't think it is actually | | 12 | under the law. You can't just come in and say they're not | | 13 | going to be able to prove it. That's just a denial. | | 14 | MR. GRAND: Well, we didn't say that. We made the | | 15 | argument based on the different -- the different facts and | | 16 | under the law. Certainly -- | | 17 | THE COURT: What facts? | | 18 | MR. GRAND: The facts that -- the facts that in | | 19 | the complaint -- the facts in the -- | | 20 | THE COURT: The facts in the complaint right now | | 21 | are -- | | 22 | MR. GRAND: Are alleged allegations in the -- | | 23 | THE COURT: -- are true until and unless the | | 24 | default gets set aside. | | 25 | MR. GRAND: Yes. And even under those -- | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 56 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 56 | | 1 | THE COURT: What evidence have you got to prove | | 2 | that they're not true? | | 3 | You have to -- the Second Circuit says you can't | | 4 | just come forward and say they're not going to be able to | | 5 | prove it. And that's what you're saying. Your meritorious | | 6 | defense is they're not going to be able to prove it. | | 7 | Well, right now it's proven under the Federal | | 8 | Rules of Civil Procedure. It is -- those are the facts. | | 9 | Unless and until the default gets set aside, those are the | | 10 | facts. That's what the law -- the law is very clear about | | 11 | that. | | 12 | So your job is to show the Court what is your | | 13 | meritorious defense? And if -- and if your answer is that | | 14 | they aren't going to be able to prove it, fine, then that's | | 15 | your answer. | | 16 | MR. GRAND: Yes. | | 17 | THE COURT: Okay. Fine. | | 18 | MR. GRAND: Our answer is that they will need to | | 19 | make that showing that it's -- that there's -- alter ego | | 20 | liability will attached, and we don't believe that they're | | 21 | going to make -- be able to prove that. And the facts as | | 22 | alleged in the complaint are insufficient, as we say in our | | 23 | papers under Delaware law, to pierce the veil under -- and | | 24 | obtain alter ego liability. | | 25 | Secondly, there's -- there's an in pari delicto | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 57 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 57 | | 1 | defense that can be asserted by both defendants in this case | | 2 | as we argue in our papers. | | 3 | And more than that, there's also the allegations | | 4 | in the complaint are -- there's no allegation of wrongdoing | | 5 | on behalf of Infinity Treasury Management. They're only | | 6 | identified in here as the sole member of Lamp. But Infinity | | 7 | Treasury is not accused of -- of any wrongful conduct. | | 8 | So as we set forth in our papers, you know, under | | 9 | the law, those allegations are deficient as well. | | 10 | THE COURT: Okay. Anything further, Counsel? | | 11 | MR. GRAND: I'll add only that the cases mentioned | | 12 | by the Trustee that they relied on in their papers, the | | 13 | Bailey's Express case, and the -- and the Bricklayers case, | | 14 | are not relevant to this motion because both of those cases | | 15 | involved seeking to set aside default judgments. | | 16 | And in the Bricklayers case, there was no dispute | | 17 | that the defendant was aware of the complaint because its | | 18 | counsel sought additional time to respond, but yet failed to | | 19 | file a responsive pleading for nine months. | | 20 | And that's certainly not the case here. You know, | | 21 | we sought to appear and assert defenses almost as soon as we | | 22 | were engaged and very shortly after the defendants learned | | 23 | of the existence of the complaint. | | 24 | And as well, the Bailey's Express case, the Court | | 25 | found that the default to be willful where the defendant | | | |

Ho Wan Kwok - January 23, 2024 58 failed to appear for five court conferences and months after its counsel had been discussing the case with the plaintiff's counsel in that case. And again, you know, those facts are just not what we have here. You know, as we say in our papers, you know, we understand that shortly after the client learned about -- that the defendants learned about the complaint, we were contacted and sought immediately to step in and try and defend the case on the merits. So I don't think that there could be a finding of willfulness. There's certainly no prejudice as a result of opening the default. There's no evidence or showing that any additional documents are going to be lost or not discoverable. You know, we've said the opposite. And certainly we believe that their defenses to the underlying alter ego claims are -- are meritorious in that the facts of -- the facts in Lamp are not all the same as the facts set forth in HK. And again Your Honor, given that we received the opposition papers late Friday night, I'm happy by the end of the day today to supply the Court with -- THE COURT: No. There'll be no need for any further briefing. MR. GRAND: -- with the evidence, Your Honor. THE COURT: No need for a briefing. I know what Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 58 of

Ho Wan Kwok - January 23, 2024 59 the standards are. I know what the issues are. And I would note for the record that the *Bricklayers* case was a default, not a default judgment. MR. GRAND: I understand, Your Honor. THE COURT: Well, you said just the opposite. MR. GRAND: I understand. I misstated. I meant to say the *Bailey's Express* case and not the *Bricklayers* case. But the fact remains that the -- the *Bricklayers* case was -- there was no responsive pleading filed for nine months after the defense lawyer acknowledged receiving the complaint. That's certainly not anywhere close to the delay that we have in this case. THE COURT: Okay. Anything further, Counsel? MR. GRAND: Nothing, Your Honor. Thank you. THE COURT: Okay. Thank you. Who's going to argue for the remaining defendants, Mr. Romney or Mr. Moriarty? MR. ROMNEY: I am, Your Honor -- THE COURT: Okay. MR. ROMNEY: -- but it's a separate motion, Your Honor. THE COURT: Well, yes, it is. I understand. I just want to make sure I understand who's arguing. MR. ROMNEY: It will be me, Your Honor. Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 59 of

Ho Wan Kwok - January 23, 2024 60 THE COURT: Okay. Thank you. MR. ROMNEY: Thank you. THE COURT: Any further response, Attorney Bassett? MR. BASSETT: Just very briefly, Your Honor. May I approach? THE COURT: Yes. MR. BASSETT: So again, for the record, Nick Bassett from Paul Hastings on behalf of the Chapter 11 Trustee. Your Honor, just a few brief points in response. First, on the willfulness prong of the analysis, obviously the Court had a back and forth with counsel as to whether or not, you know, it matters if his clients received actual notice of the complaint. I would submit for the reasons that Your Honor articulated it does not because their clients unquestionably were served. And as the Court correctly noted, it is their obligation as corporations to have registered agents who are able to accept service of process. But I don't think that the analysis needs to end there. Because even if it didn't matter whether or not they had actual notice, they have to remember that it is their burden to come to this court under Rule 55(c) and demonstrate that their default was not willful. If they're going to come and argue that they did Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 60 of

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| | 111 | |----|---------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 61 | | 1 | not have actual notice, it is incumbent upon them to come | | 2 | forward to the Court and to present a credible explanation | | 3 | sufficient to carry their burden of demonstrating how | | 4 | somehow, despite service being complete and effective, they | | 5 | did not get actual notice and there is absolutely none of | | 6 | that here. | | 7 | There's no affidavit from anyone. There's no | | 8 | specificity even, setting aside the absence of an affidavit, | | 9 | which I think is fatal in and of itself under the | | 10 | circumstances of this case where there's a real question as | | 11 | to whether there's even an individual behind this company. | | 12 | The briefing simply says they didn't have notice. | | 13 | There's no discussion whatsoever as to, okay, well, what are | | 14 | the circumstances that led to no actual notice. If service | | 15 | was complete on the register agents, why is that actual | | 16 | notice was not transmitted to Lamp Capital and to Infinity | | 17 | Treasury Management? | | 18 | Is the argument that, you know, the mail got lost | | 19 | by the mail carrier, that somebody who was supposed to turn | | 20 | it over to the right person at Lamp Capital threw it in the | | 21 | trash, there's none of that. | | 22 | And that's the only situation in which courts ever | | 23 | show lenience in this situation is where there is some | | 24 | credible, detailed explanation as to why they were unable to | | 25 | respond to the complaint. Here, there's none of that. |

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Ho Wan Kwok - January 23, 2024 62 And moreover, again, in counsel's explanation in the briefing we still have no idea when his clients actually, sorry, when his clients and he actually became aware of the complaint. They obviously have actual notice now. When did that happen? There's zero statement in the briefing that explains that. They could have had notice for months as far as we know. I mean, I guess they're alleging that notice came sometime after the answer deadline, but they're not saying when and they're not saying how. I'd also note that it's interesting that the same counsel appeared in this case as counsel for another entity that the debtor, sorry, that the Trustee served with 2004 discovery, an entity called G.S. Security, which is an entity owned by Scott Barnett, whom the Court understands from other proceedings in this case to be the debtor's bodyguard, and whom the Trustee has alleged is another person the Trustee relies upon to nominally hold interest in shell companies for the debtor of which we believe G.S. Security is another. And I say that, and by the way, this was I think in October or November of 2023, and I say that because I'd be curious to know if the person who contacted counsel was the same person for both G.S. Security and for Lamp Capital? I think that would be telling, because the only possible

Ho Wan Kwok - January 23, 2024 63 relationship between those entities is the debtor. There's nothing, again Your Honor. No details. I couldn't imagine a set of facts where the burden has been so -- where the movant has come so far away from meeting their burden. As to prejudice, Your Honor, the first thing I would note is that Your Honor had said that, you know, Lamp Capital, through counsel, had entered an appearance in this case. I will be candid, I don't recall that. Your Honor's memory is much better than mine. And I don't doubt that you're correct. But even if -- even if that weren't the case, even it hadn't entered an appearance through counsel, Lamp Capital funded the debtor's case, as the Court noted, by paying Brown Rudnick's expenses. The discovery in 2004 that the Trustee served on Lamp Capital was in August of 2022, over a year ago, almost a year and a half ago. The Court ordered Lamp Capital to comply with that discovery in January of 2023. It found Lamp Capital in contempt of court in April 2023. Absolutely nothing has been done. To the extent Lamp Capital is going to decide to get counsel and appear in this case, the first thing it should have done, before it even thought about filing a Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 63 of

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| | 111 | |----|-----------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 64 | | 1 | 55(c) motion or appearing in this adversary proceeding, is | | 2 | purge itself of contempt. It hasn't done that. And that's | | 3 | a prejudice that cannot be cured because that was pre | | 4 | complaint discovery you're supposed to get under Rule 2004. | | 5 | It's not happened. And I have zero confidence, | | 6 | and I don't think the Court should have any confidence at | | 7 | all, that if this adversary proceeds this defendant, given | | 8 | the history of the case, would actually comply with its | | 9 | discovery obligations. | | 10 | Lastly, Your Honor, as to the meritorious defense | | 11 | prong, essentially what they're arguing, as the Court noted, | | 12 | it's conclusory denials. What they're really arguing is | | 13 | that we're not going to be able to prove our alter ego | | 14 | allegations. | | 15 | The case law on that is crystal clear, that you | | 16 | can't have a conclusory denial and that some specific | | 17 | evidence to support your defense to the allegations in the | | 18 | complaint is required. | | 19 | I will just end by citing to the Sony case which I | | 20 | mentioned before. That was a case where the | | 21 | defendant/movant actually submitted affidavits by | | 22 | individuals/principals denying the allegations of the | | 23 | complaint and the Court still said that was insufficient. | | 24 | There they had sworn affidavits saying this isn't | | 25 | true and the Court said, sorry, all you're doing is | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 65 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 65 | | 1 | submitting an affidavit denying the allegations. That's not | | 2 | enough under Rule 55(c). | | 3 | Here, the defendants haven't even done that. They | | 4 | haven't come close, Your Honor, and, therefore, the Rule | | 5 | 55(c) motion should be denied, and we would respectfully | | 6 | request that the motion for a default judgment be granted. | | 7 | That's all I have, Your Honor, unless the Court | | 8 | has questions. | | 9 | THE COURT: All right. Thank you. | | 10 | With regard to your statement about Lamp Capital | | 11 | appearing, you could be correct there wasn't a formal | | 12 | appearance, but there was -- but, there might have been. I | | 13 | might be correct. You know. There's 3,000 docket entries. | | 14 | MR. BASSETT: I just wanted to point out that I | | 15 | didn't recall. | | 16 | THE COURT: And in addition to that, however, | | 17 | whether they appeared through counsel or not, they -- it was | | 18 | represented in the DIP financing motion that was filed back | | 19 | in April of 2022 that Lamp Capital was the funding source | | 20 | for the -- may not have been the funding source for the 8.8 | | 21 | million, but was definitely the funding source for the | | 22 | payment of the million dollar retainer to Brown Rudnick. | | 23 | Which had to be disclosed because the United | | 24 | States Trustee's Office and others required the Court, and | | 25 | under the rules, the debtor's counsel, even if the debtor | | | |

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| | 111 | |----|---------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 66 | | 1 | wasn't being paid by the debtor individually, the disclosure | | 2 | of compensation that's required under the rules, the Federal | | 3 | Rules of Civil Procedure -- Federal Rules of Bankruptcy | | 4 | Procedure, excuse me, 2016, and our local rules in the | | 5 | United States Bankruptcy Court for the District of | | 6 | Connecticut requires such disclosure. | | 7 | And so if we go back to the beginning of the case, | | 8 | you know, in the very early days of the case, you would find | | 9 | in the disclosure of compensation for counsel that the -- | | 10 | when I say counsel, I'm talking about Brown Rudnick -- that | | 11 | the -- that the funds were, according to Brown Rudnick, | | 12 | provided by Lamp Capital. | | 13 | And so I'm trying to find it as we talk. | | 14 | But Attorney Claiborn can remember that because | | 15 | the United States Trustee's Office was one of the parties | | 16 | that requested that that disclosure be made. | | 17 | Now, this could be it. Yes. ECF No. 54 filed on | | 18 | March 1st, 2022 in the main Chapter 11 case of Ho Wan Kwok, | | 19 | case number 22-50073. | | 20 | So less than two weeks after the case was filed, | | 21 | the firm was retained, agreed to a retainer of \$1 million. | | 22 | The retainer was paid by wire in two equal installments of | | 23 | 500,000. The first on February 14, 2022, which was the day | | 24 | before the filing, and the second early in the day on | | 25 | February 15th, 2022, prior to the commencement of this case. |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 67 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 67 | | 1 | And the source of the retainer was Lamp Capital, LLC. | | 2 | Lamp Capital, LLC made a million dollar loan to | | 3 | Mr. Kwok. And Mr. Kwok directed Lamp Capital, LLC to remit | | 4 | the proceeds directly to the firm. A signed engagement | | 5 | letter between the firm and Mr. Kwok is attached as Exhibit | | 6 | A. | | 7 | The Exhibit A letter from Brown Rudnick dated | | 8 | February 14, 2022, the day before the filing, talks about | | 9 | you shall deliver to the firm a retainer of \$1 million. You | | 10 | being defined as Mr. Kwok, actually Guo Wengui, also known | | 11 | as Miles Guo. That is the document attached to a pleading | | 12 | that's signed by Guo Wengui, a/k/a Miles Guo, on February | | 13 | 15, 2022. | | 14 | And that was filed, as I said, even in the first | | 15 | -- the case was filed on February 15, this was March 1st, | | 16 | and it was already up to ECF No. 54, and that's the -- from | | 17 | very beginning of the case Lamp Capital was involved. | | 18 | In fact, prior to the case, according to the | | 19 | letter from the debtor's counsel, the first retainer payment | | 20 | was made the day before the case. And then -- and that had | | 21 | -- and that was arranged before the filing of the case. | | 22 | So whether I could have been mistaken, and I very | | 23 | well could have been that there was actually notice of | | 24 | appearance, but I still thought there was. And maybe I'm | | 25 | wrong. | | | |

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| | 111 | |----|-------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 68 | | 1 | But regardless of that, within two weeks of the | | 2 | commencement of the case, Lamp Capital was disclosed as the | | 3 | funding source to Mr. Kwok for the payment of a million | | 4 | dollars of attorneys fee retainer to his Chapter 11 counsel | | 5 | in this court from them. | | 6 | So if I misspoke about the appearance, then I want | | 7 | to correct the record. | | 8 | But I also note for the record that that document | | 9 | that I just referred to, ECF 55, filed in the main case on | | 10 | March 1st, 2022, is an admission that Lamp Capital funded | | 11 | the debtor's attorneys fees for this Chapter 11 case in the | | 12 | amount -- the retainer in the amount of a million dollars. | | 13 | Okay? | | 14 | MR. BASSETT: Thank you, Your Honor. | | 15 | THE COURT: So I just wanted to clarify that for | | 16 | the record. | | 17 | MR. BASSETT: Thank you very much, Your Honor. | | 18 | THE COURT: Thank you. | | 19 | Any further response, Counsel? | | 20 | MR. GRAND: Just to address, briefly, it's -- the | | 21 | initial point that Trustee's counsel made was that it | | 22 | couldn't figure out how the defendants could not have | | 23 | received notice when service was effected on the registered | | 24 | agent. | | 25 | Again, the registered agent literally took that | | | |

Ho Wan Kwok - January 23, 2024 69 complaint that it received it and sent it back to Trustee's counsel and said we don't know where -- the defendant is inactive and we have no forwarding information. So we're not contesting that service was properly effected or was effected on the registered agent, but when Trustee's counsel says it makes no sense that the defendants can argue they didn't receive it, well, the registered agent is telling Trustee's counsel that they didn't receive it because they didn't sent it to them. So there's just -- THE COURT: Then how did you become aware of it? How did you become aware of the complaint then? How did Lamp Capital ever become aware then? MR. GRAND: My understanding is that -- THE COURT: Or Infinity. How did they ever become aware? MR. GRAND: -- Lamp Capital became aware of it through the grapevine of other -- THE COURT: Other matters in these cases? MR. GRAND: -- other matters in these cases, not through directly receiving it. THE COURT: Why would they be in the grapevine of other matters in these cases? MR. GRAND: You mentioned that -- there's not a dispute that Infinity -- THE COURT: Well, Brown Rudnick's been gone since Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 69 of

Ho Wan Kwok - January 23, 2024 70 July of 2022. MR. GRAND: Right. THE COURT: Right. MR. GRAND: There's not a dispute that Infinity is owned by -- by the debtor's son and that -- and that Infinity is the sole member of Lamp. Those allegations in the complaint, we understand to be true. And as Your Honor mentioned, the debtor's son, and as the Trustee mentioned in the papers, has been in their other, I guess other shell companies that he's been affiliated with. There are other ways that, you know, I guess some information has been transmitted to him. I'm not privy to it, nor do I think my colleagues are, but at some point he was made aware of this. And my understanding is that he wasn't made aware of it and didn't see it -- THE COURT: Who is he? MR. GRAND: The debtor's son, who is the -- THE COURT: So is that who retained you, the debtor's son? MR. GRAND: I believe so, yes. THE COURT: Okay. MR. GRAND: I mean, on behalf of the entities. But that's my understanding. THE COURT: Okay. Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 70 of

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Ho Wan Kwok - January 23, 2024 71 MR. GRAND: So it was my understanding that at some point through -- he learned about it or he was told about it, but that was after the time to respond to the complaint had already lapsed. And when he was -- when he learned about it -- THE COURT: But there's no facts in the record supporting anything you're saying. There's no affidavit or anything. I mean, you're telling me what you believe to be true, but there's no facts to support that. MR. GRAND: It's the representation of counsel based on -- THE COURT: I understand. MR. GRAND: -- based on those communications. Yeah. But there's no requirement -- there's no requirement under the law that an affidavit be supplied. I mean -- THE COURT: I didn't say there was. MR. GRAND: -- I just want that to be clear. THE COURT: I just said you're asking me to find facts that aren't in the record. That you're asking me to find facts that are not in the record. You're saying we didn't -- we learned about it sometime through the grapevine, and he heard it through different places, and he retained us on behalf of the entities after the response date passed. MR. GRAND: I'm not --

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 72 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 72 | | 1 | THE COURT: That's a lot of facts that don't have | | 2 | any support in the record. | | 3 | MR. GRAND: But I'm not suggesting that Your Honor | | 4 | needs to necessarily find those facts to be true. | | 5 | The issue is when there's a dispute over when or | | 6 | whether notice of a complaint was issued -- was received -- | | 7 | THE COURT: Well, that's where you're -- that's | | 8 | where we, you and I, that's where I asked you the question | | 9 | where is the case that says you have to have actual notice? | | 10 | The two cases you pointed me to don't say that. | | 11 | MR. GRAND: And as I -- as I -- | | 12 | THE COURT: And as I said, I don't -- | | 13 | MR. GRAND: -- I can supply those cases -- | | 14 | THE COURT: That doesn't make any sense. | | 15 | MR. GRAND: -- this afternoon. | | 16 | THE COURT: That doesn't make any sense to me why | | 17 | you would have to have actual notice, because then there | | 18 | would be no reason for Rule 55. | | 19 | MR. GRAND: But Rule -- but it's a two-step | | 20 | process. In other words -- | | 21 | THE COURT: I understand it's a two-step process. | | 22 | MR. GRAND: -- you're not getting the default | | 23 | judgment immediately. You're getting -- | | 24 | THE COURT: I understand it's a two-step process. | | 25 | But if you had notice before the response date and | | | |

Ho Wan Kwok - January 23, 2024 73 you chose, your client chose not to respond, then that's a willful act. MR. GRAND: I would agree, but that's not the facts here. That's not what happened. THE COURT: Well, how do we know that's not the facts. You don't have any facts to the contrary. MR. GRAND: The facts to the contrary are that -- are representations of counsel based on those communications. THE COURT: No. Based upon your assertion that there has to be actual knowledge and that service isn't enough. That's your assertion. That's your argument. Your argument is that there had to be actual knowledge of the complaint. And I would like to know where in the Federal Rules of Civil Procedure it says that, because that would be new to me. MR. GRAND: As I said, Your Honor, there are -- there are multiple cases in this district, in the Second Circuit, that -- THE COURT: That say actual notice, you have to have actual notice. MR. GRAND: Yes. That hold that where there's a dispute as to whether the defendants actually received notice of a complaint -- Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 73 of

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| | 111 | |----|--------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 74 | | 1 | THE COURT: No, no, no, no, no. | | 2 | MR. GRAND: -- even where service is alleged to | | 3 | have been properly effected -- | | 4 | THE COURT: Okay. All right. | | 5 | MR. GRAND: -- that's sufficient. | | 6 | THE COURT: I'll read your cases. I don't think | | 7 | that that's what any of them say. | | 8 | MR. GRAND: As I said, I can -- if -- | | 9 | THE COURT: I don't want any further briefing. | | 10 | The time to brief has already passed. | | 11 | MR. GRAND: Okay. Thank you, Your Honor. | | 12 | MR. BASSETT: Your Honor, very quickly, just two | | 13 | seconds, if I may? | | 14 | I just wanted to reiterate even if actual notice | | 15 | were a requirement, it is still the movant's burden to show | | 16 | that they did not receive actual notice. | | 17 | Given that he has conceded, as he must, that Lamp | | 18 | Capital is connected to the grapevine of this case, which | | 19 | they're, in fact, deeply imbedded in, cannot demonstrate a | | 20 | lack of actual notice because it doesn't necessarily mean | | 21 | actual notice by getting it from a registered agent. | | 22 | They could have actual notice by checking the | | 23 | docket, by the son talking to other people involved in the | | 24 | case. There are a million different ways when you have an | | 25 | entity that has connected as Lamp Capital to this case were |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 75 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 75 | | 1 | you could have actual notice. But under those | | 2 | circumstances, to satisfy your burden, you have to do a lot | | 3 | more than what was done here. | | 4 | The second thing I would just like to point out is | | 5 | that I don't believe there's been any suggestion -- counsel | | 6 | keeps talking about how Infinity Treasury Management's | | 7 | registered agent said we don't know where to find Infinity | | 8 | Treasury Management. A, that's irrelevant to service and | | 9 | also irrelevant to actual notice under the circumstances. | | 10 | But B, I don't think there's been any allegation that Lamp | | 11 | Capital's registered agent didn't find Lamp Capital. And | | 12 | Lamp Capital is really the entity that we're all talking | | 13 | about here primarily. | | 14 | So there's simply no basis to find that the | | 15 | default was anything other than willful, Your Honor. Thank | | 16 | you. | | 17 | THE COURT: Okay. Thank you. | | 18 | I'm going to take the motion for default judgment | | 19 | under advisement. | | 20 | MR. ROMNEY: Your Honor, if I may, Aaron Romney, | | 21 | please? | | 22 | THE COURT: Sure. What are you asking, and then | | 23 | I'll tell you if you may. | | 24 | MR. ROMNEY: Based on statements that were just | | 25 | made, obviously in my presence, I've been sitting here the | | | |

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| | 111 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 76 | | 1 | whole time, I do feel compelled to make I wouldn't use the | | 2 | word disclosures to the Court, but to provide certain facts | | 3 | for the record since I do have knowledge of certain things | | 4 | that were -- that were just discussed. And I'm happy to put | | 5 | them on the record. I'm happy not to. | | 6 | But what I don't want to be accused of ever is | | 7 | having sat in this room and had it been suggested that I | | 8 | should have spoken up because, as I've said, I have personal | | 9 | knowledge of some of the events that were just the subject | | 10 | of questioning over the last hour. | | 11 | THE COURT: Well, unless you're going to take the | | 12 | stand, I don't really see what the point is, right? I mean | | 13 | -- right? | | 14 | MR. ROMNEY: Your Honor, what I'm saying is I'm | | 15 | making a disclosure to the Court that I have personal | | 16 | knowledge of certain facts that were just discussed. And so | | 17 | that if anyone were to ever ask about my silence, I've made | | 18 | that disclosure. I'm happy to say nothing or answer any of | | 19 | the Court's questions, but that's all. | | 20 | THE COURT: I don't have any questions. | | 21 | MR. ROMNEY: Thank you, Your Honor. | | 22 | THE COURT: Thank you. | | 23 | All right. With regard to the motion for default | | 24 | judgment, as I just noted, I will take that under | | 25 | advisement. | | | |

Ho Wan Kwok - January 23, 2024 77 MR. MILLER: Your Honor, Robert Miller. If I could be excused, I have another engagement, if you're finished with Lamp Capital. THE COURT: Yes. Thank you. MR. MILLER: I just wanted to let Your Honor know. Thank you. THE COURT: All right. Then the motion to set aside default has been filed by Attorney Romney on behalf of Leading Shine New York, Limited, Defendant, is the next matter on the calendar. Attorney Romney, you indicated you'd be making the argument? MR. ROMNEY: I will be, Your Honor. THE COURT: All right. Go right ahead, please. MR. ROMNEY: Aaron Romney, Zeisler & Zeisler, on behalf of Leading Shine, Limited. May I deliver argument from counsel's table, Your Honor? THE COURT: Certainly. MR. ROMNEY: Your Honor, as been discussed at length this morning, the standard on a Rule 55(c) motion is -- the three prongs are willfulness, a meritorious defense, and prejudice. Beginning with willfulness, the standard in this circuit, as well as this district, is something more than negligence and deliberate conduct. Both of those cases are Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 77 of

Ho Wan Kwok - January 23, 2024 78 cited on page 4 of Leading Shine's motion to set aside. Here, there was no willful conduct, no motive for willful conduct, to avoid participating in this adversary proceeding on behalf of Leading Shine. What there was, in light of the Trustee's allegations, as well as the history of this case, was a need to determine that the individual who believed correctly that she had the authority to defend on behalf or direct a defense on behalf of Leading Shine, in fact, had that authority. In this case, there has been an instance, which is discussed as nauseam in my papers as well as has been discussed ad nauseam in this courtroom, where at the direction of the same principal of this company, I filed an appearance. I was then informed by the general counsel of Hodgson Russ that my client did not have that authority. I relied on a verbal representation at that time. And once I was informed by the general counsel of Hodgson Russ, I took what I believed to be a required action on my part to disclose what had happened to opposing counsel and to the Court. I was not -- I was not about, on my watch, to allow a rerun of that which would have served nobody's interest, not the Court's, not the Trustee's, not mine, not Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 78 of

Ho Wan Kwok - January 23, 2024 79 Leading Shine's, not Ms. Guo's. We received, meaning Ms. Guo received, and her counsel, an unredacted version -- THE COURT: Well, you're her counsel? MR. ROMNEY: Correct. THE COURT: Okay. MR. ROMNEY: To be clear, yes, I was one of them, but Mr. -- THE COURT: Well, you still are, right? MR. ROMNEY: I am. THE COURT: Okay. Well, you just said Ms. Guo and her counsel as if it was somebody that's not you. MR. ROMNEY: No. No. I apologize. I meant to indicate that it was not just me. It was me, it was Mr. Moriarty, it was Ms. Wernick, it was Mr. Vartan, I believe are the ones that received those documents. And I believe the date was November 27th. That was the first time that we had an unredacted version of the complaint as well as the sealed exhibits that were the first piece of any sort of evidence that actually tied Ms. Guo to Leading Shine, although it was conflicting because there was evidence that tied another individual to Leading Shine. And in fact, the public version of the complaint identifies that the Trustee, with all of his resources and

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| | 111 | |----|--------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 80 | | 1 | all -- the scope of his investigation, does not know who the | | 2 | owner of Leading Shine was. And those particular | | 3 | circumstances and allegations required a particularly -- a | | 4 | particular level of due diligence particularly in light of | | 5 | the history that happened with the Hudson Diamond entities. | | 6 | At that point, I directed my staff, my team at -- | | 7 | within my firm, to undertake a review of the records that | | 8 | were at our disposal to indicate if we had anything one way | | 9 | or another to actually verify who was in control of Leading | | 10 | Shine. | | 11 | We did not -- we were unable to locate anything | | 12 | despite the voluminous number of documents that we have | | 13 | received, both from the Trustee in this case, some from | | 14 | third parties, which have been produced by us to the | | 15 | Trustee. | | 16 | At that point, I undertook to personally speak | | 17 | with several individuals who I knew to have represented the | | 18 | debtor, various members of the debtor's family, and various | | 19 | entities that are owned -- were owned by various members of | | 20 | the debtor's family. Not one of those individuals had any | | 21 | documentation that they could provide to me one way or | | 22 | another who controlled this entity. | | 23 | Again, until I had that documentation, I was not | | 24 | about to file an appearance. And I know of no other | | 25 | attorney who was willing to under the circumstances of the | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 81 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 81 | | 1 | history of this file. | | 2 | I reached out to Ms. Guo's personal accountant | | 3 | directly. I received information from her that was | | 4 | suggestive that Ms. Guo was the control person of Leading | | 5 | Shine, but it was not definitive. | | 6 | However, I then learned the name of the law firm | | 7 | that formed Leading Shine. I don't recall the year. I | | 8 | believe it was either 2018 or 2019. I contacted that firm. | | 9 | I was told that the attorney who represented Leading Shine | | 10 | was no longer with the firm. I contacted the attorney at | | 11 | his successor firm. | | 12 | We're now getting ourselves into mid, late | | 13 | December and the holidays. And obviously the world is not | | 14 | operating at the same pace as then, although certainly I was | | 15 | doing my best to operate at that pace. | | 16 | Upon speaking with the counsel who formed Leading | | 17 | Shine, he informed me he no longer had access to his | | 18 | records, but verified to me that Ms. Guo was his natural | | 19 | person affiliated with Leading Shine, Ltd. He referred me | | 20 | back to his prior firm that had the file. The file had to | | 21 | be retrieved from storage. I had several discussions with | | 22 | his former associate. | | 23 | And at that point, I satisfied myself that Ms. Guo | | 24 | did have authority to direct me and my firm, and Mr. Vartan | | 25 | and his firm, and Ms. Wernick, and Mr. Moriarty, to appear |

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Ho Wan Kwok - January 23, 2024 82 on behalf of Leading Shine, which we did, and we promptly, the second day of the year, the first business day, filed a motion to set aside default.

There was no intentional desire to evade. In fact, there was the exact opposite of a desire to evade, but there was an equal desire to ensure that nothing happened that could cause either Ms. Guo, myself, my firm, or anybody else to have done something that lacked corporate authority that would have resulted in a waste of the Trustee's resources, and this court's resources, and most importantly this court's time.

As is evidenced by Ms. Guo's participation in this litigation, which was timely, as well as Hudson Diamond Holdings and Hudson Diamond New York, which was timely, there was no desire to evade the process in this litigation.

There was the opposite. There was a desire to appear and assert defenses and that is what they're going to do, and that's what they have done to date. And the defenses are meritorious.

The standards in a -- in alter ego action are quite different from the standards in certain other actions that are the subject of a number of the decisions that have been cited by both parties. This is not an account-stated. This is not a failure to fund an ERISA account where the money is simply gone. This is a very fact-intensive case

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 83 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 83 | | 1 | that has implications that are very broad reaching, | | 2 | particularly in a case like this. | | 3 | The Trustee's allegations, as they concern Leading | | 4 | Shine, are threadbare. The Trustee hasn't alleged who -- | | 5 | even contends is the actual owner of Leading Shine. | | 6 | The Trustee identifies a number of allegations, | | 7 | excuse me, I misspoke, a number of transfers that were made | | 8 | to or from Leading Shine. But the law is clear that | | 9 | transfers alone, there's a distinction between fraudulent | | 10 | transfers, even if they're fraudulent, and we're certainly | | 11 | not conceding that they are, but transfers, even if they are | | 12 | fraudulent, do not establish alter ego. | | 13 | The law is equally clear that common officers and | | 14 | agents do not establish alter ego successor liability. | | 15 | There's simply nothing in the complaints that even | | 16 | if true would establish that Leading Shine is the alter ego | | 17 | of anyone other than its legal owner Ms. Guo. And actually, | | 18 | as stated in the complaint, with the allegations taken as | | 19 | true, that there isn't even that because the complaint | | 20 | doesn't even allege who the legal owner of Leading Shine is. | | 21 | With respect to the merits, if the Trustee | | 22 | believes that there is no dispute that Leading Shine is the | | 23 | alter ego of the debtor, then it should be very easy for the | | 24 | Trustee to immediately file a summary judgment. There won't | | 25 | be a distraction. There won't be an expense. But the |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 84 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 84 | | 1 | Trustee has not done that to date. And until he establishes | | 2 | his case, Leading Shine should be able to put forth a | | 3 | defense. | | 4 | Moving on to prejudice, clearly there is not even | | 5 | an allegation that evidence has been lost or destroyed in | | 6 | the several weeks since the initial response date. And even | | 7 | less time since the extended response date that the Trustee | | 8 | was courteous enough to extend to Ms. Guo in light of the | | 9 | fact that we initially received a redacted complaint that | | 10 | would have been near impossible to respond to. Only several | | 11 | weeks has passed. No discovery has been served or | | 12 | transpired with anyone. And there's no basis to believe | | 13 | that any evidence has been lost. | | 14 | Second, Rule 54(b) precludes the entry of default | | 15 | judgments that could be inconsistent with the allegations | | 16 | against appearing defendants who are prepared to defend on | | 17 | the merits. | | 18 | Ms. Guo has timely appeared and is defending on | | 19 | the merits. | | 20 | Clearly a finding, a default finding, that -- | | 21 | against Leading Shine would be inconsistent with a judgment | | 22 | that Ms. Guo is the owner of Leading Shine, Ltd. | | 23 | Ms. Guo cannot be defaulted because she timely | | 24 | appeared. And under that basis alone, there's no -- a | | 25 | default judgment cannot enter against Leading Shine at this | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 85 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 85 | | 1 | time and, therefore, there would be no prejudice from | | 2 | allowing it to fully and -- fully participate in its | | 3 | defense. | | 4 | With that, unless the Court has any questions, I | | 5 | would rest on my -- on my initial brief as well as my reply. | | 6 | THE COURT: I do not have any questions at this | | 7 | time. Thank you. | | 8 | MR. ROMNEY: Thank you, Your Honor. | | 9 | THE COURT: Mr. Bassett? | | 10 | MR. BASSETT: Your Honor, may I approach the | | 11 | podium? | | 12 | THE COURT: Sure. | | 13 | MR. BASSETT: Again Your Honor, Nick Bassett from | | 14 | Paul Hastings on behalf of the Chapter 11 Trustee. | | 15 | Attorney Romney started his argument by walking | | 16 | through a lengthy recitation of all the sort of detailed and | | 17 | convoluted steps he had to take to determine, over the | | 18 | course of more than two months, if his client, Mei Guo, is | | 19 | actually the nominal owner of Leading Shine. | | 20 | That story, Your Honor, is irrelevant, and beside | | 21 | the point, for reasons I'll explain as to the willfulness | | 22 | inquiry. And it absolutely, 100 percent, supports beyond a | | 23 | reasonable doubt the Trustee's position as to whether there | | 24 | could possibly be meritorious defenses in this adversary | | 25 | proceeding. | | | |

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Ho Wan Kwok - January 23, 2024 86 As to the willfulness inquiry, Your Honor, I'm having trouble even understanding the logic behind the argument because I have heard nothing in the papers or in argument today to explain why anyone would ever decide, under these circumstances, to just allow -- again, there's no argument or suggestion that Mei Guo and Leading Shine did not have notice of this complaint and the answer deadline. And this is critical for the case law. There was a deliberate decision under those circumstances to simply ignore the answer deadline. Whether or not Attorney Romney and his client couldn't figure out somehow if she owned this legal entity or not for two months, there has been zero explanation, and again, there's no affidavit, nothing from Mei Guo herself, zero explanation for why they decided to just remain silent and do nothing. Now, Attorney Romney says, well, we got into this big mess in the past with the Hudson Diamond entities, and I couldn't appear and purport to represent an entity unless I had authority, Your Honor, there are a million things that could have been done. How about starting with simple transparency and openness and communication? How about calling the Trustee and saying you know what, we had this issue before, we're having an issue again, this entity does not want to default on the complaint, but I'm trying to figure out, as

Ho Wan Kwok - January 23, 2024 87 implausible as it might be, that Ms. Guo -- I'm trying to figure out if she owns this company. There was none of that. Not to the Trustee's counsel. And beyond that, I feel for Attorney Romney in some respects here, but this is not his problem. It is Leading Shine's and Mei Guo's problem. If she and Leading Shine were on notice of this complaint and couldn't figure out if they owned the entity or not, that is on them. She could have reached out to the Trustee. She could have sent the letter to the Court. Somebody could have done something prior to the answer deadline rather than simply sit there and let it pass by. And again, with Leading Shine, like the other defendants, they're no strangers to this case. The Trustee sought and obtained 2004 discovery from Leading Shine in April of 2023 I believe it was and they defaulted on the subpoena. Now, the immediate question that comes to my mind is, I mean, wouldn't that have been the time for Mei Guo and Attorney Romney to start conducting their lengthy journey to figure out if she owned the company so they could comply with 2004 discovery? No. They sat around and did nothing. And then somehow, for some reason, somebody on that, you know, abyss side of the Kwok universe said you know what, we should probably do something about this Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 87 of

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 88 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 88 | | 1 | Leading Shine complaint. And that's when this exercise | | 2 | started. | | 3 | But it doesn't change the fact that the default | | 4 | was clearly willful. They had knowledge of the complaint. | | 5 | They sat there. They did nothing. | | 6 | Mr. Romney said there was, quote, "No intentional | | 7 | desire to evade," end quote. That is absolutely not the | | 8 | standard. The standard is whether the default was willful | | 9 | and whether they've come forward with some explanation to | | 10 | demonstrate to the Court as to why their failure to respond | | 11 | should be excused. They have utterly failed to do that. | | 12 | As to the meritorious defense argument, Your | | 13 | Honor, again, no affidavit, no facts, just legal arguments. | | 14 | And why is there no affidavit and why are there no | | 15 | facts, because his client until a week ago or so didn't even | | 16 | know that she owned this entity. Of course she is going to | | 17 | be entirely incapable of ever putting forth a defense on the | | 18 | merits to show that Leading Shine is an alter ego of the | | 19 | debtor if she didn't even know and had to take two months to | | 20 | figure out if she nominally owned it. | | 21 | There is next to zero possibility of her ever | | 22 | setting forth a meritorious defense, and that's exactly why | | 23 | there's no affidavit, there's no facts, there's nothing | | 24 | talking about, hey, Leading Shine is not the debtor's alter | | 25 | ego because it does X, Y and Z. It actually operates in | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 89 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 89 | | 1 | this industry, but does these types of things on a regular | | 2 | basis, has these employees, has these officers and | | 3 | directors, there's none of that, because there's no source | | 4 | of that information here. | | 5 | Mr. Romney, again, essentially raises a 12(b)(6) | | 6 | motion to dismiss argument saying -- he raises in pari | | 7 | delicto and other arguments that have already been directed, | | 8 | and then today he spent most of his time alleging that the | | 9 | allegations of the complaint are insufficient to demonstrate | | 10 | that Leading Shine is, in fact, the debtor's alter ego. | | 11 | First of all, as I noted before, if that's the | | 12 | defense that they're going to raise, that there's no | | 13 | evidence and it's just 12(b)(6) type arguments, that's | | 14 | exactly what is appropriate for the Court to consider on a | | 15 | motion to vacate a default under 55(c). | | 16 | And those arguments that he has raised all fail | | 17 | because the complaint more than sufficiently meets the | | 18 | requirements to allege alter ego under Delaware law. | | 19 | Mr. Romney took issue with the fact that the | | 20 | complaint doesn't specifically allege who exactly is the | | 21 | nominal owner of the entity. | | 22 | It's mystifying how that can be turned around and | | 23 | put on the Trustee given that Mei Guo, the defendant, is the | | 24 | purported owner. | | 25 | But in any event, the reason why the Trustee said | | | |

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| | 111 | |----|--------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 90 | | 1 | what he said in the complaint is because in discovery the | | 2 | Trustee has found account opening statements, which are | | 3 | cited to in the complaint, where both Yvette Wang, the | | 4 | debtor's co-conspirator in the criminal fraud case, and Mei | | 5 | Guo, have both opened accounts on behalf of Leading Shine. | | 6 | So I would think that supports the Trustee's allegations. | | 7 | The Trustee also alleges in the complaint that an | | 8 | individual the Court knows as the family chef has taken | | 9 | actions on behalf of Leading Shine. | | 10 | Leading Shine has the same address of the debtor's | | 11 | other shell companies, including Golden Spring, which is now | | 12 | the debtor's alter -- which is now owned by the Trustee as | | 13 | the debtor's alter ego, as well as HK (USA), for which the | | 14 | same finding has been made. | | 15 | Again, Leading Shine, like Lamp Capital, is a | | 16 | different kind of shell company used by the debtor from HK | | 17 | (USA). It is of the funding kind. It is another entity | | 18 | that the debtor used as his personal piggy bank to move | | 19 | around funds to and from his companies and to pay for his | | 20 | expenses and those of his family. | | 21 | There's allegations in the complaint about | | 22 | transfers from Gold Spring, Saraca, Hudson Diamond, ACA | | 23 | Capital, transfers to other shell companies, Golden Spring, | | 24 | Greenwich Land, Gypsy Mei, a company owned by the debtor's | | 25 | daughter. |

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| | 111 Ho Wan Kwok - January 23, 2024 91 | |----|---------------------------------------------------------------| | 1 | The debtor also, as alleged in the complaint, used | | 2 | Leading Shine to pay his personal expenses, including his | | 3 | personal counsel in the United Kingdom in the Ace Decade | | 4 | litigation, including other counsel in the U.K., Berkeley | | 5 | Rowe, which is the same counsel who represented the Himalaya | | 6 | entity, purportedly owned by William Je, and the \$37 million | | 7 | loan made to HK (USA). | | 8 | There's allegations in the complaint that the | | 9 | debtor transferred -- that Leading Shine transferred funds | | 10 | to an aircraft design company on behalf of the debtor. | | 11 | And of course there's also the mention in the | | 12 | complaint that the debtor, when asked about Leading Shine, | | 13 | took the Fifth on all relevant questions. | | 14 | Your Honor, there is an abundance of evidence in | | 15 | the complaint to support, at this stage, a 55(c) denial and | | 16 | an ultimate finding of default judgment in favor of the | | 17 | Trustee. | | 18 | The Trustee does not, as Attorney Romney insists, | | 19 | need to prove its allegations right now. | | 20 | The posture of this case is they have defaulted, | | 21 | the Trustee has alleged what he has alleged in the | | 22 | complaint, and it's their burden to come forward with | | 23 | evidence on a meritorious defense and they've failed to do | | 24 | that. | | 25 | Lastly Your Honor, on prejudice, I would just go | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 92 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 92 | | 1 | back to some of the comments I made at the outset, and which | | 2 | we've sort of discussed ad nauseam here today, this is not | | 3 | an entity or a purported owner of such entity who are | | 4 | strangers to this case. | | 5 | Mei Guo has been a participant in this case from | | 6 | the beginning, has her own history of issues complying with | | 7 | discovery requests. | | 8 | Lamp, Leading Shine, rather, was served with a | | 9 | subpoena back in April. Failed to comply with it. Nobody | | 10 | bothered to take any steps at that time to determine who | | 11 | owned it and whether they were going to respond. | | 12 | Your Honor, for this court to maintain order and | | 13 | the rule of law and to make sure that the Trustee can | | 14 | continue his investigations unobstructed, it cannot be that | | 15 | parties can pick and choose when they participate in these | | 16 | cases. | | 17 | And therefore, allowing parties such as Lamp | | 18 | Capital, such as Leading Shine, to decide belatedly that | | 19 | they want to participate and be able to do so is, in fact, | | 20 | prejudicial to the Trustee and should not be permitted. | | 21 | But again, I will reiterate, the prejudice | | 22 | element, as very clear under Second Circuit law, does not | | 23 | need to be satisfied; whereas, here, the defendant has | | 24 | fallen extraordinarily short of demonstrating a meritorious | | 25 | defense. | | | |

Ho Wan Kwok - January 23, 2024 93 That's all I had, Your Honor, unless the Court has questions. THE COURT: I do not have any questions at the moment. Thank you. MR. BASSETT: Thank you, Your Honor. THE COURT: Any response, Attorney Romney? MR. ROMNEY: Yes, briefly, Your Honor. Your Honor, Mr. Bassett said a moment ago that there was a deliberate decision to ignore. There is absolutely no evidence of that or plausible basis to believe that in light of the representations that I have made, as well as Ms. Guo's active participation individually, in a timely manner. There was a deliberate decision to ensure that Ms. Guo had the authority to direct Leading Shine to avoid another circus, for lack of a better word, that occupied considerable amounts of time and resources. Mr. Bassett says someone could have reached out to the Trustee. That is 100 percent wrong according or based upon the events that have happened in this case. With the Hudson Diamond issue, Attorney Vartan reached out to the Trustee. He did not appear. And when there were questions of authority, he was the subject of an order to show to cause. Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 93 of

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Ho Wan Kwok - January 23, 2024 94 Everyone, Ms. Guo, her counsel, including myself, are viewing this case and how we should conduct ourselves with an eye towards how this -- how we have gotten here today, and trying to avoid circumstances where our clients and our arts are put in a position where it might appear or has appeared that we're trying to be evasive or, you know, impede the process. What we're trying to do is avoid distractions, make sure that we have our facts straight, before we take action. The same applies to Ms. guo personally. The issue was not whether I or my firm or Mr. Vartan or his firm were willing to take direction from Ms. Guo. The issue that both Ms. Guo had, as well as what we had, is that given the allegations in the complaint, given the lack of documentation at either of our fingertips at the time, we determined, given the options of taking action and then having allegations made, accusations made, that we shouldn't have taken that accusation -- or the action, and that we somehow did so for some nefarious purpose, that it made more sense, would be less distraction, less distracting, and less wasteful, to get our ducks in a row, and do it the right way, and appear now, some three weeks later. The Trustee has not identified any case, because

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| | 111 | |----|--------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 95 | | 1 | there is none, where a Rule 55(c) motion has been denied | | 2 | within weeks of the answer date, and a coherent, | | 3 | comprehensive, explanation as to why it took a little bit | | 4 | more time has been placed on the record. I am unaware of | | 5 | any, and I don't believe there are any. | | 6 | Everything that the Trustee has said, Mr. Bassett | | 7 | as his counsel, with regard to the merits, exclusive of what | | 8 | I began by acknowledging, that there are some alleged | | 9 | transfers and that there are alleged common agents of | | 10 | Leading Shine and third-party entities, everything else is | | 11 | pure speculation and conjecture. Hypothetical questions, | | 12 | why don't we have this, why don't we have that. | | 13 | The complaint was filed on October 30th. It was | | 14 | heavily redacted. | | 15 | There are many moving parts in this case. I think | | 16 | Your Honor said something like we're up to 3,000 docket | | 17 | entries. We're all human beings. We're doing our best. | | 18 | But we can't focus on everything at one time. This is not | | 19 | the only case on this court's docket. It's not the only | | 20 | case on my firm's docket. | | 21 | We have the right, Leading Shine has the right, | | 22 | Ms. Guo has the right, to present a defense. That's what | | 23 | she wants to do. And at this point, articulation, our | | 24 | defense is, as well as the weaknesses in the Trustee's own | | 25 | allegations and the failure to satisfy the elements that is | | | |

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 96 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 96 | | 1 | his burden to satisfy, is sufficient for a Rule 55(c) | | 2 | motion. | | 3 | And Judge Tancredi wrote a very articulate | | 4 | decision stating exactly just that in the Walnut Hill case | | 5 | that's cited on page 6 of our reply. | | 6 | With that, I have nothing further. Thank you, | | 7 | Your Honor, for your time. | | 8 | THE COURT: Okay. Thank you. | | 9 | Anything further, Mr. Bassett? | | 10 | MR. BASSETT: Yeah. Just very briefly, Your | | 11 | Honor. Your Honor, again for the record, Nick Bassett from | | 12 | Paul Hastings on behalf of the Chapter 11 Trustee. | | 13 | I don't think much more needs to be said on the | | 14 | willfulness element. The fact of the matter is there was -- | | 15 | there no questionably was service of the complaint, an | | 16 | actual notice, and it was not responded to knowingly. | | 17 | There's no allegation at all that there was some mistake or | | 18 | other extraneous factor that presented -- that prevented any | | 19 | kind of response. | | 20 | Again, it's not up to Attorney Romney. Mei Guo, | | 21 | and Leading Shine, they're the party. They're the ones who | | 22 | had the obligation to meet their deadline. They decided to | | 23 | take no action, to sit there and do nothing. So the | | 24 | willfulness -- and again, it's their burden on willfulness. | | 25 | They have not satisfied it. |

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Ho Wan Kwok - January 23, 2024 97 As to meritorious, the meritorious defense prong, I won't rehash what's been said before other than to note again there is zero evidence in the record to show that there's a meritorious defense that could be offered. That's not surprising, because the only actual party involved here is Mei Guo, who knows nothing about this entity. And the last point I would make on that, Your Honor, is that I think it's a little convenient for Mr. Romney to rest his entire argument on the meritorious defense prong on the idea, incorrect as it may be, that the Trustee has not included sufficient allegations of the alter ego relationship in his complaint, when his client, the party here, ducked the Trustee's 2004 discovery that he was entitled to. The entire purpose of 2004 discovery made available to a trustee is to allow the Trustee to uncover the facts necessary to bring potential causes of action to acquire and recover assets for the estate. They cannot have it both ways. It's entirely improper and indicative of the gamesmanship that has been occurring. I have nothing further, Your Honor. Thank you very much. THE COURT: Thank you. All right. I do not have any further questions

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 98 of 111 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 98 | | 1 | with regard to the motion to set aside default on behalf of | | 2 | Leading Shine, Inc., ECF 30, so I will take that matter | | 3 | under advisement. | | 4 | And then we'll move to the final matter on today's | | 5 | calendar, which is the motion to set aside default filed on | | 6 | behalf -- | | 7 | Well, I mean, you've argued it in some respects, | | 8 | Attorney Grand, but I suppose you can argue again. | | 9 | We were arguing the motion for default judgment, | | 10 | but you also argued the motion to set aside default, | | 11 | although I'm happy to let you argue again if you'd like to. | | 12 | MR. GRAND: Well, Your Honor, it wasn't clear that | | 13 | our -- that Lamp Capital and Infinity Treasury Management | | 14 | motions to set aside the default was -- | | 15 | THE COURT: Yeah. | | 16 | MR. GRAND: -- going to be -- | | 17 | THE COURT: So then go ahead and argue. | | 18 | MR. GRAND: -- heard today, so. | | 19 | THE COURT: What do you mean it wasn't clear. | | 20 | It's on the calendar. | | 21 | MR. GRAND: I did not see it on the calendar. | | 22 | THE COURT: It's on the calendar. | | 23 | MR. GRAND: I only saw Infinity's, I'm sorry, the | | 24 | Trustee's motion for default judgment and Leading Shine's | | 25 | motion to set aside a default. |

Ho Wan Kwok - January 23, 2024 99 THE COURT: It's on the calendar. MR. GRAND: That's what I'm saying. When I looked at Your Honor's calendar for today, I didn't see the motion there. THE COURT: Am I -- I'm looking at the courtroom staff. Isn't there -- aren't there -- isn't there another motion to set aside default on ECF 42? MR. GRAND: Yeah. THE COURT: Okay. MR. GRAND: It may be there now. I'm just saying, when I looked at it yesterday when I was trying to figure out whether or not it was on the calendar, I didn't -- I didn't see it on the Court's calendar. MR. BASSETT: Your Honor, if I may? I mean, so the Rule 55(c) motion was filed in response to the motion for a default judgment sort of as -- I think it was styled as a cross-motion. And I pointed this out earlier. And the real reason I pointed it was just to help the Court sort of understand the process to help us decide how to proceed today, which is that there wasn't so much a response separately to the motion for a default judgment that the Trustee filed -- THE COURT: Yeah. They filed -- instead they -- MR. BASSETT: -- it was really just a 55(c) as a Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 99 of

Ho Wan Kwok - January 23, 2024 100 response to the default judgment. So what I had thought we were doing, and thought made sense, was for me just to address that. Counsel would address the 55(c) and respond, as I think he did -- THE COURT: Well, he did address the 55(c). Yeah. MR. BASSETT: -- and, therefore, I don't -- THE COURT: Yeah. MR. BASSETT: -- I don't think we need to further -- THE COURT: I don't think there's any further need for any further argument. I mean, he's correct, if you look at the docket, Counsel, of the adversary proceeding. MR. GRAND: I'm not suggesting that we not handle it all today or that I want to come back again and argue another time, I'm only pointing out that it was a bit unclear. In other words, the motion to set aside the default, there was a notice of hearing that the Court issued in response setting today as the hearing date to hear that. The motion for a default judgment, there was a notice of hearing setting today as the hearing date to address that, our motion to set aside the default, and I understand that it was a motion to set aside the default. And our brief that we submitted in support of that motion was submitted for two purposes, both in support of Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 100 of

Ho Wan Kwok - January 23, 2024 101 that motion, but also in opposition to the Trustee's motion for a default judgment. So it served two purposes. But all I'm -- I'm only pointing out that I just didn't see a notice of hearing saying it was going to be addressed today. THE COURT: There wasn't a notice of hearing -- MR. GRAND: Right. THE COURT: -- because that was your response to the motion to set aside the motion -- MR. GRAND: It was both. THE COURT: -- for default judgment. MR. GRAND: Right. It was both. It was both. And -- THE COURT: And you've made the argument. You made the argument. MR. GRAND: I have. I mean -- but I appreciate Your Honor's, you know, offering me another, you know, additional time. I mean, I only point out that, you know, a couple of case cites on the issue we addressed before on the notice point, and I can provide those to you, a few of them, now -- THE COURT: You can provide -- MR. GRAND: -- that I was able to just find in the last few minutes. THE COURT: Okay. Go ahead. Give me a -- Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 101 of

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| | | | | | 111 | | | | |--|--|--|--|--|-----|--|--|--| |--|--|--|--|--|-----|--|--|--|

| | Ho Wan Kwok - January 23, 2024 102 | |----|----------------------------------------------------------------| | 1 | MR. GRAND: I know Your Honor didn't want | | 2 | additional briefing. | | 3 | THE COURT: Give me a -- give me the cites then. | | 4 | MR. GRAND: Sure. | | 5 | THE COURT: Please, when you get a chance. | | 6 | MR. GRAND: Sure. An Eastern District case. It | | 7 | can be found at 2023 Westlaw 170595. | | 8 | THE COURT: That's the full cite? Decor Holdings, | | 9 | Inc.? | | 10 | MR. GRAND: Yes. Which was affirmed by the Second | | 11 | Circuit. | | 12 | THE COURT: Well, it's an unreported decision, so, | | 13 | but let's -- it's an unreported slip opinion according to | | 14 | this. So where -- what am I looking at here? | | 15 | MR. GRAND: So -- | | 16 | THE COURT: What page? | | 17 | MR. GRAND: You can look to page, I believe it's 4 | | 18 | and 5 where, hang on, I'm doing this on my phone, so I | | 19 | appreciate -- | | 20 | THE COURT: This appeal turns on whether B&J was | | 21 | an authorized agent for service of process of the Bankruptcy | | 22 | Rule 7004(b)(3). That's what the District Court, the United | | 23 | States District Court of Eastern District of New York said. | | 24 | So the case was about whether or not there was an entity | | 25 | that was actually the agent for service of process. |

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Ho Wan Kwok - January 23, 2024 103 MR. GRAND: Yes. But further up, I believe, in that case, the Court distinguished on a motion to vacate a default judgment, based on improper service where the defaulting defendant had actual notice of the original proceeding but delayed in response, is different than a situation where the Court said, however, whereas, here, it is in dispute whether defendant had actual notice before the entry of default judgment courts have found that the burden of proof properly remains with the plaintiff. THE COURT: This was the burden of proof for vacating a default judgment -- MR. GRAND: Right. Which is -- THE COURT: -- depends upon whether the defendant had actual notice. We're not dealing a default judgment. We're dealing with a default. MR. GRAND: I understand. And the willfulness standard is applied even less rigorously in that circumstance. THE COURT: Well, it says on a motion to vacate a default judgment, based upon improper service of process, where the defaulting defendant had actual notice of the proceeding but delayed in bringing the motion. And this was based on -- You have -- you haven't alleged that there wasn't

Ho Wan Kwok - January 23, 2024 104 improper service of process. MR. GRAND: Right. I'm talking about the -- THE COURT: You just alleged you -- MR. GRAND: This decision said that where service -- even where service is -- it doesn't -- THE COURT: No. It says when improper service was made and the defendant had actual notice, the defendant bears the burden of proof to establish that the purported service did not occur. MR. GRAND: Right. The next sentence. THE COURT: Okay. However, whereas, here, it is in dispute whether the defendant had actual notice -- MR. GRAND: Yes. THE COURT: -- of the entry of the default judgment, Counsel. Not the default, the default judgment. MR. GRAND: I understand that. And in this circumstance, when we're only dealing with the default and not a judgment, the willfulness standard is even less rigorously applied. THE COURT: It doesn't say that, Counsel. I disagree. That's not what it says. MR. GRAND: That's the stuff along the Second Circuit for -- THE COURT: That's not what it says. MR. GRAND: -- 20 years. Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 104 of

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Ho Wan Kwok - January 23, 2024 105 THE COURT: It says the burden of proof for vacating a default judgment. And this whole case was about whether the entity that was supposedly the agent of service really was the agent of service. MR. GRAND: But that's not what it -- right. But the point was that irrespective of whether the agent was proper or not, the point was that the defendant never received notice. THE COURT: No, that's -- no, it's not. That's not what it says. That's not what it says. MR. GRAND: It was. Due process does -- THE COURT: No. It's citing to another -- another case. It doesn't say -- MR. GRAND: We can look at that case as well if that's where the quote comes from. THE COURT: Okay. Let's look at it. Again, an unreported decision from the Eastern District of New York, so there has no precedential value. And it's -- and it's under Rule 60(b)(1), which is a default judgment, not a default. MR. BASSETT: Your Honor, I don't have -- I don't have access to that case, so if I could just have the -- MR. GRAND: I'll give you the cite. MR. BASSETT: Thank you. THE COURT: The second one?

Ho Wan Kwok - January 23, 2024 106 MR. BASSETT: Yeah. The second one that we're now -- THE COURT: 22 Westlaw -- 2022 Westlaw 16754744. MR. BASSETT: Thank you. THE COURT: This whole case, the second, is dealing with the vacature under Rule 60(b), not 55(c). That's what the Court says. MR. GRAND: Your Honor, I recognize that. The point is that if all the factors are the same, they're applied even less rigorously in -- THE COURT: Where does it say that, Counsel? It doesn't say that -- MR. GRAND: It says that throughout our papers. In the *Enron* case. In the -- in the -- THE COURT: Okay. Well, I'll look at your papers then -- MR. GRAND: I can point you to that if you'd like. THE COURT: -- but it doesn't say that. I asked you specifically and that -- and those are the cases that you cited to, so I'll look. MR. GRAND: Judge, I'm not sure what you're asking. If you're asking whether or not -- THE COURT: I'm not asking anything. You said -- MR. GRAND: -- the standard under Rule 55(c) is -- THE COURT: I'm not asking anything. You said you Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 106 of

Ho Wan Kwok - January 23, 2024 107 wanted to cite to me additional cases and so you are. MR. GRAND: There's also the *U.S. Commodity Futures Trading Commission vs. McCrudden* case which addresses some of these issues. THE COURT: What's the cite to that case? MR. GRAND: That cite is 2015 Westlaw 5944229. THE COURT: Okay. Anything else? MR. GRAND: I just want to confirm that that's all I have. I appreciate one minute, and then I think I'll either have more or not. I think that is -- THE COURT: Okay. That prior case that you cited that we just to, talked about, is actual notice, is broader because there was an improper service. There's no assertion in this case that there's improper service. MR. GRAND: That's not the point. THE COURT: No assertion whatsoever. MR. GRAND: The point is that because they didn't receive notice. That's what those cases hold. THE COURT: No, they don't, Counsel. They don't. MR. GRAND: Okay. THE COURT: Because if they did then Rule 55 would not need to be in existence. They don't. They do not hold that. And the case that I'm looking at mow, *U.S. Commodity Future Trading vs. McCrudden*, they talk about the Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 107 of

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 108 of 111 | |----|------------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 108 | | 1 | elements in Wang, the request for an entry of default | | 2 | judgment, the elements we've gone over today, which we all | | 3 | know what they are. | | 4 | MR. GRAND: I understand. And they articulate | | 5 | that the elements are to be applied less rigorously -- | | 6 | THE COURT: Where does it say that? I haven't | | 7 | seen it once, not once, not in any of the cases that you | | 8 | cited. | | 9 | MR. GRAND: In all of the -- in all of the cases | | 10 | that I've cited. Our brief has many of those cases. | | 11 | THE COURT: Okay. Then I think we've -- I'm happy | | 12 | to -- I will go back and read them, Counsel, but not one of | | 13 | the cases say that there -- it's applied less -- it doesn't | | 14 | say what you say. | | 15 | None of them say that when you acknowledge that | | 16 | service is proper you also have to have actual notice. So | | 17 | none of them say that. Not one. And they couldn't. | | 18 | Because then it would render Rule 55's purpose, there would | | 19 | be no reason for Rule 55. | | 20 | Then every single defendant would have to have | | 21 | actual notice of a complaint. In your argument, if you take | | 22 | it to its -- every single person, there would be no reason | | 23 | that you could ever seek a default. | | 24 | MR. GRAND: Your Honor, the default is premised on | | 25 | service. | | | |

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| | Ho Wan Kwok - January 23, 2024 109 | |----|--------------------------------------------------------------| | 1 | THE COURT: That's correct. | | | | | 2 | MR. GRAND: Correct. Nobody is suggesting here | | 3 | that the default that was entered -- | | 4 | THE COURT: Okay. And where does it say that you | | 5 | can set aside a default because you didn't get actual | | 6 | notice? | | 7 | MR. GRAND: That's what the -- | | 8 | THE COURT: Where does it say that in Rule 55, | | 9 | Counsel? Where does it say that? | | 10 | MR. GRAND: It said it in the cases that I just | | 11 | cited to Your Honor. | | 12 | THE COURT: No, it doesn't. No, I'm sorry, it | | 13 | doesn't. | | 14 | MR. GRAND: Okay. | | 15 | THE COURT: I disagree with you. | | 16 | MR. GRAND: Okay. | | 17 | THE COURT: It doesn't say that. Okay? | | 18 | MR. GRAND: Yeah. Thank you. | | 19 | THE COURT: All right. Well, then I'm -- all | | 20 | these matters have been addressed by the Court. I will go | | 21 | back and review all the matters and I will take all the | | 22 | matters that were on the calendar, other than the interim | | 23 | application for compensation, which is granted, for which a | | 24 | revised, proposed order will be submitted, there will be no | | 25 | further pretrial conferences set, and the matters will all |

Ho Wan Kwok - January 23, 2024 110 be taken under advisement. Is there anything further we need to address this afternoon, Trustee Despins? MR. DESPINS: Just a few seconds, Your Honor. Mr. Shaiban (ph) sent a letter to the Court asking to get permission to sue the assignee for the benefit of creditors. We want to make sure that we'll have enough (indiscernible) to respond to that. I assume Your Honor will enter an order -- THE COURT: If he sends a letter asking for permission to do something, I will take no action on it. You file a motion in this court. That's how it works. MR. DESPINS: I understand. Okay. Thank you, Your Honor. THE COURT: Okay. All right. Then that concludes today's hearings, this afternoon's hearings. Thank you, all. Court is adjourned. (Proceedings concluded at 3:36 p.m.) Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 110 of

| | Case 22-50073 Doc 2539 Filed 01/31/24 Entered 01/31/24 13:29:55 Page 111 of 111 | |----|------------------------------------------------------------------------------------------------| | | Ho Wan Kwok - January 23, 2024 111 | | 1 | I, CHRISTINE FIORE, court-approved transcriber and | | 2 | certified electronic reporter and transcriber, certify that | | 3 | the foregoing is a correct transcript from the official | | 4 | electronic sound recording of the proceedings in the above | | 5 | entitled matter. | | 6 | | | 7 | | | 8 | January 29, 2024 | | 9 | Christine Fiore, CERT | | 10 | | | 11 | | | 12 | | | 13 | | | 14 | | | 15 | | | 16 | | | 17 | | | 18 | | | 19 | | | 20 | | | 21 | | | 22 | | | 23 | | | 24 | | | | | | | |