郭文贵破产案 · TRANSCRIPT · ECF #3054

元数据

当事人: 郭文贵 (Guo Wengui / Miles Guo / Ho Wan Kwok)
法院: CTB
案号: 22-50073
ECF #: 3054
类型: TRANSCRIPT
立案日: 2024-03-28

原始法庭文件为英文，下方为英文全文。

全文

1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT BRIDGEPORT DIVISION IN RE: . Chapter 11 . Case No. 22-50073 (JAM) HO WAN KWOK, et al., . . Debtors. . . . . . . . . . . . . . . . . . . LUC. A DESPINS, CHAPTER 11 . Adversary Proceeding TRUSTEE, . No. 23-05023 . Plaintiff, . . v. . . LAMP CAPITAL LLC, INFINITY . TREASURY MANAGEMENT, INC., . HUDSON DIAMOND NY LLC, . HUDSON DIAMOND HOLDING LLC, . LEADING SHINE NY LTD., MEI . Courtroom 123 GUO, and YANPING, A/K/A . Brien McMahon Federal Building "YVETTE," WANG, . 915 Lafayette Boulevard . Bridgeport, Connecticut 06604 Defendants . . Tuesday, March 19, 2024 . . . . . . . . . . . . . . . 1:39 p.m. TRANSCRIPT OF HEARING BEFORE THE HONORABLE JULIE A. MANNING UNITED STATES BANKRUPTCY JUDGE Audio Operator: Electronically recorded Transcription Company: Reliable The Nemours Building 1007 N. Orange Street, Suite 110 Wilmington, Delaware 19801 Telephone: (302)654-8080 Email: gmatthews@reliable-co.com Proceedings recorded by electronic sound recording, transcript produced by transcription service. Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 1 of 112

| Case 22-50073 | Doc 3054 Filed 03/28/24 | Entered 03/28/24 09:21:31 Page 2 of 112 | | | | |---------------|--------------------------------------|----------------------------------------------------------------------------|--|--|--| | | | 2 | | | | | | | | | | | | 1 | APPEARANCES: | | | | | | 2 | For the Chapter 11 | | | | | | 3 | Trustee: | Douglas S. Skalka, Esquire NEUBERT PEPE & MONTEITH, P.C. | | | | | 4 | | 195 Church Street 13th Floor | | | | | 5 | | New Haven, Connecticut 06510 | | | | | 6 | | -and- | | | | | 7 | | Luc A. Despins, Esquire PAUL HASTINGS, LLP 200 Park Avenue | | | | | 8 | | New York, New York 10166 | | | | | 9 | | Nicholas A. Bassett, Esquire 2050 M Street, NW | | | | | 10 | | Washington, DC 20036 | | | | | 11 | For the U.S. Trustee: | Holley L. Claiborn, Esquire UNITED STATES DEPARTMENT OF JUSTICE | | | | | 12 | | OFFICE OF THE UNITED STATES TRUSTEE The Giaimo Federal Building | | | | | 13 | | 150 Court Street, Room 302 New Haven, Connecticut 06510 | | | | | 14 | For the Official | | | | | | 15 | Committee of Unsecured Creditors: | Kristin B. Mayhew, Esquire | | | | | 16 17 | | PULLMAN & COMLEY, LLC 850 Main Street 8th Floor | | | | | | | Bridgeport, Connecticut 06601 | | | | | 18 | For Pacific Alliance | | | | | | 19 20 | Asia Opportunity Fund: | Stuart M. Sarnoff, Esquire O'MELVENY & MYERS, LLP Times Square Tower | | | | | 21 | | 7 Times Square New York, New York 10036 | | | | | | | | | | | | 22 23 | For Mei Guo: | Stephen M. Kindseth, Esquire ZEISLER & ZEISLER 10 Middle Street | | | | | 24 | | 15th Floor Bridgeport, Connecticut 06604 | | | | | 25 | | | | | | | | | | | | | | | | | | | |

3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ALSO APPEARING: For Mei Guo: Sam Della Fera Jr., Esquire CHIESA SHAHINIAN & GIANTOMASI, P.C. 105 Eisenhower Parkway Roseland, New Jersey 07068 For G Club Operations: Jeffrey M. Sklarz, Esquire GREEN & SKLARZ, LLC One Audubon Street 3rd Floor New Haven, Connecticut 06511 For Mercantile Bank International Corp. and Yieldesta, LP: Frederick Hyman, Esquire CROWELL & MORING, LLP Two Manhattan West 375 9th Avenue New York, New York 10001 For Clayman Rosenberg Kirshner & Linder, LLP: Frank A. Oswald, Esquire Minta J. Nester, Esquire TOGUT, SEGAL & SEGAL, LLP One Penn Plaza Suite 3335 New York, New York 10119 For Fox News Network and Marcum LLP: Henry P. Baer, Esquire FINN DIXON & HERLING, LLP 177 Broad Street 15th Floor Stamford, Connecticut 06901 -and- Andrew R. Gottesman, Esquire MINTZ & GOLD 600 3rd Avenue New York, New York 10016 Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 3 of 112

| Case 22-50073 | |---------------| | | | 1 | | 2 | 3 | 4 | 5 | | 6 7 | 8 | | 9 | 10 11 | 12 | | 13 | 14 | | 15 | | 16 17 | 18 | | 19 | 20 | | 21 | | 22 | | 23 | | 24 | | 25 | | | | | | Doc 3054 | Filed 03/28/24 | Entered 03/28/24 09:21:31 | Page 4 of 112 | | ------------------|-----------|------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|---------------|------| | | | | | 4 | | | | INDEX | | | | MOTIONS: | | | | | PAGE | | Matter | | | | | | | No. 1: | | | Status Conference Held (RE:[2981] Order Scheduling Status Conference) | | 9 | | | Court's Ruling: | | | -- | | Matter No. 2: | Despins) | | (RE:2931 Application to Employ Praeger Dreifuss AG filed by Chapter 11 Trustee Luc A. | | 80 | | | Court's Ruling: | | | 86 | | Matter | | | | | | | No. 3: | Bliss PC) | | (RE:2928 First Interim Application for Compensation of O'Sullivan McCormack Jensen & | | 86 | | | Court's Ruling: | | | 87 | | Matter No. 4: | | | (RE:2929 First Interim Application for | | 88 | | | Compensation of Kroll, LLC) | | | | | | Court's Ruling: | | | 89 | | Matter No. 5: | | | (RE:2933 Second Interim Application for Compensation for Harney Westwood & Riegels LP) | | 90 | | | Court's Ruling: | | | 91 | | Matter No. 6: | | | | | 91 | | | (RE:2930 Third Interim Application for Compensation of Epiq Corporate Restructuring, LLC filed by Claims/Noticing Agent Epiq | | | | | | | Corporate Restructuring, LLC) | | | | | Court's Ruling: | | | 93 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Case 22-50073 | | Doc 3054 | | Filed 03/28/24 | Entered 03/28/24 09:21:31 | Page 5 of 112 | | |---------------|--------------------|----------|-------------------------------------------------------------------------------------|------------------|----------------------------------------------------------------------------------------------------------------------------------------|---------------|------| | | | | | | | | 5 | | 1 | | | | | INDEX | | | | 2 | MOTIONS: | | | | | | PAGE | | 3 | Matter No. 7: | | | | | | | | 4 | | | | | (RE:2935 Fourth Interim Application for Compensation for Paul Hastings LLP filed by Debtor's Attorney Paul Hastings LLP) | | 94 | | 5 | | | | Court's Ruling: | | | 95 | | 6 | Matter | | | | | | | | 7 8 | No. 8: | | | | (RE: 2872 Third Interim Application for Compensation of Pullman & Comley, LLC filed by Creditor Pullman & Comley, LLC) | | 96 | | 9 | | | Court's | Ruling: | | | 97 | | 10 | Matter | | | | | | | | 11 | No. 9: | | | | (RE:2936 Fourth Interim Application for Compensation for Neubert, Pepe & Monteith, | | 98 | | 12 | | | P.C. filed by Trustee's Attorney Neubert, Pepe & Monteith, P.C.) | | | | | | 13 | | | | Court's Ruling: | | | 99 | | 14 | Matter | | | | | | | | 15 | No. 10: | | | | Motion to Dismiss Adversary Proceeding to Dismiss the Fifth and Sixth Claims contained in the Complaint Against Leading Shine NY | Ltd. | 100 | | 16 | | | | Court's Ruling: | | | 110 | | 17 | Matter No. 11: | | | | | | | | 18 | | | Motion to dismiss Counts 3 and 4 against Hudson Diamond New York, Hudson Diamond | | 100 | | | | 19 | | | | Holding, Mei Guo | | | | | 20 | | | Court's | Ruling: | | | 110 | | 21 | Transcriptionist's | | | Certificate | | | 112 | | 22 | | | | | | | | | 23 | | | | | | | | | 24 | | | | | | | | | 25 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (Proceedings commenced at 1:39 p.m.) THE CLERK: Case Number 22-50073, Ho Wan Kwok and Adversary 23-05023, Despins v Lamp Capital, et al. THE COURT: Okay. Good afternoon. If we could have appearances for the record, starting with the Chapter 11 trustee, please. MR. DESPINS: Good afternoon, Your Honor. Luc Despins, Chapter 11 trustee. MR. BASSETT: Good afternoon, Your Honor, Nick Bassett from Paul Hastings, on behalf of the Chapter 11 trustee. MR. SKALKA: Good afternoon, Your Honor. Douglas Skalka on behalf -- or excuse me -- from Neubert Pepe & Monteith, on behalf of the Chapter 11 trustee. MS. CLAIBORN: Good afternoon. Holley Claiborn for the U.S. Trustee. MS. MAYHEW: Good afternoon, Your Honor. Kristin Mayhew, Pullman & Comley, on behalf of the Creditors Committee. MR. SARNOFF: Good afternoon, Your Honor. Stuart Sarnoff, O'Melveny & Myers, on behalf of creditor PAX. MR. KINDSETH: Good afternoon, Your Honor. Stephen Kindseth, Zeisler & Zeisler, for Mei Guo. MR. DELLA FERA: Good afternoon, Your Honor. Sam Della Fera, Chiesa, Shahinian & Giantomasi, is also for Mei Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 6 of 112

7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Guo. THE COURT: May I stop both of you for a second? Sorry. Mr. Kindseth, I think someone said to me that you filed an appearance in the last hour, I think, in addition to Mei Guo? MR. KINDSETH: Correct. I believe that's at the 2 o'clock matter. THE COURT: Okay. MR. KINDSETH: Will we be doing appearances at the 2 o'clock matter as well? THE COURT: Okay. That's fine. I'm just asking the question, because -- MR. KINDSETH: Yes, I will be appearing on behalf of the Defendants at the 2 o'clock matter. THE COURT: Okay. Sorry. MR. DELLA FERA: As will I, Your Honor. Thank you. THE COURT: Okay. Thank you, both. MR. SKLARZ: Jeffrey Sklarz, G Club. THE COURT: Good afternoon. MR. SKLARZ: Good afternoon, Your Honor. MR. HYMAN: Good morning, Your Honor. Frederick Hyman on behalf of Mercantile Bank International and Yieldesta LP. I filed a motion for pro hac and Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 7 of 112

8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (indiscernible) yesterday. I don't think the order has been entered yet. THE COURT: We probably -- it's in the process, I think. There were certain -- there were a number of motions pro hac. I think they are being processed, but I believe orders have not entered yet. MR. HYMAN: Understood, Your Honor. THE COURT: Okay. Thank you. Anyone else in the courtroom wish to note their appearance? (No verbal response) THE COURT: Anyone on the phone wish to note their appearance? MR. OSWALD: Good afternoon, Your Honor. Frank Oswald, Togut, Segal & Segal, along with my colleague Minta Nester. Your Honor, we were recently engaged by defendant Clayman Rosenberg Kirshner & Linder, LLP. We appreciate the Court's accommodation in allowing us to appear remotely, as I'm away this week with the family and Ms. Nester is recovering from some surgery, so thank you for that accommodation. THE COURT: You're welcome. And I think, Attorney Oswald, I think you may be involved in the status conference, right. There are other Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 8 of 112

9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 matters that you see at 1:30, applications, fee applications. You're not appearing on behalf of any of those matters are you? MR. OSWALD: No, I'm not, Your Honor. THE COURT: Okay. Thank you. All right. Then, Trustee Despins, there are several fee applications and an application to employ counsel that I think are on at 1:30, in addition to the status conference, so how do you propose to proceed? MR. DESPINS: If this is acceptable to Your Honor, it probably would make sense, given the number of people involved with respect to the status conference, to cover that first. THE COURT: That's fine. MR. DESPINS: So let me -- this is the status conference (indiscernible) the proposed mediation. THE COURT: And I think you also asked for a status conference about the motion to stay? MR. DESPINS: Correct, Your Honor. THE COURT: Okay. MR. DESPINS: So for the record, Luc Despins, Chapter 11 Trustee. And with Your Honor's permission, I will ask that some of this be covered by Mr. Bassett, but I wanted to just open up with general concepts and then I'll turn it over to Mr. Bassett to handle more precise issues. Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 9 of 112

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 I know there was a hearing at which I could not attend, where Mr. Linsey attended and he gave us a full report and I actually looked at the transcript, so we understand what's on your Court's -- on the Court's mind in terms of issues, and we did file the motion, as requested by the Court and we view that, Your Honor, as an opening for a discussion, really. Informal, when we file a motion, we want the motion to be granted as set forth in the motion, but here, we understand that, especially, we could not get all the Court's views. We certainly don't have Judge Tancredi's views, so we understand that this is an iterative process, but I wanted to address some of the big points. The first one is we're not going to dump 170 adversary proceedings on Judge Tancredi's lap. That would be a recipe for disaster, and we have a game plan. Of course,

16 17 18 19 20 we have not talked to Judge Tancredi, so I don't know how he wants to handle this, or how Your Honor wants to handle this, but the idea here would be that conceptually, we would come up with a list of five or six maximum buckets of different types of claims.

21 22 23 24 25 So I'll give -- I always give easy examples. So you have, for example, Federal Express or UPS. They receive a post-petition transfer. There are issues that apply to these types of Defendants that, frankly, I'll stipulate just for now that they probably did not know anything about what

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1 2 was going on with the debtor. So there are a set of issues there that are common to these types of Defendants.

3 4 5 6 7 8 9 10 11 12 13 14 There are other Defendants that are at the other end of the spectrum where, you know, it's very clear that people knew or should have known what was going on and sometimes that issue is irrelevant and sometimes it's not. In a post-petition context, it may not be relevant. What's relevant is, was there a court order? There was none. The second is, is this ordinary course of business, especially, Your Honor forks transfers that were made after the appointment of the trustee. I don't know how people are going to argue that it was ordinary course of business to get paid by a debtor or by an entity controlled by the debtor after the trustee's appointment.

15 16 17 18 19 20 21 22 23 24 25 But I'm not here to argue the merits. I'm just trying to tell Your Honor that there will be five or six buckets that will cover 90 percent of these Defendants. And our concept is that this will only work if we agree to do this on a global basis, meaning that, again, this is subject to Your Honor's views and subject to Judge Tancredi's views, but they would be sessions involving multiple Defendants. So maybe Federal Express got a transfer of -- I'm sorry to always mention them, but I've been talking to them -- you know, a transfer for \$100,000, \$120,000. Maybe UPS got a transfer for \$110,000. It doesn't matter what the amounts

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1 2 3 4 5 6 7 8 9 10 are. These are similar -- almost identically situated entities and there should be a bucket where there's -- there could be a meeting with Judge Tancredi where the debtor will make a presentation. This is our case against these types of Defendants and they would make or the people who are there or represented by counsel could make their own presentation and then we would withdraw from that meeting and Judge Tancredi might give them some general advice on his views of whether these claims should be settled or not and at what level. But we don't -- and we think that's the best use

11 12 13 14 15 16 17 18 19 20 of the mediation process, because otherwise, if we are going to attempt to have a case-by-case mediation, it would overwhelm Judge Tancredi, the fees would be through the roof, and in addition to that, I don't think it would be productive and, therefore, we are -- our proposal, our structure is to have this global approach and to, for now, defer the issue of whether there would be other mediators appointed. Of course these mediators would be appointed by a court order entered by Your Honor, but after a discussion between the trustee and Judge Tancredi.

21 22 23 24 25 But we want to resist the temptation to do that right out of the box because we believe that the most efficient way is not to have one-on-one mediation, but to have group mediations. And people are free to say, I don't belong in this group; I have a special situation. And we can

1 2 3 4 5 deal with that, but there are so many people that clearly, you know, fall within some of these buckets that remain to be precisely defined that that's our approach and we believe strongly that the mediation will be productive if we adopt this approach.

6 7 8 9 10 11 If it fails because the Defendants don't want to participate like that, we understand that. Even from their point of view, they would benefit. The lawyer from Federal Express may benefit from hearing what the lawyer for UPS has to say, et cetera, et cetera. So the point is that this could be beneficial to all involved.

12 13 14 15 16 But if it fails, then we may very well have to revert back to the appointment of individual mediators and that's built into the order. That possibility is there, subject to Your Honor actually approving the specific appointment of mediator one, two, three, four, and five.

17 18 19 20 21 22 23 24 25 So I wanted to give this broad outline, because this is counterintuitive in the sense that, generally, mediation is one-on-one. There are issues that are specific to some Defendants here. Sure, there will be some of that, but, generally, there are a lot of people that are Defendants that fall within very defined buckets, prepetition, postpetition, post-petition after the appointment of the trustee, et cetera, et cetera. So, I wanted to say this at the outset and then I would ask Mr. Bassett to come and address other

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1 2 more precise issues, for example, where we're proposing to change our approach.

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 You had raised the question very accurately when Mr. Linsey was here, which is, what do you have to do to be in mediation; meaning, do you have to file an answer or a motion to dismiss? We had, in the proposal -- the motion we filed, we had required that people file, you know, either an answer or a dispositive motion. After a lot of internal discussions about that, I think we're going to change tack on that because the thinking is, on balance, although, personally, I would rather see answers than motions to dismiss because it focuses the discussion. It may defeat mediation for a lot of people because they'll say, If I have to file a lawyer to file a motion to dismiss or an answer and incur all these costs, this may not be very interesting for me to participate in. So I think we're proposing to change our position on that in the motion that said, you have for file an answer or a motion

19 20 21 22 to dismiss and I think Mr. Bassett will address this, but I think we're proposing to change that approach. But there are other technical aspects that I would ask Mr. Bassett to addresses with the Court's permission.

23 24 And I'm happy to answer the global questions you may have, as well.

THE COURT: I just have one or two, I think, given

15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 what you've said. I've reviewed the mediation motion and you have a list of 90 pairs. It's exhibit -- I don't remember the -- MR. DESPINS: The excluded. THE COURT: -- Exhibit 3 or something to the motion. There's 90 that you are proposing to exclude. Are you thinking that at any point in time that if one of those parties wanted to be part of the mediation that you would entertain that? What I'm trying to determine is, obviously, the mediation motion hasn't been served on anyone, right? MR. DESPINS: Well, Mr. Bassett will address that. I think there's been some service, but let me let him address that. THE COURT: Well, what I'm saying is what I saw was this list of 90 -- MR. DESPINS: Oh. THE COURT: -- that, apparently, at least at this point, from your perspective, would not be subject to these mediation procedures; is that correct? MR. DESPINS: Correct. That's correct, Your Honor. THE COURT: So what -- there's two ways I suppose this could work, I think, and maybe you could come up with a third. But either the motion gets served on the Defendants Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 15 of 112

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in the other adversary -- in all but those 90 adversary proceedings and there's an objection deadline, or are you asking for the Court -- and I'm not suggesting you have to answer this right now, but this is my question: Are you asking the Court to enter this without service on the Defendants, but give the Defendants an opportunity to say they don't want to go to mediation? I think it has to be one or the other. MR. DESPINS: Yes. Well, Mr. Bassett was going to address that, but -- THE COURT: Okay. All right. That's fine. MR. DESPINS: -- so we have this concept of initially mandatory mediation -- THE COURT: Right. MR. DESPINS: -- for everyone, other than the 90. But if you don't want to be in, you file a motion with the Court to be excluded. So there's a safety valve. So, it is, at the outset, mandatory, but they have the ability to come to court to say, No, I don't want to be in mediation. Because at the end of the day if people don't want to mediate, it's not going to be very productive to include them, but there's a default mechanism at the outset that everyone is in, unless they file a motion to be excluded. As to the 90, I think I'm indifferent as to

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 whether we serve them or not. We're not trying to exclude them for life in the sense that if they want to file a motion with the Court saying there's a compelling case why they should be included, fine. Our view is -- and I don't know if -- (An alarm plays in the courtroom) THE COURT: That might mean the air is not good in the courtroom right now. There might be too many of us, but we'll see. Is that a little monitor with numbers? MS. CLAIBORN: Yes. THE COURT: Okay. MR. DESPINS: Too much hot air. (Laughter) THE COURT: Most likely. MS. CLAIBORN: It says, "poor." THE COURT: Okay. It says, "poor." I don't know how to turn that off, though. That would -- is there an ability to unplug it? MS. CLAIBORN: Let's see if that works. THE COURT: Okay. Thank you, Attorney Claiborn. MS. CLAIBORN: Go for it. (Laughter) MR. DESPINS: So my point, Your Honor, is as to the 90, the judgment call there was, we don't think it would

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1 2 3 4 5 6 7 8 be productive to have them in mediation because -- and that's going to sound like a broad, overt generalization, but it's intended -- those are Kwok-related entities. We've already been in mediation with Mr. Kwok and his family. We think it's a waste of time to do mediation with them because it's just going to incur costs for no reason. I don't think they have any intention of settling anything. So that's my assessment.

9 10 11 12 13 14 15 So, therefore, to put them in the mediation would be -- that's, again, I may exaggerate that in the accepts of, are they all Kwok-controlled entities? Not sure, but I would say the intent was to cover those and maybe others that are related to those entities. So, but they're free to file a motion to say, Oh, the trustee should be compelled to mediate with us and we did oppose that.

16 17 18 19 THE COURT: Well, I'm not suggesting that needs to happen at the moment. What I was talking about Attorney Linsey about, and you've addressed it, is I would think there have to be these buckets --

MR. DESPINS: Yes.

21 22 23 24 THE COURT: -- right. With 170 or 80 adversary proceedings, I agree that we can't just dump them all on Judge Tancredi, although, I'm sure he would try to figure it out.

But we also have to worry about -- and at this

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| 1 | point, he doesn't see any problem with acting as the | |----|---------------------------------------------------------------| | 2 | mediator, but, you know, a defendant might, so you'd have to | | 3 | deal with that if and when that happens. I do think that | | 4 | Judge Tancredi would be supportive of having more | | 5 | identification of what these buckets are and, like you said, | | 6 | either have a group mediation and/or, you know, a test case | | 7 | of the groups that you determine are the buckets that you | | 8 | think they fit into, I think that would be fine. | | 9 | MR. DESPINS: And we've added that. We've added | | 10 | the point that the judge has the ability, Judge Tancredi has | | 11 | the ability to issue a report saying in his opinion, it would | | 12 | be beneficial to the advancement of mediation for the Court | | 13 | to rule on issue X, a general issue. | | 14 | THE COURT: Right. | | 15 | MR. DESPINS: And so we've added that and we | | 16 | welcome that. I think that would be beneficial. | | 17 | THE COURT: I also think that there -- and this | | 18 | can possibly work with discussions with Judge Tancredi, but I | | 19 | think it would be helpful for him to have some kind of idea | | 20 | of a timeline of what you're thinking of, right. I mean, I | | 21 | heard what you said about abandoning the issue of a Defendant | | 22 | having to file a responsive pleading or an answer. I think | | 23 | that probably makes sense in the sense that there's still the | | 24 | period of time running in all of these complaints, correct, | | 25 | the 60-day period which you can unilaterally extend without a |

20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 court order. MR. DESPINS: Yeah, but for people who are on mediation, they would pick up an extension if there -- THE COURT: No, that's what I'm -- I'm agreeing with you. MR. DESPINS: Okay. THE COURT: I think what my point is, is I think, though, what would be helpful to Judge Tancredi is to identify those buckets and try to have at least some form of a proposed timeline or even just a range of when you think some bucket is going to be given to him -- MR. DESPINS: Yes. THE COURT: -- right, so he can focus on those issues and go from there. MR. DESPINS: And, Your Honor, we didn't put that precisely in the order, but the intent would be, the minute the order is entered is to try to have a meeting with the judge to go over the proposed buckets because you might say, No, interested party don't buy that or maybe you should have another bucket, and to have him participate in the sequencing of these buckets. Because I don't feel comfortable telegraphing to him right now what the sequencing should be -- THE COURT: Okay. That's fair. MR. DESPINS: -- because he might say, You're Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 20 of 112

21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 wrong. THE COURT: Okay. That's fair. I think that what I read in the papers, I would not have the procedures say that Judge Tancredi will create a mediation panel, because he will or he won't; that's up to him to make that determination. He may feel that that's not necessary and/or efficient, you know. I think he needs to figure that out himself. MR. DESPINS: I think we put that as an -- not an automatic, but an alternative mechanism. THE COURT: I just don't -- I don't think it should be automatic -- MR. DESPINS: Okay. THE COURT: -- and I don't think he would like it to be automatic. MR. DESPINS: Okay. THE COURT: I'm not saying he might not do that, ultimately, Trustee Despins, but I don't think he wants that to be -- he's got to get his arms around all of this, right? MR. DESPINS: Understood. THE COURT: Okay. So then, I think you've answered the question that I've had with regard to what you've said and I guess I will hear from Attorney Bassett then. MR. DESPINS: Thank you, Your Honor. Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 21 of 112

| | Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 22 of 112 | |----|-----------------------------------------------------------------------------------------------| | | 22 | | 1 | THE COURT: All right. Thank you. | | 2 | MR. BASSETT: Your Honor, I might just address the | | 3 | Court from here if that's okay? | | 4 | THE COURT: Sure. | | 5 | MR. BASSETT: Thank you. | | 6 | Again, for the record, Nick Bassett from Paul | | 7 | Hastings, on behalf of the Chapter 11 Trustee. Your Honor, | | 8 | as is sometimes the case, Trustee Despins said I was address | | 9 | certain things but then he went ahead and addressed them, so | | 10 | I'm not sure how much more I do have to add. I will respond | | 11 | to a couple of questions the Court asked and maybe provide a | | 12 | little bit more detail as to how some of the procedures will | | 13 | work. | | 14 | But first, the Court had asked about service. So | | 15 | as I understand it, all of the approximately 270 avoidance | | 16 | actions for those -- and I don't have a list breaking this | | 17 | down -- but for those involving Defendants who are located in | | 18 | the United States, I understand we have completed service on | | 19 | those Defendants. | | 20 | THE COURT: Of the what? Of the mediation motion | | 21 | or the summons and complaint? | | 22 | MR. BASSETT: Of the summons and complaint, Your | | 23 | Honor. The mediation motion, I think we just filed toward | | 24 | the end of last week, so we have not yet done that, but I'm | | 25 | just speaking in terms of the summons and complaint. I | | | |

1 2 3 4 5 6 7 understand we've served that on the domestic Defendants. Obviously, those located abroad is a longer, more involved process that we are working through, but I think the way that works with the mediation procedures is that we will go ahead and serve the mediation procedures motion on those Defendants located in the United States. We will ultimately make sure that those located abroad have it as well.

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 But, regardless, the way the procedures work is that the referral to mediation would occur on the date of the answer deadline automatically, subject to an opt-out right within 14 days thereafter, as the trustee described, where a Defendant could say that they would like to not participate in the mediation and ask to be accepted. So each -- before that clock starts ticking, each Defendant will have been properly served with the summons and complaint. They will then have that answer. They will have an answer deadline, but the way we are going to modify that, based on what Trustee Despins said, is rather than have it be a deadline to file either an answer or a motion to dismiss, instead, by that date, an appearing Defendant can simply file a notice of appearance. The Defendant has to do something to enter an appearance in the case to avoid default, but in order to, you know, help facilitate fruitful mediation discussions to save Defendants money that could potentially be used as part of the settlement, et cetera, we think it makes stones have that

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 be a notice of appearance, instead of, necessarily, a motion to dismiss or an answer. But again, everybody is going to get served with the complaint according to applicable law and then their time to opt in to the mediation procedures or opt out, rather, would start ticking thereafter. So in terms of due process -- THE COURT: But how are they going to know that if they don't get served -- you're saying you're going to serve them with an order that modifies the avoidance action procedures that addresses mediation and not the motion? MR. BASSETT: Well, we would serve them with both. I mean, we'll serve the domestic Defendants with the motion. To the extent the Court enters -- THE COURT: Well, I just want to understand. Are you giving them an opportunity to object or are you saying, This is the order that says this is -- you're in mediation and if you want to opt out, you have to file something. MR. BASSETT: It's the latter -- THE COURT: Okay. MR. BASSETT: -- and I think, practically, that's the only way it can really work, especially given all of the Defendants who are located abroad. You know, it could take a significant amount of time to serve them with a summons and

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 complaint and all of that, so I think that that has to happen. Then the mediation procedures order, which is, in effect, will take over at that point according to its terms. THE COURT: All right. Well, then, it sounds as though you're going to be modifying the mediation procedures, according to what Trustee Despins just said, so there isn't going to be an order for the Court to sign until that's done, correct? MR. BASSETT: That's correct, Your Honor. And we had treated today -- we had always understood that today's hearing was, of course, just a status conference -- THE COURT: Understood. MR. BASSETT: -- anyway, so -- and we had anticipated that, based on discussions that we might have be parties that there would be some modifications to the mediation procedures. So we'll work that out and, obviously, get the Court a revised proposed order as soon as we can. THE COURT: It seems at least, and I could be wrong, that the mediation motion was filed in the main case and in all of the adversary proceedings, I think, yesterday, right. So, then, you're going to then file an amended mediation motion or what are you going to do? MR. BASSETT: I would can contemplate, simply, a notice of revised proposed order that would filed --

26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Okay. MR. BASSETT: -- as opposed to an entirely amended motion. THE COURT: Okay. And then -- but that revised proposed order has to provide how much of time to opt out? MR. BASSETT: The procedures state that it's 14 days from the date of the answer deadline. So, in other words, if they -- I think the current procedures say 60 days, right, which is already -- THE COURT: So 60 days from service? MR. BASSETT: Right. Which is already giving parties an extension. So they'll have 60 days from the date of service to simply file a notice of appearance and then they have 14 days thereafter to decide whether they want to opt out and, obviously, that 14 days is really 74 days because, you know, or from whenever they find out about the mediation procedures, they'll have a significant amount of time to -- THE COURT: Well, what if they file a notice of appearance before the answer date is due? I think some people have. MR. BASSETT: That's the way -- well, then, according to the way we have the procedures, it would be 14 days from then. I would see no reason to change that, but, obviously, if the Court has a different view, we could -- Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 26 of 112

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Well, I don't know. We'll see if anybody wants to be heard on that issue. But I'm just trying to understand the process so that it's clear that parties have a right to say I don't want to be a part of mediation. I think we need to make sure we understand how that's going to work. So, what you're saying, so that I'm clear, is that all Defendants in the U.S. have been served with a summons and complaint so that the 60 days that are part of the avoidance actions procedures order has already started to - will have started to run upon service of the summons and complaint? MR. BASSETT: That's what I'm told by my team, Your Honor. If there's one or two or something where there's a lingering issue, that could be -- THE COURT: Right. But that's the process, that's how it works? MR. BASSETT: Yeah. THE COURT: And then you're saying on the sixtieth day after service, all the Defendants in those adversary proceedings have to do is file a notice of appearance and if they do, then they will be included in the mediation process, unless 14 days thereafter, they move to opt out of the mediation process? MR. BASSETT: That's correct, Your Honor.

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1 2 3 And I believe we've modeled this off of -- I don't know if the dates and deadlines are precise, but this concept is one that we've seen elsewhere.

4 5 6 7 8 9 10 THE COURT: Right. I agree, but in a little bit different context. But I think it's fine, but I think you do need to address -- and there are people here who have filed appearances in some of these adversary proceedings, so I don't know if they feel they should be bound by a 14-day period from the date they filed their notice of -- because we don't even have the mediation procedures order in place.

11 12 13 14 15 16 17 18 MR. BASSETT: That's fair, Your Honor. I don't see how it could possibly be before the order has been entered. So, to the extent that parties have filed a notice of appearance and need more time, I'm happy to, you know, consider some -- maybe for people who have filed a notice of appearance, it's going to be X days from the date that the order is entered, whether it's two weeks or something else, but I think that would make sense.

19 THE COURT: I heard what you said.

20 21 22 23 MR. BASSETT: I think -- otherwise, I think, you know, most of what I was going to mention has been covered. Obviously, if you have any other questions I'm happy to try to answer those.

24 25 THE COURT: I don't have any at the moment, but that doesn't mean I might not as the afternoon progresses,

29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 okay. But thank you. MR. BASSETT: Thank you. THE COURT: Does anyone else wish to be heard in connection with the trustee's motion to modify the avoidance action procedures in connection with mediation? I should say anyone, because no one else has spoken yet, so does anyone wish to be heard? MR. SKLARZ: Good afternoon, Your Honor. Jeffrey Sklarz for G Club. I suppose this doesn't necessarily apply, as I've heard today, to G Club, but I'll be filing appearances on - in the future on behalf of parties that it will apply to. THE COURT: Is G Club on the list of 90, right? MR. SKLARZ: G Club is on the list of 90, but I'll say my peace for the record -- THE COURT: Go right ahead. MR. SKLARZ: -- as I will have clients that are not on the list of 90. This is a very complicated motion and what I want to mostly make clear is that all Defendants should be given sufficient time to analyze the motion and respond to it, attempt to collaborate with the trustee to provide whatever constructive criticism and proposed changes to the mediation procedures should be -- that would be appropriate. So it would seem that if there is -- there should be an objection Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 29 of 112

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1 2 3 4 5 6 bar date set, but it should be set well out ahead, six or eight weeks, something like that, before a hearing to allow everybody to communicate with the trustee, understand the narrow issues, and provide sufficient time for a response and allow the Court to assimilate all the information that it'll likely get back and craft an order.

7 8 9 10 11 12 13 14 15 16 Certainly, clients that I currently represent, but haven't filed an appearance on behalf of and will represent, will want to test the viability of claims, whether they're in a mediation setting or not. And, particularly, if they're in a mediation setting, the trustee should be filing a response to motions to dismiss, as the alter-ego concept that the trustee has put forth is novel. So it'll be important as parties go to mediation that we understand the basis for the trustee's claims to make any mediation productive and to understand why we're wrong in our posture for dismissal.

17 18 19 20 21 22 Similarly, the mediators will have to understand the trustee's concepts. Unless we understand why we should lose, it's hard for the mediation to work. So just letting the trustee not respond to motions to dismiss in a mediation context, I think is not necessarily productive in terms of moving a mediation forward.

23 24 25 We have a number of basic questions. There's a good faith requirement in paragraph V where -- THE COURT: Tell me where you are, Attorney

31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Sklarz. MR. SKLARZ: On page 7 -- I'm sorry, ECF 3003, page 19 of 31, paragraph V. THE COURT: All right. Give me a second, please, just so I can make sure I'm following you. Paragraph B? MR. SKLARZ: V, as in Victor. THE COURT: Yeah, go ahead. MR. SKLARZ: And starting one, two, three, four, five, six, seven, eight lines down, where a mediator's report indicates noncompliance. If somebody is required to go for mediation and says we think we have a good case, we have no interest in settling, is that noncompliance? Am I going to be sanctioned and my client defaulted because we want our day in court? I think this, in particular, is difficult to understand and it is not consistent with mass mediation procedures I've seen. Similarly, in paragraph M -- THE COURT: So let me just ask you, again, so you're saying you're concerned because if your client says, I don't want to go to mediation; is that what you're saying? MR. SKLARZ: No, we say we will go to mediation -- THE COURT: Okay. MR. SKLARZ: -- we hear the pitch of the trustee and the mediator and we say, We think we have a good case and Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 31 of 112

32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 we want our day in court. Constitutional -- THE COURT: Well, that's not going to mediation, right? MR. SKLARZ: Well, no. THE COURT: I mean, that you're saying that you don't want to mediate. MR. SKLARZ: Well, we say we've gotten to mediation. We don't think we should pay anything and we would like to terminate the mediation. THE COURT: Okay. MR. SKLARZ: There's no requirement to settle if you go for mediation. THE COURT: I understand there's no requirement to settle if you go to mediation, but mediation is meaningless if you go there and think that there's no reason to try to resolve the matter, right? MR. SKLARZ: I'm not saying that. I'm not saying that at all. What I'm saying is everybody goes there and at the end of the mediation, there's a business decision made by a client, we do not want to accept whatever is on the table and we would prefer to go to trial. I'm fearful that not agreeing to settle will have sanctions leveled on me and my client for (indiscernible) noncompliance. THE COURT: Well, I don't see how that can happen Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 32 of 112

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 necessarily, but I guess we'd have to cross that bridge when we come to it. But remember, if your client doesn't want to go to mediation, they can opt out, number one. I understand what you said, but let me just follow my thought through, okay. MR. SKLARZ: Sure. THE COURT: Number two, if your client goes to mediation, your client has to act in good faith, too, right? MR. SKLARZ: For sure. THE COURT: So your client -- and if you have any concern that your client has -- doesn't want to do this and can't act in good faith, then you don't -- then opt out. MR. SKLARZ: And that brings me to my second point. In paragraph M on page 16 of 31 -- THE COURT: Okay. Give me one second, okay. I just want to make sure I'm following you exactly. MR. SKLARZ: -- this is the opt-out. THE COURT: Page 16, you said? MR. SKLARZ: 16 of 31 -- THE COURT: Paragraph M, as in Mary? MR. SKLARZ: -- ECF -- M, as in Mary -- or I suppose we should M, as in Manning -- ECF 3003, third line, or that whole sentence. You can't just opt out; it's you have to show good cause to opt out. So I think what Your Honor indicated about

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 paragraph V, it gives even greater concern because what is good cause to opt out of the mediation? THE COURT: I'm looking at M and I haven't found what you're reading yet, but just -- oh, there it is. I see it. I got it. It took me a minute. MR. SKLARZ: So, again, I think these are just discussion points. I have no doubt that lawyers can work together to craft language. You know, Delaware and the Southern District of New York and other jurisdictions have language that they use in mass mediations. THE COURT: Well, they have mandatory mediation procedures -- MR. SKLARZ: Yes. THE COURT: -- we do not. MR. SKLARZ: Yes, but we can borrow from some of those to, perhaps, provide language that would work for everybody. And, again, I'm just pointing out, these are things I think that need discussion, and so if the Court were to set an objection bar date of two weeks from today, it would make it very difficult to have these discussions. I think there needs to be a lengthy period for everybody to, number one, get served. None of my clients -- I haven't filed appearances in a number of adversaries yet because my clients haven't been served, for the most part, so we need to get everybody

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1 2 3 served. Get everybody served with this motion and give everybody an opportunity to be heard. I think that's only fair.

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 So, essentially, at this point, we think a lot of these ideas are good ideas and these procedures are good procedures, but there's ones that we have difficulty with. I pointed out a couple here. There's others. I don't want to belabor this, because I think there needs to be a discussion among counsel, but I would just urge Your Honor to ensure that the nearly 300 Defendants in these cases are given sufficient time to not only protect their rights and understand their rights, but respond meaningfully to the trustee's motion and then assuming we get past all that or we will get past all of that when it's dispositive motion time, that when we're going to mediation, we understand what the trustee's arguments are in favor of their claims. THE COURT: In favor of what? MR. SKLARZ: In favor of their claims. THE COURT: Okay. MR. SKLARZ: So, you know, my client files a motion to dismiss, we would want to see a response to that motion to dismiss so that we understand the basis of the claims. Again, I understand what the trustee is saying.

25 The 549 claims run from the petition date based on this

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 alter-ego concept, but we have to understand the alter-ego concept is being used in a way that's substantively different than I've ever seen alter-ego used before -- THE COURT: But you're not talking about just the alter-ego, number one. Number two, there's a pending motion to stay the alter-ego case and the RICO case. So let's presume, let's just for the sake of your points, let's presume that those cases are stayed. We're talking about avoidance actions. MR. SKLARZ: But the avoidance actions are, for the most part, premised on an alter-ego finding. So let's take the -- THE COURT: I don't know that that's exactly true. MR. SKLARZ: Let's take -- well, I've looked -- THE COURT: Not all of them. MR. SKLARZ: Not all of them, but a lot of them. THE COURT: I mean 90 of them are carved out, right -- MR. SKLARZ: Well, but -- THE COURT: -- and those 90, I think you might be right about. MR. SKLARZ: Well, but -- THE COURT: But I don't know about others that -- MR. SKLARZ: All the 549 claims -- virtually, all the 549 claims are. They say so and so company was an alter-

37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ego of Kwok and, therefore they're bringing 549 claims. THE COURT: Well, are any of those companies already been found to be the alter-ego of Kwok, because that might be a reason why it says that? MR. SKLARZ: Well, I mean, I can tell you, not all of the companies have. THE COURT: Okay. MR. DESPINS: Your Honor, if I may? I think I could clarify this, if I may? THE COURT: Sure. MR. DESPINS: So, as I mentioned to the Court when we had the status conference over the filing of these 280 actions, I mentioned that we had filed omnibus alter-ego when you're just mentioned that and that's a complaint where we're saying we own or -- we -- Kwok owned or controlled these entities. That includes G Club. So that's in the alter-ego complaint. That's not a fraudulent transfer action. That's an omnibus alter-ego action where we say -- the same way we said that Lamp Capital or Golden Spring was owned and we obtained judgments on that, we are seeking the same relief in that omnibus alter-ego complaint against G Club and others, many others. Now, because the statute of limitation was expiring, we also filed, as a safety valve, a fraudulent transfer claim against G Club for transfers made by entities Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 37 of 112

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1 2 3 4 5 6 7 8 that we believe are alter-egos in the event that we lose the main alter-ego action. So we go to trial or summary judgment on the issue of we own or we control G Club, the Court rules against us. At that point, the estate and everything that's in the estate's jurisdiction, if you will, the other alteregos, made millions of transfers to G Club. That is when the fraudulent transfer action that counsel was talking about would become ripe.

9 10 11 12 13 14 15 16 17 18 19 20 21 But there's no point in litigating that action because if we win on the alter-ego or against G Club, it would be us suing ourselves because G Club would be part of Kwok. So Kwok cannot sue himself. And we made that very clear in the action where there's a fraudulent transfer claims against G Club that that is going to be prosecuted only in the event that we lose the principal alter-ego, omnibus alter-ego complaint that was filed on February 15th. And as you mentioned, that action needs to be stayed because of the criminal trial. THE COURT: Well, let me ask you a question about that, then. If those actions, those two actions that are not avoidance actions are stayed, are you saying, then, the

22 23 fraudulent transfer action against those entities would also be stayed?

24 25 MR. DESPINS: Against those entities that are - you mean like G Club?

| 1 | THE COURT: Yes. | |----|---------------------------------------------------------------| | 2 | MR. DESPINS: Yes, they are. They should be | | 3 | stayed, as well, because we said that we would not prosecute | | 4 | those. I am pretty sure we said that, that's what I | | 5 | remember, that we would not prosecute those unless and until | | 6 | we lost the omnibus alter-ego. | | 7 | THE COURT: Right. So, then, there really needs | | 8 | to be more matters stayed, essentially, than just the omnibus | | 9 | alter-ego and the RICO action? | | 10 | MR. DESPINS: That's a fair -- we -- because we | | 11 | didn't intend to prosecute it, we didn't seek a stay, but, | | 12 | yeah, I guess, technically, they should be stayed, as well. | | 13 | THE COURT: Maybe. I mean, I'm just -- | | 14 | MR. DESPINS: No, no, no. That's a very fair | | 15 | point. | | 16 | THE COURT: -- talking because, then, if that | | 17 | happens, doesn't that -- | | 18 | MR. DESPINS: It moots the issue. | | 19 | THE COURT: -- put aside -- yes, Attorney Sklarz's | | 20 | issue? | | 21 | MR. DESPINS: Correct, Your Honor. | | 22 | So I wanted to clarify that, because I know it's | | 23 | not clear. I tried to make that clear in the PowerPoint | | 24 | presentation that we filed I guess two weeks or so after | | 25 | February 15th and we had the status conference. But that | | | |

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1 2 3 type of action, the fraudulent transfer against G Club is only going to be prosecuted if we lose the alter-ego that G Club is part of the estate.

4 5 THE COURT: Right. I mean that's my recollection. That doesn't mean I'm correct. That's my recollection.

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 So, Attorney Sklarz, I think what -- there are two things that I think when you said file a response to your motion to dismiss, for example, what I heard today, which is different than what's in the motion, is that you won't have to file anything; you just have to file a notice of appearance, number one. I don't know what your position is on that, but I have an idea, but in any event, it doesn't - that's just number one. But number two, if you're -- when you're speaking specifically about G Club, anyway, at least you are at this point, I don't know why those matters would go to mediation when the alter-ego claims are being stayed. MR. SKLARZ: All I'm doing is reading what I had. THE COURT: No, no, I understand that. MR. SKLARZ: Yeah. THE COURT: I'm just -- like you said, we're just having a discussion, right? MR. SKLARZ: Yeah, totally. I totally agree. And that's the most important thing I'm trying to convey here is that this is complicated and I appreciate what

the trustee is trying to do here, but I think we just need to

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| 1 | not rush through it and be thoughtful and reflective and | |----|-----------------------------------------------------------------| | 2 | whatever procedure is determined and the trustee should | | 3 | collect input from everybody in the courtroom and everybody | | 4 | who's not in the courtroom who wants to be heard so that the | | 5 | procedures that are proposed to Your Honor comport with | | 6 | everything from the constitutional right to trial in a civil | | 7 | matter to (indiscernible) some of the nitty-gritty | | 8 | particulars that we've gone through today. That is what I'm | | 9 | trying to say. We just need to slow down a bit and make sure | | 10 | we do this right. | | 11 | THE COURT: Well, there isn't, as Attorney Bassett | | 12 | correctly noted, there's no motion on the calendar. This is | | 13 | a status conference, right? | | 14 | MR. SKLARZ: And that's why I'm saying what I | | 15 | said. | | 16 | THE COURT: And we need to -- no, and I agree, | | 17 | that's one of the reasons I raised the issue at the last | | 18 | status conference of how this was going to work and that | | 19 | there needed to be a motion, right? That's what I said. | | 20 | MR. SKLARZ: Yes. | | 21 | THE COURT: Because we need to understand how the | | 22 | process is going to work. And I asked questions of Attorney | | 23 | Bassett and Trustee Despins already and now I'm asking -- I | | 24 | asked you and you've told me what your thoughts are. And I'm | | 25 | going to ask you -- I think I understand your position -- is |

| | Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 42 of 112 | |----|-----------------------------------------------------------------------------------------------| | | 42 | | 1 | there anything else you want the Court or Trustee Despins to | | 2 | consider in connection with these mediation proposal and | | 3 | procedures? | | 4 | MR. SKLARZ: Well, there's many things that we | | 5 | will want him to consider, but we got this on Friday -- it's | | 6 | Tuesday -- and I think we should have time to reflect and | | 7 | send him our thoughts so that -- | | 8 | THE COURT: That's not -- I understand that. | | 9 | MR. SKLARZ: Yeah. | | 10 | THE COURT: I'm saying as you stand here right | | 11 | now? | | 12 | MR. SKLARZ: No, Your Honor. | | 13 | THE COURT: Okay. All right. Thank you. | | 14 | Does anyone else wish to be heard? | | 15 | MR. HYMAN: Good morning, Your Honor. Frederick | | 16 | Hyman on behalf of NBI and Yieldesta. | | 17 | THE COURT: Yes. | | 18 | MR. HYMAN: I won't take much of the Court's time, | | 19 | but I did want to put a little bit of color on the comments | | 20 | that were made by counsel that just spoke. | | 21 | I represent two Defendants in adversary | | 22 | proceedings that are the recipients of transfers from alleged | | 23 | alter-egos. There were no other transferors, so I wanted to | | 24 | understand how the procedures would affect my client because, | | 25 | as has been acknowledged, the trustee has sought a motion to | | | |

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1 2 3 4 stay the alter-ego action. So it would seem a little bit inconsistent to go to mediation before the trustee has gotten, ultimately, a judgment that the transferors were alter-egos.

5 6 7 8 9 10 11 12 13 14 15 16 17 18 MR. DESPINS: And I can address that, Your Honor. I think in his case, the transferor is HCHK and I think we already -- HCHK is not being stayed, meaning we cannot -- it's not covered by the omnibus alter-ego because we've already sought a ruling from the Court. We already obtained various default judgments. And I know the ultimate ruling is pending before Your Honor, but that is not being stayed. So, to be clear, and maybe I'm presumptuous, but we assume there'll be a ruling from the Court on HCHK eventually on our summary judgment or, sorry, on the default judgment. And that case, that action is -- it would be going forward, because the transferor or the entity that transferred is HCHK, which will be, we hope, determined by the Court to be an alter-ego. So that's --

19 20 MR. HYMAN: I don't think that's correct on the transferors, but I --

21 22 23 24 THE COURT: I can't hear you, Attorney Hyman. MR. HYMAN: Sorry, Your Honor. THE COURT: That's all right. MR. HYMAN: I think we need better clarification

25 on the ultimate transferor for the payments to my clients. I

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44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 do not believe that it was solely HCHK, but we're happy to have those conversations. MR. DESPINS: I'm happy to do that, Your Honor. THE COURT: All right. So I understand your point, Attorney Hyman, and just so you know, Attorney Hyman, and you probably do, there have been some determinations made by this Court about alter-egos and so, but it may be in your case that it hasn't. MR. HYMAN: I'm well aware of that. THE COURT: Okay. All right. Thank you. Does anyone else wish to be heard? MR. OSWALD: Your Honor, Frank Oswald with Togut Segal, if nobody else is (indiscernible), I'll just very briefly. I echo many of the comments of prior counsel for the defendant, recognizing and empathizing with the trustee and also Judge Tancredi to the extent that he does mediation. I'm a big fan of mediation and we have been in the trustee's shoes prosecuting literally thousands in certain cases, like Enron and whatnot. So it's a good thing to do. I had the ability to catch up quickly yesterday with one of the attorneys for the trustee on the matter. Again, we would like an opportunity to look more closely at the procedures, work with the other counsel. I think we're going to have a lot of commonality of the issues. I certainly think that everybody should have the same amount

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1 2 3 4 5 6 7 8 9 of time to respond, whether they want to opt in or opt out. I mean, quite frankly, my discussions with counsel, only because it seems to work very well in our prior cases, is sort of a precursor for the mediation, than a mediation statement, is (indiscernible) provide counsel with a position statement once the requisite factual and legal diligence is done. Get some feedback on that, have a dialogue, and more often than not, you know, you're able to avoid mediation if folks are reasonable.

10 11 12 13 14 15 16 That being said, if not, again, I'm a big fan of mediation, but I do think we need a little bit more time. I think my client, a law firm in Connecticut, would be subject, at least to whatever ruling was made. I haven't had a chance to digest it, but in terms of the Lamp Capital, I heard that reference, but on the other hand, our client represented the debtor, as well as another entity.

17 18 19 20 21 22 23 24 25 So, I, likewise, notwithstanding the thousands of actions that I've been a party to on avoidance actions, haven't seen the alter-ego theory applied in this way, but as it relates specifically to mediation, I think it's a good idea. I think we'd all like to see the revised procedures and have an opportunity to confer with clients and other Defendants, get back to the trustee's counsel, and perhaps submit something that's, you know, completely consensual. THE COURT: So, Attorney Oswald, I asked Attorney

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1 2 3 4 Sklarz and he told me that he would like the motion to be served on his Defendants and he'd like an opportunity to respond six to eight weeks out and see what can be done in the meantime.

5 6 What's your proposal, as far as timing and response? I'd like to understand that.

7 8 9 10 MR. OSWALD: Yeah, well I only have one client, we think, today, I think, because we filed a notice of appearance, gotten the backup to the complaint. Those were filed under seal.

11 12 13 14 15 16 17 18 I certainly don't think it's going to require eight weeks to come to terms on a mediation procedure and, certainly, if there are issues in dispute, we presumably would ask for another conference so Your Honor could make a ruling on it. But, on the other hand, as I said, we are sort of getting up to speed. We didn't have the benefit of prior status conferences and we're just getting the diligence off and running on our front with our one defendant.

19 20 21 22 23 24 25 THE COURT: Well, why I asked the question is, I think the -- well, I know the reason the trustee would like to proceed this way is so that he doesn't have 170 different ways to proceed in 170 different adversary proceedings, right. And I think there is utility to procedures that involve avoidance actions and I think there's utility in mediation; however, I heard some concerns. Well, just you

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1 2 3 4 and Attorney Sklarz at this point, saying -- and I'm sorry, and Attorney Hyman, also, saying that they'd like some time to review the process and figure out what, if anything, they would like to see be part of that process.

5 6 7 8 9 10 11 And my next question is, you know, the Defendants can make those suggestions, but what if they're not agreed to, then what are we doing? Am I deciding? I would think I am. I don't think you can just Judge Tancredi, if he's the mediator, making decisions about what the procedures are piecemeal. That doesn't seem to make sense to me, otherwise, it defeats the whole purpose of mediation.

12 13 14 15 16 17 18 19 MR. OSWALD: Yes, in my experience -- and we've done it many times -- is that to the extent there was a dispute, you as the sitting judge, would resolve that and we'd send it to mediation. And, also, as the trustee indicated, I've had to stagger -- again, you can imagine 1200 actions filed at one time -- and we worked and staggered those with the mediator. You know, some of them are not as complicated as others, Your Honor.

THE COURT: Right.

21 22 23 24 25 MR. OSWALD: And some have, you know, not a lot of diligence to be done and the trustee takes measure of that and -- listen, it's in everybody's best interests, starting with the Defendants, who have to come out-of-pocket, like our client, to do this as expeditiously and as efficiently as

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1 2 possible. And I certainly pledge to the Court and the trustee to do that and help as I can.

3 4 5 6 7 8 9 10 11 12 13 So, again, I don't think coming to agreement on mediation terms, you know, the one point, if I read it correctly, there was going to be a mediation statement -- I'll call it a mediation statement -- from the defense side, but then it was -- it didn't seem clear as to whether or not we were going to get the benefit of the trustee's side. And, at least in my experience, these things work best. There shouldn't be any hide-the-ball and we should put forth our statements and facts and where we stand on the law, have a good faith discussion, and I think a lot of this will get narrowed down.

14 15 16 17 18 19 Now, listen, I think the alter-ego issue may well be a novel one. As I said, I've been involved in literally thousands of these actions -- not thousands of alter-ego ones -- but I just can't bring my own specific expertise to it because I've not had the alter-ego issue raised in this fashion.

20 21 22 23 24 25 But you may well, Your Honor, see somewhere, you know, the defense is going to be able to show value and the value seems to me, if what the trustee is saying, that the debtor and the third-party nondebtor entities should be treated one in the same, well, if you can establish value to the debtor, then you're not going to have a fraudulent

1 2 3 conveyance action. But I'm not -- I don't want to get into the substance and I don't think that's the point of this conference.

4 5 6 7 8 9 10 Your Honor wants to have these things move along efficiently. The trustee wants that. The defense should want that. And if there's going to be a motion -- am I right, did I understand it correctly -- I apologize if I didn't -- that there's going to be a formal motion to approve the procedures and then you'll set a deadline for responses and then we'll get into it?

11 12 13 14 15 16 17 18 19 THE COURT: Well, the motion was filed yesterday in all of the adversary proceedings. It is not -- it does not, at this point in time, have a process for objection - an objection deadline. In our Local Rules, motions can be set for hearing -- in adversary proceedings, can be set for a hearing at the direction of the judge. There's not necessarily an objection deadline; however, you know, parties can insist that there should be an objection deadline and then you can proceed accordingly.

MR. OSWALD: Yeah.

21 22 23 24 THE COURT: We don't have, as do other jurisdictions, mandatory mediation in adversary proceedings, so when these things occur, they usually occur on a smaller scale and we're able to address them that way.

Now, this is a bigger scale and the issue is how

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 do we address them appropriately? And one of the reasons for having a status conference was to discuss these issues. The motion for the -- to modify the avoidance procedures to include the mediation procedures was just filed yesterday, as I said. MR. OSWALD: Okay. Thank you and I was in transit, so I didn't see it. But I get it and I think that -- again, I guess the suggested procedures were Friday night. Listen, my suggestion is set an objection deadline and the parties will have an opportunity now that the motion is filed and, you know, we'll discuss, as I said, among ourselves. I've already taken the liberty to reach out to some counsel that I know. I'm a little bit handicapped traveling, but I tend to do that, and I think folks should cull their formal suggestions, formal edits to the procedures, share them with the trustee, set an objection deadline, and then we'll come back. I mean, I think that's the way you get it down on a timeline. Everybody work off the same clock and calendar. THE COURT: Okay. Thank you, Attorney Oswald. Is there anything else you'd like to note for the record? MR. OSWALD: No, Your Honor. Thanks, again, for allowing me to appear remotely. THE COURT: You're welcome. And your specific

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| | 51 | |----|-----------------------------------------------------------------| | 1 | circumstances were taken into consideration, so I appreciate | | 2 | that. | | 3 | Anyone else wish to be heard? | | 4 | MR. BAER: Thank you, Your Honor. Hank Baer, on | | 5 | behalf of several Defendants in the adversary proceeding. I | | 6 | apologize for not appearing earlier; we didn't intend to | | 7 | speak up. With me in court is Mr. Gottesman from New York | | 8 | City. We're working co-counsel on behalf of the Defendants. | | 9 | We filed a pro hac for Mr. Gottesman recently. I | | 10 | don't believe it's been granted yet. | | 11 | THE COURT: It probably hasn't been acted upon | | 12 | yet, because we've been in other hearings. | | 13 | In any event, counsel, would you just state your | | 14 | name and spell your name for the record, for the courtroom | | 15 | deputy, please. | | 16 | MR. GOTTESMAN: Oh, certainly, Your Honor. Thank | | 17 | you and good afternoon. My name is Andrew Gottesman, G-o-t | | 18 | t-e-s-m-a-n. I'm with Mintz & Gold. We represent Fox News | | 19 | and Markham LLP, two adversary defendants. | | 20 | As Mr. Baer said, we weren't planning on | | 21 | addressing the Court this afternoon, but what we'd like to do | | 22 | is lend our voice to the chorus on behalf of all of the | | 23 | Defendants to suggest that an objection deadline and a | | 24 | hearing date be set for everybody to have an opportunity to | | 25 | have input. We have some concerns with the procedures, but | | | |

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 we understand that, generally, mediation is a good idea. We think it'll be functional here, so we're onboard with the idea, but we'd like to have the opportunity before an order gets entered, to bring those up with the trustee, have discussions, and then have the Court have a date set in case we're not able to, or Mr. Oswald or anybody else is not able to agree with the trustee, to have the Court rule on the mediation procedures before an order is entered. And so we're just basically lending our voice to the other parties that have arisen to ask for that same, basically that same type of procedure, which is an objection deadline and then a hearing date. My sense is that hearing enough people at the same time, and I'm sure the trustee would be reasonable, and everybody can reach a reasonable accommodation on a good timeline so these things don't drag, and that's not in anybody's best interests, but we would like the opportunity

18 19 20 21 to both, discuss our comments to the procedures with the trustee and then if we're not able to reach an accommodation with the trustee or agreement, to have Your Honor rule on the Court believes the proper procedures should be.

THE COURT: Okay. Thank you.

23 24 25 When you say -- and I didn't ask prior counsel this, so it's a little unfair but -- it's not really unfair -- discuss your -- discuss the issues that you see

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1 2 3 4 with the trustee. I mean, you know, wouldn't a way to do that would just have you mark up what the trustee's already proposed and say what your problems are with it, if any, or what you agree to?

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 I mean, if we all start having discussions -- and I think -- I'm not suggesting that you're not going to. I'm listening to what everyone's saying -- you know, we're not going to have discussions for three months. You know, it's going to be -- there's -- the card is on the table, right. You now need to figure out whether you want to pick it up and how you want to pick it up, right. So you need to -- I think when we talk about these discussions, if they are going to happen, you know, the Court is not -- if the Court agrees that there should be some form of period for an objection deadline and discussions, it's not going to be a substantial amount of time, and so it's going to be incumbent on the Defendants to do what they need to do in that time frame or maybe they lose any rights to complain or argue about what the process is.

20 21 MR. GOTTESMAN: I couldn't agree more, Your Honor. THE COURT: Okay.

22 23 MR. GOTTESMAN: I absolutely agree 100 percent. I don't think this should drag on infinitely.

24 25 And, frankly, I think if there isn't a hard deadline, that's exactly what's going to happen and then

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1 2 Mr. Despins and his counsel are going to have to kind of do this piecemeal.

| 3 | I think if there's an objection deadline, then | |----|-----------------------------------------------------------------| | 4 | parties will have the opportunity to both, reach out to the | | 5 | trustee with a markup of the procedures saying, These are our | | 6 | issues. Maybe there will be a discussion. I would imagine | | 7 | that there would be. But at the end of the day if those | | 8 | discussions aren't fruitful, an objection has to be filed, | | 9 | there's a set date, and then there's a hearing date. And | | 10 | that way, these things don't drag on infinitum and, also, it | | 11 | doesn't burden the Trustee's Office any more than they are | | 12 | with this number of adversary proceedings and, frankly, the | | 13 | number of comments I anticipate them having to shuffle | | 14 | through and be able to have some kind of dialogue with | | 15 | everybody who gives those comments. | | 16 | THE COURT: And when I said the word "complain," I | | 17 | don't mean complain in a negative way. I mean, you have the | | 18 | right to raise an issue, right? | | 19 | MR. GOTTESMAN: Understood, Your Honor. | | | |

20 21 22 23 THE COURT: So I didn't mean that in what could be thought to be that you don't have a basis. You have a basis. If you have a basis, you have a basis. It's not a complaint in a negative way, just to be clear on that.

24 25 So, you're suggesting that there be a discussion period at which point that discussion period cuts off and

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 then you have a few days to file an objection and then there's a hearing; is that what you're suggesting? MR. GOTTESMAN: I'm suggesting you just set an objection deadline. THE COURT: All right. MR. GOTTESMAN: I think the natural course of things is for people to discuss. THE COURT: Well, you can't start talking to the trustee on the objection deadline. That's not going to work either, though. I want to make that very clear if I go down that path, any defendant that comes to me and says they start talk -- if I do that, if I do what people are considering and suggesting, if I hear that they talked to the trustee on the objection deadline, that's not going to be very persuasive to me. I just want to be clear about that, if that is where the Court ends up. You know, there's -- I think that's clear. I think what I've said is clear. MR. GOTTESMAN: I agree, Your Honor. And I think setting an objection deadline is the natural way to have what would be considered a discussion period. In my experience, that is what happens. THE COURT: Well, I would hope so. MR. GOTTESMAN: Yeah, exactly. And then parties have an opportunity to object if that doesn't get resolved, then Your Honor has an opportunity

56 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to rule. THE COURT: Okay. Thank you. MR. OSWALD: Your Honor, Frank Oswald. May I swing back for a second? THE COURT: Sure, go ahead. Attorney Oswald, go ahead. MR. OSWALD: Thank you, Your Honor. Frank Oswald, again, for the record, for the Clayman Defendant. I agree with the Court's comment. I took it as a given, but perhaps if you were leaning towards going this way, there's a date by which folks will submit their comments, redline or otherwise, to trustee's counsel, and then a subsequent date for the formal objection. I don't see why anybody would have a problem with that approach. MR. GOTTESMAN: We have no problem with that approach, Your Honor; in fact, I think it would help clarify things for the trustee and the Trustee's Office. And that, I imagine, many of those comments are going to be similar. MR. DESPINS: Neither do we, Your Honor. THE COURT: Okay. All right. Well, you know, that's one of the points of having the conference today, right, is to discuss these issues. And one of the reasons why I stated that we needed to have a motion to work off of. And Trustee Despins started off, I think I'm correct, Trustee Despins, in saying that when you Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 56 of 112

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1 2 started talking today, you said that this is a dialogue, right? So this is a dialogue.

MR. DESPINS: Yes.

4 5 6 7 8 9 10 11 12 13 14 15 THE COURT: And so, Attorney Bassett and Trustee Despins, are you saying that you would be in agreement to some form of process that's been discussed, meaning, that there would be a date by which -- well, everybody now -- the problem -- the only different -- the only difficulty that I see right now, and maybe I'm wrong, on the U.S. Defendants, the Defendants that can be served in the U.S., is they've got to be served with the motion. I mean these people have them, but not everybody has it, right. People that are here today, obviously, they couldn't be here if they didn't know that there was a motion. They know there's something. They're here. They have filed appearances.

16 17 18 19 20 21 22 23 24 25 But you have many other adversaries which no one has filed an appearance yet, and there's no need to file an appearance yet because of the avoidance procedures. So I think if we're going to do this, you've got to serve them with the motion for -- or this amended motion for the mediation procedures. And I know that's burdensome in some respects. I'm not suggesting it's not. But if you want to go through this process and not have people challenge it, ultimately, that might be the better way to proceed. MR. BASSETT: So, Your Honor, that's a fair

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 comment. And I think -- a couple of thoughts in response. First, as I understand it, again, from talking to my team, who's been primarily dealing with the service issues, we have been able to serve the summons and complaint on all of the Defendants who are located in the United States, and I don't expect that it would be a huge problem. It may obviously be some cost to the estate, but I think we could feasibly go ahead and serve the motion, which under the Rules, can primarily be done by mail -- THE COURT: Right. MR. BASSETT: -- on all the Defendants, as well. The one other thought I have in response, which relates to another issue, is that I -- while we're happy to do this as an accommodation, I think it could be a very useful exercise both, to eliminate objections, and some of the Defendants, frankly, may have good suggestions that make the mediation procedures better, so I think that's great, but I don't think it is necessarily a requirement before the Court enters an order like this, that all parties have notice and an opportunity -- I mean, the Court already -- and we've cited precedent to this when we did it previously -- but the Court entered the avoidance actions procedures order prior to the complaints even being filed. And those -- THE COURT: That was a little different, though, and what it did was it gave 60 days, an additional 60 days,

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 which I envisioned as a time for you and all the trustee's - and the people on the trustee's team to have discussions with the Defendants' counsel, even before there might be mediation, right, because if these buckets are created and there's a bucket of what -- I'm going to use the trustee's example, a business, like a FedEx, then you might be able to have a discussion and a resolution with FedEx before anybody files a notice of appearance or an answer, right. That's the way I envisioned the avoidance procedures were to benefit that, to be beneficial to, gee, we might be able to actually -- instead of starting to incur a lot of fees and costs, and you're going to have to -- I'm not suggesting that fees and costs are not going to be incurred -- but that you would be able to say, Okay, here's 40 of them -- and maybe that's not the right number -- that we can settle right now, so let's just do that.

17 18 19 20 21 22 23 MR. BASSETT: And, Your Honor, I understand that and I think there is a distinction, certainly, between that motion and the current mediation procedures motion. I do think that the current mediation procedures motion is also beneficial to the Defendants in that they no longer have an answer deadline, right. They have an appearance deadline, not a substantive response deadline.

24 25 THE COURT: Well, the current motion doesn't say that. The amended motion --

60 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BASSETT: The amended motion will. THE COURT: -- that you're going to file is going to say that. MR. BASSETT: That's correct, Your Honor. That's the intent. But the real reason I raise this, too, is that it does create a bigger issue for the Defendants, who are located abroad, because there's just no practical way any of those Defendants, let alone all of them -- and by the way, Your Honor, I don't have -- THE COURT: Well, that may be why you have to put things in certain buckets, right. I mean, there's got to be some adversary -- well, maybe I'm wrong. I mean, I didn't look at them. I'm not going to look at them unless and until it's necessary for the Court to look at them, right. But I would think, but maybe I'm wrong, that there are adversary proceedings in which all of the Defendants are in the United States. MR. BASSETT: That's true, Your Honor. I don't think it'll make -- there would necessarily be a substantive distinction in those claims, subject to maybe some personal jurisdiction arguments, I suppose. But the point I was trying to make was just that it would be the trustee's preference that whatever mediation procedures are entered are uniform and apply to all the Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 60 of 112

61 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Defendants. THE COURT: I understand. MR. BASSETT: And part of the issue, obviously, is if you get to have a second set for foreign Defendants or (indiscernible), even those aren't going to be answered on the same timeline. THE COURT: Well, then you need to think about how you want to deal with that. MR. BASSETT: And my suggestion was that this order would apply across the board, even as to those foreign Defendants. THE COURT: But I don't know that you -- you know, how are you going to do that? How are you going to bind foreign Defendants who haven't been served, but you can bind U.S. Defendants who have been served who didn't give you any comments? MR. BASSETT: And, again, Your Honor, it's the same logic that underlied the avoidance action procedures. I understand the distinction the Court is drawing. THE COURT: Well, I don't think it's the same. MR. BASSETT: I understand that. THE COURT: Because it was really with regard to, we were very specific in the avoidance procedures about what the time frame was to serve U.S. Defendants and Defendants outside of the United States. And the time frames that then Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 61 of 112

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| 1 | were triggered from that service were in that order. And | |----|-------------------------------------------------------------------| | 2 | what the rules require, with regard to Defendants outside of | | 3 | the United States, is to give additional time for service | | 4 | and/or that out-of-United States Defendant to figure out what | | 5 | they're going to do, whether they're going to retain counsel | | 6 | or not, right. That's what the Rules say. | | 7 | MR. BASSETT: Right. Understood. | | 8 | But, Your Honor, that's not changing, though, | | 9 | right, because -- | | 10 | THE COURT: No, that's not changing at all. | | 11 | MR. BASSETT: Right. | | 12 | THE COURT: And so, I'm not suggesting that should | | 13 | change, but I'm saying I don't know if you can bind the | | 14 | Defendants outside of the United States in the same if you | | 15 | just served the Defendants in the United States with the | | 16 | motion for -- the amended motion for an order providing for | | 17 | mediation procedures as part of the avoidance actions. | | 18 | You know, maybe you can, but I'm sitting here and | | 19 | the issue I have -- it's not an issue -- a concern is you | | 20 | want this to work. That's the whole point. You want this to | | 21 | work. You want this to be a process that goes forward and | | 22 | hopefully -- but, you know, we all know it may not happen -- | | 23 | but hopefully resolves a great portion of these adversary | | 24 | proceedings without the need for trial, because in most of | | 25 | these adversary proceedings, and you can all tell me that -- |

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1 2 3 4 5 6 7 8 9 10 11 12 13 I'm using most as more than 50 percent -- I don't know what the percentage is -- but in most of these adversary proceedings, we're not dealing with novel issues of law; we're dealing with preferences and fraudulent transfers and fraudulent conveyances. That's what we're dealing with, right. And the whole (indiscernible) reason to do this is to try to see if these can be resolved for both sides of the equation, not just the trustee's side, but the Defendants' side, without having to incur a lot of time and costs and energy. But I think you need to think about the foreign Defendants. And I don't think -- you know, I will say one thing to the Defendants, if you're not a foreign Defendant,

14 15 16 17 18 I'm not going to listen to whatever argument you make about a foreign Defendant. It doesn't matter. You can make whatever argument you want to make about your Defendant in the United States. I don't want to hear that I want to make this argument for all the Defendants.

19 20 21 22 23 24 25 All the Defendants, they want to make their argument, they can make their argument. You're here for your arguments; that's who you're here for. But that requires that there be service on the Defendants so they can determine whether they want to make an argument or raise issues. It isn't -- the motion is not on the calendar yet. It hasn't been addressed yet, other than in the context of

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this status conference. So, there's a couple of things we can do. We can do nothing today. You can think about it and we can come back for a further status conference. You can say, I want you to figure out, Judge, whether or not you're going to set an objection deadline or set a deadline by which all the comments have to be given to the trustee, then have an objection deadline, then have a hearing deadline, a hearing date. I can do that, too, or I can just set the matter for hearing because I think it should be set for hearing and then we can go from there. I think those are the three options. I'm not sure what other option, but you can all take -- if you want me to take a recess and y'all want to talk about it, that's fine, too. This is a status conference, so it's not as if anyone has been completely - has their roadmap completely in line, in my opinion, at this point. MR. BASSETT: Your Honor, I think I may be helpful to take a five-minute recess. THE COURT: Yeah, I think we should take a recess and then you can all talk about it, okay. Why don't we take a little bit more than a fiveminute recess. It's a few minutes before 3:00. Why don't I come back at 3:15, okay. The Court is in recess. (Recess taken at 2:58 p.m.)

65 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (Proceedings resumed at 3:16 p.m.) THE CLERK: All rise. The United States Bankruptcy Court for the District of Connecticut is now (indiscernible) after recess. The Honorable Julie Manning presiding. THE COURT: Please be seated. So we're going to keep the windows -- the doors open so the alarm won't go off again. UNIDENTIFIED FEMALE SPEAKER: I think she's unplugged -- MS. CLAIBORN: I unplugged it. THE COURT: Oh, you did? Okay. MR. BASSETT: You never know how bad the air quality is. THE COURT: It didn't say dead; it just said poor, so I think there was -- (Laughter) THE COURT: I think that the air quality isn't that great. Did you -- there was -- that door was open for a reason. Would somebody mind -- MR. DESPINS: There was a stopper. THE COURT: There was a stopper there so we can all breathe. (Laughter) Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 65 of 112

66 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 THE COURT: Thank you, Attorney Baer. I appreciate that. So we are back on the record after the recess. And I don't know, Trustee Despins, is there anything you want to report or trustee -- or Attorney Bassett, excuse me? MR. BASSETT: Yes, Your Honor. Again, for the record, Nick Bassett from Paul Hastings on behalf of the trustee. So we used the time, I think, fairly efficiently. We had a conversation with defense counsel. Obviously, anyone who feels necessary can correct me if I get it wrong or if they object to the procedures that I outline, but what we talked about was that we would -- that the trustee would make the revisions to the order that we've already discussed and any others that we are prepared to make right now, so we are then presenting a revised, proposed order with our motion. We will then file a certificate of service indicating that we have served the motion and that revised proposed order on the Defendants by this Friday. Thereafter, the parties, the Defendants would have 21 days to object. We initially had wanted something closer to 10 or 14. Some of Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 66 of 112

23 24 25 the Defendants said that it would be helpful to have additional time to submit comments, work through those, and then do an objection, if necessary, so we ultimately -- we're

| | Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 67 of 112 | |----|-----------------------------------------------------------------------------------------------| | | 67 | | 1 | willing to say 21 days and we would -- | | 2 | THE COURT: Twenty-one days from March 22nd? | | 3 | MR. BASSETT: Twenty-one days from this Friday, | | 4 | which would be -- | | 5 | THE COURT: Which is March 22nd. | | 6 | Okay. Go ahead. I just want to make sure I | | 7 | understand the dates. | | 8 | MR. BASSETT: And then the idea, sort of | | 9 | consistent with the discussions that occurred earlier, would | | 10 | be that parties would have an opportunity to, obviously, | | 11 | discuss any changes they have or want to suggest. You know, | | 12 | we'll try to accommodate as many of those as we can. To the | | 13 | extent that objections are filed, those will be filed, and, | | 14 | thereafter, you know, we'll file a reply on a week after that | | 15 | or whatever the Court thinks would work and then have a | | 16 | hearing. | | 17 | And then whatever order the Court might enter | | 18 | following that hearing would be an order that is binding on | | 19 | the parties who were served and had an opportunity to object | | 20 | to the motion. As to anyone who has not been served, whether | | 21 | that's a foreign Defendant or others, we will have to deal | | 22 | with those in due course. But, generally, the trustee is | | 23 | comfortable with the process that I've outlined and we think | | 24 | it should work. | | 25 | THE COURT: Okay. So let's step back so I make | | | |

68 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 sure I understand. I understand, but I want to get dates. So by this Friday, the 22nd of March, the trustee is going to file and serve an amended order or motion? I'm sorry. Are you doing both? MR. BASSETT: I would anticipate that it would just be the motion that we filed with a revised proposed order. THE COURT: Okay. MR. BASSETT: But as we evaluate that, if we need to file an additional cover motion with it, we may do that. THE COURT: Okay. That's fine. And then you're going to file and you're going to serve by the 22nd; is that right? MR. BASSETT: That's correct. THE COURT: Okay. So then everybody will have until April 12th to file a written objection? That's the objection deadline? That's 21 days. MR. BASSETT: Don't have any calendar open, Your Honor, but if it's 21 days, then that's correct. THE COURT: That's 21 days. And then what happens after that? We have a hearing when? MR. BASSETT: Subject to the Court's availability, obviously, the trustee would like the opportunity to submit a reply, if necessary, in response to any objections that might Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 68 of 112

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2 3 4 that would be sufficient and then we could have a hearing. THE COURT: All right. Let me take a look at the calendar, please.

be filed. Like, if we had, you know, 5 to 7 days to do that,

5 6 7 Now, April 12th is a Friday and that's the objection deadline and you want an opportunity to file a response, which I understand.

8 9 10 MR. BASSETT: And, Your Honor, we don't need that much time. By the middle of that next week should be fine. MR. DESPINS: The 17th.

11 12 MR. BASSETT: The 17th, is that Wednesday? MR. DESPINS: Yeah.

13 14 15 MR. BASSETT: The 17th would be okay, Your Honor. THE COURT: Well, we can either do the hearing on Monday the 22nd or Tuesday the 23rd in the afternoon.

16 17 MR. BASSETT: Either of those works for the trustee, Your Honor.

18 19 20 21 22 23 24 25 THE COURT: Okay. Then why don't we say Tuesday the 23rd at 1:00 p.m.? I think you need an order saying - having these dates in or you'll have to create a notice with these dates, Attorney Bassett. Whichever way you prefer, I don't really -- I mean, I guess you would -- I would like you to create a notice, right, that you -- I don't know. If you'd rather have an order, that's fine. It could just say order -- you know, scheduling order in connection with

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70 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 amended motion to modify avoidance procedures with mediation procedures or something. MR. BASSETT: We're happy to submit a proposed order later today or tomorrow. THE COURT: That would be fine, thank you. All right. So, then, as far as the status conference is concerned on the mediation issues, that seems to resolve the mediation issues; is that correct? MR. BASSETT: I believe so, Your Honor. THE COURT: Okay. Then, with regard to the pending motions to stay, the two adversary proceedings, the omnibus alter-ego and the -- MR. BASSETT: Civil RICO, Your Honor. THE COURT: -- civil RICO, summonses haven't even been issued in those cases, have they? MR. BASSETT: I believe they have finally been issued, Your Honor, and I think we have actually served those complaints on the Defendants located in the United States, as well. THE COURT: But you'd like an order staying those right now? MR. BASSETT: That's correct, Your Honor. THE COURT: And in my recollection, even if the order doesn't say it, what it will say -- what it can say in it is that if someone believes the stay should be lifted,

| | Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 71 of 112 | |----|-----------------------------------------------------------------------------------------------| | | 71 | | 1 | they can file a motion seeking to lift the stay. | | 2 | MR. BASSETT: I believe that is in the order, Your | | 3 | Honor. | | 4 | THE COURT: Even if it isn't, we'll put it in. | | 5 | MR. BASSETT: It's a necessary right that anyone | | 6 | would have, in my view. | | 7 | THE COURT: But I think it needs to be stated in | | 8 | the order, okay. So those are -- under our Local Rules in | | 9 | the District of Connecticut Bankruptcy Court, when a motion | | 10 | is filed in an adversary proceeding, and I know it was filed | | 11 | in the main case, too, but it's seeking relief in the | | 12 | adversary proceeding, those two adversary proceedings, the | | 13 | Court may or may not schedule a hearing. It's within the | | 14 | Court's discretion and I see no reason to schedule a hearing | | 15 | on those two motions to stay, those two specific adversary | | 16 | proceedings and, therefore, the order will enter, subject to | | 17 | if it doesn't say what I just said it said, I'm going to -- | | 18 | will add that, you know, the parties can seek relief from | | 19 | that order. | | 20 | Attorney Kindseth? | | 21 | MR. KINDSETH: May I be heard, Your Honor? | | 22 | THE COURT: Yes, you may. | | 23 | MR. KINDSETH: Thank you, Your Honor. | | 24 | Stephen Kindseth for the Defendant Mei Guo. | | 25 | THE COURT: In what adversary proceeding? |

72 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. KINDSETH: And this is in the RICO action, Your Honor. THE COURT: Okay. MR. KINDSETH: We did have some comments, which we shared with Attorney Bassett yesterday and I believe -- THE COURT: As to the proposed order? MR. KINDSETH: Concerning the proposed order. THE COURT: Okay. MR. KINDSETH: We are in agreement with the substance of the stay. We did ask for some clarifications and I believe the trustee is receptive to those; in particular, we just wanted to make clear, and we understand the policy behind the motion, which is in summary, that discovery should not be pursued while there's a separate criminal proceeding in which the government would perceive a possible prejudice or the parties to the criminal proceeding perceive some prejudice in discovery being obtained or witnesses that are anticipated to be testifying in the criminal proceeding may be deposed. And so in terms of the purpose of the stay, we're supportive of that stay entering; however, we wanted to make clear, as we have filed a motion to withdraw the reference, we wanted to make sure that there's some clarity in the order that the stay is not staying the District Court or the District Court's consideration to the motion -- Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 72 of 112

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Well, why would you want the District Court to consider a motion to withdraw the reference when the adversary proceeding is stayed? Isn't that a waste of judicial resources? MR. KINDSETH: Your Honor, the purpose behind the stay, as I understand it, is to ensure that the parties to the criminal proceeding are not prejudiced through discovery, including documents or witness depositions. Having the legal merits of the withdrawal of the reference heard, which, in part, raises the legal issues of the validity of claims in no way prejudices the parties to the criminal proceeding. And as the allegation -- THE COURT: Well, it may not prejudice the parties, but it may prejudice the District Court. Why would we put the District Court in that position -- MR. KINDSETH: Because we -- THE COURT: -- where they don't need to determine a withdrawal of the reference if the adversary proceeding is stayed? MR. KINDSETH: We believe that the allegations against our client are completely without merit -- THE COURT: I understand that. That has nothing to do with what I just said. MR. KINDSETH: There's no reason -- THE COURT: So, why would you put the District

74 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Court in that position? MR. KINDSETH: Because we would like the case in that regard to proceed. THE COURT: What if they deny your motion? MR. KINDSETH: Then the stay would be in effect in all other regards. We believe the District Court should hear it. We have an interest in having the adjudication of legal issues. There are some very serious allegations that are being made against my client, which we believe are completely unfounded -- THE COURT: Do you really think the District Court is rule on the motion to withdraw the reference when the adversary proceeding is stayed? MR. KINDSETH: I think -- THE COURT: Do you really think that? MR. KINDSETH: I think it should be clear that the Bankruptcy Court should not stay the District Court. THE COURT: But the Bankruptcy Court isn't staying the District Court, Attorney Kindseth. That wasn't my question. MR. KINDSETH: And so we would like to have it clearly provide that this Court is not staying -- and you're right, Your Honor, the District Court will take up in its due course, the withdrawal of the reference and we're simply Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 74 of 112

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 seeking clarity in the order, which I believe the trustee did not oppose in the order, that the proceeding concerning the motion to withdraw the reference is not being stayed. THE COURT: Okay. That's fine. MR. KINDSETH: Thank you very much, Your Honor. THE COURT: Just understand that, you know, the District Court has many other matters to deal with, besides motions to withdraw the reference. So, you can do whatever you want, but I don't think that you should have an expectation that they're going to act on it when the underlying adversary proceeding is stayed. MR. KINDSETH: I appreciate that, Your Honor. MR. BASSETT: Your Honor, just briefly in response to Attorney Kindseth's comments. So, he's correct, we did briefly discussions this issue. The trustee does not have a problem with making the obviously clear, to the extent that that's necessary, which is that Your Honor is not going to be telling the District Court what to do. That said, we agree entirely that I can't imagine any world there would be in which the District Court would want to spend the time and effort considering this motion in an adversary proceeding that's stayed. So I imagine we will file a notice of some kind with the District Court to make the District Court aware of the stay once it enters, but that's not the same thing as this Court instructing the

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| District Court what to do. And if that's what Attorney | |-----------------------------------------------------------------| | Kindseth is concerned about, we have no issue. | | THE COURT: This Court has no authority to | | instruct the District Court what to do. | | MR. BASSETT: Understood, Your Honor. | | THE COURT: That's very clear. | | Okay. So you don't have an agreed-upon order; is | | that what you're telling me? | | MR. BASSETT: We'll work it out. | | THE COURT: Okay. So, will you -- when -- when do | | you think that order will be submitted, those orders, because | | it's too -- well, yours is only in one, so I don't know. You | | only represent Mei Guo in the RICO action, not in the alter | | ego action, correct? | | MR. KINDSETH: I -- we haven't filed an | | appearance, yet, but we will be representing her in that. | | THE COURT: Okay. Well get -- | | MR. KINDSETH: But I'm speaking on her behalf in | | that regard, as well. | | THE COURT: Get that appearance on file, please. | | MR. KINDSETH: Thank you. | | THE COURT: So how much time do you both need? | | Are you think you're going to do it by the end of this? I | | don't have a problem with whatever time frame you want, I | | just need to know. | | |

77 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BASSETT: I would say by tomorrow. MR. KINDSETH: We'll do it in -- if you would set a seven-day deadline, just to make sure, but we'll do it in days. THE COURT: I'm going to do it by this Friday, the 22nd. MR. KINDSETH: Thank you, Your Honor. THE COURT: All right. So that addresses the stay motion -- stay motions, I should say. MR. DESPINS: Your Honor, I just want to -- this is Luc Despins for the record -- I want to be clear, the stay of the alter-ego, omnibus complaint for alter-ego does not stay any actions that are already pending; that means Greenwich Land, whatever remains of HCHK -- THE COURT: That were pending before the avoidance actions began -- MR. DESPINS: Sure. Correct. THE COURT: -- that's correct. MR. DESPINS: Pending before the motion -- the complaint for alter-ego was -- exactly, Your Honor. THE COURT: Yes. MR. DESPINS: And, also, there's a carve-out for an entity called K Legacy. THE COURT: I saw that. I did see that. And I see that they're named Defendants. Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 77 of 112

1 2 All right. So the stay orders will be submitted on or before March 22nd.

3 4 So, what else do we need to discuss at the status conference?

MR. BASSETT: Think that's all, Your Honor.

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Okay. The only thing I would note for the parties is that -- or for the trustee, not for the parties -- certain people have sent emails to the Clerk's Office about, I suppose they're Defendants in adversary proceedings, I'm not really sure. I'm not looking at them. We don't look at letters in that vein. We're not going to docket them. I think what will happen is the Clerk of the Court will send a letter to those parties who sent emails to the courtroom deputy email box and say, you either need to file a pleading or you need to get in touch with Trustee Despins. That's what we're going to do. I just want you - there's two, only two, is what my understanding is. But I don't even know if they are a Defendant. I'm not going to put it on the docket because I don't think it's appropriate under the circumstances of this case in the adversary proceedings, with regard to confidentiality and protective orders. I have no idea whether these people should be part of the action. I am not going to worry about that. The Clerk of the Court will send correspondence to say, you can't file anything in email to the courtroom

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| 1 | deputy. If you would like to file something, you must file | |----|---------------------------------------------------------------| | 2 | them in the adversary proceeding to which you have an | | 3 | interest and/or you should contact Trustee Despins, okay. | | 4 | That's what we're going to do with regard to these two emails | | 5 | that the Courtroom Deputy email box received, and I suppose | | 6 | if any other kind of correspondence like that is received, | | 7 | because it just -- with the confidentiality issues, I'm not | | 8 | going to have to worry about whether or not something should | | 9 | be docketed if it's received that way, okay? | | 10 | MR. BASSETT: Understood, Your Honor. | | 11 | THE COURT: All right. Anything else? | | 12 | MR. BASSETT: I don't think so. | | 13 | THE COURT: All right. Well, I think that | | 14 | concludes the status conference. And then anybody that was | | 15 | only here to the status conference is obviously, as you | | 16 | could, regardless -- I don't have to tell you -- but you're | | 17 | obviously allowed to leave if you'd like to. | | 18 | COUNSEL: Thank you, Your Honor. | | 19 | THE COURT: Okay. All right. Thank you. | | 20 | COUNSEL: Thanks again. | | 21 | THE COURT: Thank you. | | 22 | All right. Then, let's turn to, I think we're now | | 23 | on the fee applications and/or the application to employ | | 24 | counsel; is that right? | | 25 | MR. DESPINS: That's correct, Your Honor. | | | |

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| 1 | THE COURT: All right. Go right ahead, please. | |----|----------------------------------------------------------------| | 2 | MR. DESPINS: So, perhaps, I'll start with the | | 3 | application to retain counsel, and this is Swiss counsel. | | 4 | The name of the law firm is Praeger. As we mentioned in the | | 5 | motion that was filed with the Court and there was a revised | | 6 | order at Docket 3004, we need to retain Swiss counsel because | | 7 | we've discovered through our investigation that there is | | 8 | activity in Switzerland, transfers made, you know, large | | 9 | transfers made. There may be assets there. | | 10 | And Swiss law does not recognize the trustee, even | | 11 | though our system asserts that the Court has jurisdiction | | 12 | over all assets of the debtor, wherever located. The in | | 13 | Switzerland, the trustee in this case does not exist, unless | | 14 | there is a recognition sought and obtained, and that's what | | 15 | we need to do. | | 16 | THE COURT: Right. | | 17 | MR. DESPINS: So we filed a motion to retain the | | 18 | Praeger firm. Their fees, Your Honor, are stated in the | | 19 | application. They're in the five hundred to \$900 range. | | 20 | And we've had discussions with the U.S. Trustee | | 21 | regarding their retention. We resolved a number of issues, | | 22 | but we're unable to resolve two issues which deal with, | | 23 | first, they, the Praeger firm have a -- it's a very small | | 24 | firm -- they don't have an administrative, you know, system | | 25 | that allows them to track expenses, other than large expenses | | | |

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1 2 3 4 5 6 7 like travel, et cetera -- and, by the way, there's not going to be those expenses here -- but expenses such as copying, phone charges, et cetera. They're not equipped to deal -- to capture that, and so what they have, as a standard provision, is that they charge typically 3 percent of their fees -- the equivalent of 3 percent of their fees as spare expense charge.

8 9 10 11 12 13 14 15 16 And, obviously, the U.S. Trustee is concerned, and I understand it, is that that's not the way our system works, where you're supposed to have fees and expenses separately and the expenses are supposed to be documented. And we fully understand that. We've explained that to Praeger and basically, they said that they're just not equipped to do that because they're a small firm. And we have agreed to reduce that deemed expense to 2 percent of their fees, so now we're talking about, frankly, not a lot of dollars.

17 18 19 20 21 22 23 24 25 I understand the principal objection by the U.S. Trustee on this, but in this case, Your Honor, under these very special circumstances, we would ask the Court to allow them to -- essentially, we could do it the other way, which is to increase their rates by 2 percent and they would have no expenses, but they want it to be clear that the way to do it is the charge of 3 percent of fees for expenses and in this case, they've agreed to reduce it to 2 percent and we would ask the Court to allow this.

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1 2 3 4 5 6 7 Even though we fully understand the principle of the fact that they're supposed to be documented expenses, here, we believe the amount involved couldn't be more than about 3 percent or 2 percent, because they've agreed to it, could not be material at all. It would be like a few thousand dollars at most. I can't believe it will be more than that, practically.

8 9 10 11 12 13 14 15 16 So the other issue is the limitation on liability and I know that's a hot button for Your Honor, and we've had discussions with them about this. Their typical engagement letter contains an exclusion for liability for negligence, simple negligence, which is very different than the way we have, subject to a cap that they negotiated. And in this case, they've agreed to increase the cap to \$5 million, so that if there is a malpractice, we would have a claim limited to \$5 million.

17 18 19 20 21 22 23 24 Again, given their role, I just can't believe that -- well, first of all, I assume that there will be no malpractice -- but even if there were, that the damages could be more than \$5 million. There is a carve-out for gross negligence or intentional, you know, an intentional act, so, therefore, there's no liability, no cap on that. But for simple negligence or malpractice, there's a cap of \$5 million.

I had several discussions with the partner there

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 about the fact that in the U.S. we don't do that. It's hard to conceive that there's any cap for simple negligence. But -- and I said, look, I'm going to make representations to the Court. You better be sure they're true and he said that their engagements also contain such a cap. He said that normally it's \$2 million for simple negligence and he agreed to increase it after talking to their insurance carrier. So, Your Honor, these are really the issues and we circulated a revised order at Docket 3004, which -- and if you look at pages 13 of 14 of Document 3004 and also 14 of 14, you see these changes reflected, and other changes that the U.S. Trustee, in that case, had agreed to. So, essentially, these are the issues: the 2 percent of deemed expenses and the issue of cap on liabilities. So I'll pass the podium to the U.S. Trustee on that. THE COURT: And I have the order in front of me, so I know what you're talking about, and I have reviewed it. MR. DESPINS: Thank you, Your Honor. THE COURT: Attorney Claiborn? MS. CLAIBORN: Thank you, Your Honor. Holley Claiborn for the U.S. Trustee. The U.S. Trustee, as Trustee Despins noted, filed a limited objection, and that's at ECF 2997 on the docket and the two issues are as discussed by Trustee Despins.

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1 2 3 4 5 6 7 8 9 10 11 12 13 I'd like to talk about the limitation of liability first. So, the U.S. Trustee is opposed to any limitation of liability for any professionals engaged to represent and act as a fiduciary on behalf of the estates and that's exactly what this application seeks to approve. There isn't a basis for such a waiver. It's not in the best interests of the estate and it exposes the estate to unnecessary risk should there be an event that no one would like to talk about, but might actually happen. So the U.S. Trustee remains firm on the idea that there should be no limitation on liability for any professional, such as an attorney, who's representing the estate. With respect to the issue of the expense reimbursement, that also is a nonstarter. I searched and

14 15 16 17 18 19 20 21 wasn't able to find any case anywhere that's been reported where there's been an employment agreement based on the reimbursement expenses based on a percentage approach. I don't discredit the position that Praeger Dreifuss is articulating that they don't have a system in place. I think that that is, by whatever reason it is, it's by choice, but that doesn't make it appropriate for the estate.

22 23 24 25 There isn't any methodology for anyone to be able to determine whether or not that makes any sense and the Code is very clear, as are the Rules and the U.S. Trustee Fee Guidelines that there's a methodology for getting your

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| 1 | expenses reimbursed and it requires itemization. It requires | |----|-----------------------------------------------------------------| | 2 | documentation. It also requires them to be actual and | | 3 | necessary. None of that is met by the proposed percentage | | 4 | approach that's being requested here. | | 5 | And so the U.S. Trustee would ask the Court to | | 6 | enforce the Bankruptcy Code and the Rules and the U.S. | | 7 | Trustee Fee Guidelines, as currently structured. | | 8 | THE COURT: All right. Thank you. | | 9 | MS. CLAIBORN: Thank you. | | 10 | THE COURT: Any response, Trustee Despins? | | 11 | MR. DESPINS: No, I knew the issues, Your Honor. | | 12 | I understand them. This is the second or third firm that | | 13 | I've tried to retain in Switzerland and I would say that | | 14 | there's a prejudice to us if we cannot retain them. | | 15 | I do understand the issues, Your Honor. I've | | 16 | explained to them that that's not the way we operate and they | | 17 | said that, you know, that is what they were prepared to agree | | 18 | to. So, I apologize for putting you in this position, but | | 19 | that's the best I was able to accomplish and under the | | 20 | exceptional circumstances of this case, because we believe | | 21 | that there are -- again, I don't want to say there are, but | | 22 | there could be material assets in Switzerland that this | | 23 | minor, very minor deviation from the Rules should be | | 24 | authorized. Thank you, Your Honor. | | 25 | THE COURT: Thank you. |

| | Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 86 of 112 | |----|-----------------------------------------------------------------------------------------------| | | 86 | | 1 | Anything further, Attorney Claiborn? | | 2 | MS. CLAIBORN: No, Your Honor. | | 3 | THE COURT: All right. I'm going to take a look | | 4 | at that after we're done today, so I'll take it under | | 5 | advisement, but I will rule in the next day or two. It's not | | 6 | going to be something that I'm going to sit on. I just want | | 7 | to go back and look at a few things. | | 8 | MR. DESPINS: Thank you, Your Honor. | | 9 | THE COURT: Thank you. | | 10 | MR. DESPINS: So, then, we can move to the fee | | 11 | applications, and I believe that the first one was the | | 12 | O'Sullivan McCormack firm. And you're familiar with them, | | 13 | they are counsel to Genever in the action against AIG and the | | 14 | application can be found at Docket 2928. | | 15 | And the relief sought in the application was | | 16 | compensation in the amount of \$191,730 for professional | | 17 | services from July 27th, '23, through December 31st, 2023, | | 18 | and a reimbursement of \$5,240. | | 19 | No objections were filed, Your Honor, and the U.S. | | 20 | Trustee filed a statement of no objection at Docket 2989. | | 21 | And a copy of the proposed order granting the O'Sullivan | | 22 | McCormack fee application was filed with the application at | | 23 | Docket 2928. | | 24 | I'm happy to answer any questions you may have, | | 25 | Your Honor. | | | |

87 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: I do not have any questions. Thank you. MS. CLAIBORN: And I have nothing to add, Your Honor. THE COURT: Thank you. Does anyone wish to be heard on the first interim fee application of O'Sullivan McCormack Jensen & Bliss? (No verbal response) THE COURT: All right. Hearing nothing, I will say, Trustee Despins, that I have reviewed the application, the fees and expenses sought here to be reasonable and necessary under the specific circumstances of this case. I agree that there are no filed objections to the application and the Office of the United States Trustee has filed a statement of no objection. I've looked at the proposed order, which is on pages 10 -- I'm sorry -- 19 and 20, I'm sorry, of ECF Number 2928 and it is fine, other than -- I'm turning to the courtroom deputy -- we just need to add today's hearing date to, it looks like the fifth line on the first page of the order, please. And other than that, everything looks fine and the application is granted and the order will enter. MR. DESPINS: Thank you, Your Honor. THE COURT: Thank you. MR. DESPINS: The next application is the Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 87 of 112

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| 1 | application for Kroll, LLC. It is their first interim fee | |----|-----------------------------------------------------------------| | 2 | application. As you know, they are the forensic experts that | | 3 | the trustee retained. That was filed, Your Honor, on | | 4 | February 16, 2024, at Docket 2929. The relief sought was | | 5 | compensation in the amount of \$1,019,095.55 for professional | | 6 | services from August 2nd, 2023, through December 31st, 2023, | | 7 | and a reimbursement of \$93,702.91 in expenses. | | 8 | No objections were filed, Your Honor, and the U.S. | | 9 | Trustee filed a statement of no objection at Docket 2991. | | 10 | I would mention, Your Honor, that, you know, | | 11 | Kroll's role was critical during this period because we had | | 12 | the February 15 deadline that was coming up during that | | 13 | period. They did all the accounting and the tracing of funds | | 14 | that was the basis for the filing of these avoidance actions | | 15 | that's sought in the aggregate in excess of \$600 million, | | 16 | and, therefore, we believe that these fees should be | | 17 | approved, Your Honor. But I'm happy to answer any questions | | 18 | you may have. | | 19 | THE COURT: I do not have any questions, thank | | 20 | you. | | 21 | Attorney Claiborn? | | 22 | MS. CLAIBORN: Your Honor, I would just like to | | 23 | make one comment, which is that there was a prior reduction | | 24 | agreed to by Kroll that's already incorporated into this fee | | 25 | application and I just wanted to make the Court aware of | | | |

89 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that. THE COURT: Okay. That's good to know. Thank you. I'm not sure if I did know that, or if I did, I may have forgotten, so I appreciate that. So the then, the proposed order, is what you're saying, Attorney Claiborn, that's part of the application already includes those reduced fees? MS. CLAIBORN: Correct. THE COURT: Okay. Thank you. All right. I have reviewed the first interim application of Kroll LLC for compensation and reimbursement of expenses from August 2nd, 2023, through December 31st, 2023. I have been reminded that there was a reduction in the fees sought in the application already and then was actually incurred, I should say -- incurred, excuse me, by Kroll. The review of the fees and expenses indicate to me that the fees and expenses were necessary and appropriate under the very specific circumstances of this case. No one has filed any written objection to the application. There is no one objecting to the application that is in court today and the United States Trustee's Office has filed a statement of no objection. And I would just say to the courtroom deputy, again, on page 1 of the proposed order, which appears at 19 and 20 of ECF 2929, we just need to add today's hearing date, Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 89 of 112

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 again, as well, and then the order will be fine and can enter. And for all those reasons, the first interim at the application of Kroll is granted. MR. DESPINS: Thank you, Your Honor. THE COURT: Thank you. MR. DESPINS: Moving on to the application of Harney Westwood & Reigels. These are our BVI counsel, British Virgin Islands counsel, Your Honor. This is their second fee application filed on February 29th, Docket 2933. The relief sought was compensation sought in the amount of \$101,597 for professional services from the period of August 1st through December 31st and the reimbursement of \$1,825 in expenses during that same period. I know there was conversation between Harney and the U.S. Trustee, but I'm not familiar with the details. But I know that no objections were filed and that the U.S. Trustee filed a statement of no objection at Docket 2990, Your Honor. I'm happy to answer any questions you may have. MS. CLAIBORN: I have nothing to add, Your Honor. THE COURT: Thank you. I have no questions, thank you. MR. DESPINS: And so the proposed order is attached to the application at 2933.

| 1 | THE COURT: Yes, the proposed order is at pages 16 | |----|---------------------------------------------------------------| | 2 | and 17 of 2933. And I have reviewed the second interim fee | | 3 | application of counsel. The fees and expenses sought are | | 4 | reasonable and necessary under the circumstances of this case | | 5 | and all of the related proceedings. | | 6 | No one has filed any written objection to the | | 7 | second interim fee application and there is no one | | 8 | participating in this hearing today that is objecting to the | | 9 | second interim fee application. | | 10 | The United States Trustee's Office has filed a | | 11 | statement of no objection. I'm looking at the proposed | | 12 | order, submitted with the second interim fee application, | | 13 | which is on page 16 and 17 of 2933, and it appears to be in | | 14 | order, other than adding today's hearing date on page 1. | | 15 | So for all those reasons, the second interim fee | | 16 | application is granted and the proposed order will enter. | | 17 | MR. DESPINS: Thank you, Your Honor. | | 18 | THE COURT: Thank you. | | 19 | MR. DESPINS: The next application is the | | 20 | application of Epiq Corporate Restructuring. This is the | | 21 | third interim fee application filed on February 16, 2024, at | | 22 | Docket 2930 for the period between September 1st and | | 23 | December 31st of last year. They're seeking -- they were | | 24 | seeking compensation of \$10,417 and a reimbursement of | | 25 | expenses of \$1,606.43. |

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| 1 | There was extensive discussions between the U.S. | |----|--------------------------------------------------------------------| | 2 | Trustee and Epiq and there was a reduction of fees that was | | 3 | agreed to. So the fees reduced from \$10,417 to \$7,000 -- | | 4 | from \$10,417 to \$7,862, so a reduction of \$2500 or so. And a | | 5 | reimbursement of expenses -- no, I think there was no change | | 6 | to the expenses, only to the fees, and the U.S. Trustee filed | | 7 | a statement at Docket 2992, a statement of no objection. | | 8 | THE COURT: So, what proposed order am I looking | | 9 | at, then? | | 10 | MS. CLAIBORN: I don't think I've seen a revised | | 11 | proposed order. | | 12 | THE COURT: I don't think I have either. That's | | 13 | the point. | | 14 | MR. DESPINS: We need to submit that to Your | | 15 | Honor. | | 16 | THE COURT: Okay. That's fine. | | 17 | Go ahead, Attorney Claiborn. I'm sorry. | | 18 | MS. CLAIBORN: Your Honor, I was just going to say | | 19 | that the statement that I filed at ECF 2992 contains the | | 20 | amount of the correct figure that should be the approved fees | | 21 | and the approved expenses. | | 22 | THE COURT: Okay. | | 23 | MR. DESPINS: Which is \$7,862. | | 24 | MS. CLAIBORN: Correct. | | 25 | MR. DESPINS: Okay. Thank you. |

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. CLAIBORN: And there's no change to the expenses. MR. DESPINS: So, we would -- THE COURT: Well, I did look at the fees and expenses and I understood prior to the hearing that there was a reduction, I just didn't see the revised proposed order and that's fine. With those reduced fees and the expenses remaining the same, I do think that the fees are necessary and appropriate under the circumstances of the case. Again, the only issue was with regard to the fees and that was resolved after the U.S. Trustee filed their statement of reduced fees for all those -- and no one has filed any other written objection. There's no one participating in this hearing today that's objecting to the reduced fees and the expenses of Epiq. So for all those reasons, the interim application, which is their third interim application of Epiq is granted. And I'll need the trustee to submit a proposed order. MR. DESPINS: Will do, Your Honor. THE COURT: Okay. MR. DESPINS: Thank you. THE COURT: I'm going to say by Friday, if that's okay? MR. DESPINS: Absolutely. THE COURT: Okay. So that's granted. The Epiq

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| 1 | third interim fee application is granted. Proposed order to | |----|------------------------------------------------------------------| | 2 | be submitted on or before and after March 22nd. | | 3 | MR. DESPINS: Thank you, Your Honor. | | 4 | And the next application is the application of | | 5 | Paul Hastings, the fourth interim fee application, also filed | | 6 | on February 19th, 2024, Docket 2935. And the relief sought | | 7 | in the application was compensation in the amount of | | 8 | \$6,911,034.50 for professional services between September 1st | | 9 | and December 31st and a reimbursement of expenses | | 10 | of \$718,236.31. | | 11 | We've had extensive discussions with the U.S. | | 12 | Trustee which led to a fee reduction of \$192,930, so almost | | 13 | \$200,000, which would bring the fees allowed down to | | 14 | \$6,718,104.50. In addition, we had agreed to reduce our | | 15 | expenses by \$3,518.70. That's an error that we had caught on | | 16 | our own, so we had agreed to reduce our expenses by that | | 17 | amount. | | 18 | The U.S. Trustee filed its statement at | | 19 | Docket 2998, Your Honor. | | 20 | THE COURT: I think, again, this may be a | | 21 | situation where we need a revised proposed order. | | 22 | MR. DESPINS: Yes, Your Honor. | | 23 | THE COURT: But, Attorney Claiborn, the statement | | 24 | that you filed, the amounts set forth in that statement are | | 25 | the amounts that the Office of the United States Trustee | | | |

95 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 asserts and has no objection to being awarded? MS. CLAIBORN: Correct. THE COURT: Okay. Thank you. MR. DESPINS: And to be clear, Your Honor, they would be awarded, but not paid in full because there's a 20 percent holdback. The actual amount after reduction for the 20 percent holdback that would be paid would be \$5,374,483.60. THE COURT: And I saw in the other orders there were provisions about what was actually going to be paid versus what was awarded, so I understood that to part of the process of the applications, as submitted, and then this is the approval of those that have been submitted and some have been paid. So thank you, I understand that. So I've looked at the fees and expenses and I appreciate that the firm corrected a mistake with regard to the expenses. That's always helpful. I think the fees -- I find the fees are reasonable and necessary under the circumstances, the very specific circumstances of this case and the related proceedings, the numerous related proceedings. No one has filed any written objection to the fee application, the fourth interim fee application -- am I right, it's the fourth, right? MR. DESPINS: Yep. Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 95 of 112

| 1 | THE COURT: Okay. | |----|---------------------------------------------------------------| | 2 | MR. DESPINS: Yes, Your Honor. | | 3 | THE COURT: And that the U.S. Trustee's Office and | | 4 | Paul Hastings had several discussions regarding the amounts | | 5 | sought and there is an agreement on reduction, which the | | 6 | Court appreciates. And under those circumstances, with the | | 7 | fourth interim application for compensation for Paul Hastings | | 8 | is granted and I would ask that a revised proposed order be | | 9 | submitted by Friday, March 22nd. | | 10 | MR. DESPINS: Will do, Your Honor. Thank you. | | 11 | THE COURT: Thank you. | | 12 | MR. DESPINS: And I believe there are two fee | | 13 | applications remaining: Pullman & Comley, counsel to the | | 14 | CEO, and also Mr. Skalka's firm, so I'll let them address | | 15 | those. | | 16 | Thank you, Your Honor. | | 17 | THE COURT: Thank you. | | 18 | MS. MAYHEW: I appreciate it. | | 19 | Good afternoon, Your Honor, Kristin Mayhew, | | 20 | Pullman & Comley, on behalf of the Creditors Committee. | | 21 | Before the Court is Pullman & Comley's third | | 22 | interim application for allowance of compensation and | | 23 | reimbursement of expenses. Pursuant to the application, | | 24 | Pullman & Comley is seeking fees in the amount of \$89,835.50 | | 25 | and reimbursement of expenses in the amount of \$392.14. |

97 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Proper service of the fee application has been made and a cert of service was filed on February 20th the ECF 2937. Your Honor, no objections have been received and the United States Trustee has filed a statement of no objection at ECF 2988. And we would ask that Your Honor enter the proposed form of order that's attached to the application at ECF 2872-3. THE COURT: Thank you. Attorney Claiborn? MS. CLAIBORN: I have nothing to add, Your Honor. THE COURT: Okay. Thank you. I have reviewed the third interim fee application of Pullman & Comley, as counsel to the Official Committee of Unsecured Creditors and I find that the fees and expenses are reasonable and necessary under the circumstances of the case. I do note that the Committee has been very conscientious about its fees and expenses since the -- I think I've noted this before -- but since the appointment of the trustee, but I would also agree that there are things and tasks that the Committee does still need to perform and I think the fees and expenses are reasonable under those circumstances. No one has filed a written objection to the third interim fee application. Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 97 of 112

98 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The United States Trustee's Office has filed a statement of no objection. There's no one participating in this hearing today that is objecting to the third interim fee application. I would ask the Courtroom Deputy, just at the very bottom of the first page, if we could just add today's date. It just says that after the hearing on the application, if we could just say "Held on May 19th [sic]" so then when someone needs to know when it was held, they'll know. But other than that, I have no changes to the proposed order. So for all those reasons, the third interim fee application of Pullman & Comley is granted and the proposed order will enter. MS. MAYHEW: Thank you, Your Honor. THE COURT: Thank you. MR. SKALKA: Good afternoon, Your Honor. Douglas Skalka on behalf of Neubert Pepe & Monteith or from Neubert Pepe & Monteith, on behalf of Neubert Pepe & Monteith's fourth interim application for compensation, which was filed on February 19th at Docket 2936. The fees sought by Neubert Pepe & Monteith cover the period of September 21st, 2023, through December 31st, 2023. The fees sought total \$1,038,670 and also expenses of \$34,929.96. The fees include a voluntary reduction of \$5,945. A certificate of service reflecting the service of

99 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the application was filed on February 27th, 2024. We have received no objections to the application and the Office of the United States Trustee has filed a statement of no objection. Subject to the 20 percent holdback, which Neubert Pepe & Monteith has agreed to, we have filed a revised proposed order that does reflect that the 20 percent holdback will be in place. Attorney Claiborn asked that I revise that order, again, to make the specific reference to the amount of that holdback, which I will do, and file a revised order within - by Friday, Your Honor. THE COURT: Okay. So I'm looking at a revised order, but you're saying it needs to be further revised? MR. SKALKA: Yes, Your Honor. The revised order makes reference to a defined term as the application period holdback. And I'm Attorney Claiborn has asked that I specify the amount of the holdback, which is in the next paragraph, but I will revise this slightly and put in that \$203,734 figure. THE COURT: Okay. All right. Well, I have looked at the fees and expenses of Neubert Pepe & Monteith in connection with the fourth interim allowance of compensation and reimbursement of expenses and I find that the fees and expenses are reasonable and necessary Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 99 of 112

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 under the circumstances of this case and the many related proceedings. No one has filed any written objection to the fourth interim application. There is no one participating in this hearing today that is objecting to the further interim application. I understand that you have worked with the United States Trustee on a revised proposed order granting the application and that it will be further revised. So for all those reasons, the fourth interim application of Neubert Pepe & Monteith is granted and the revised proposed order will be submitted on or before March 22nd. MR. SKALKA: Absolutely, Your Honor. THE COURT: Okay. Thank you. MR. SKALKA: Thank you. THE COURT: All right. So if I'm correct, Trustee Despins, then I think we've taken care of everything at the 1:30 mark, even though we're at 4:00 p.m.; is that right? MR. DESPINS: Yes, Your Honor. THE COURT: Okay. So, then we have the two motions to dismiss that are on the calendar at 2:00 p.m. So I see counsel is approaching on their motions. I see counsel, Attorney Kindseth and Attorney Dell Fera that both of these motions -- I don't know. Obviously, you're both allowed to make an argument. I did see a

101 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 joinder, I think in part, so how do you plan to proceed this afternoon? I know that the two -- I understand that Counts 3 and 4 apply to one defendant and Counts 5 and 6 apply to the other, but I also see that the arguments are very similar. So however you want to proceed is fine. MR. DELLA FERA: So, Your Honor, is correct. The arguments are similar. Frankly, we thought it would be more efficient to have the arguments by -- appeared you'll have to forgive me, Your Honor -- THE COURT: Take your time. MR. DELLA FERA: -- the more recently joined Defendant Leading Shine New York. THE COURT: Leading Shine. MR. DELLA FERA: Sorry, Your Honor. Rather than file a separate motion with a separate hearing date for Leading Shine, we requested and Your Honor was considerate enough to allow us to argue the motion to dismiss on behalf of Leading Shine today. And as Your Honor points out, the counts that apply to each of those Defendants are separate and distinct. There's the third and fourth, with respect to Hudson Diamond New York and fifth and sixth, with respect to Leading Shine. The arguments are similar as we point out in our papers, Your Honor, given the jurisdictions of incorporation or formation Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 101 of 112

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1 2 of these Defendants, different state law, specifically, New York and Delaware, would apply.

3 4 5 6 7 8 9 10 11 12 13 14 In addition to Hudson Diamond New York and Leading Shine, the motion is filed on behalf of Defendants Hudson Diamond Holding, LLC and Ms. Mei Guo. The arguments are somewhat different, with respect to those Defendants, Your Honor; namely, that there are no claims or causes of action asserted against those particular Defendants. There are allegations included in the complaint with respect to the ownership interests or membership interests of Ms. Guo and/or Hudson Diamond Holding in Defendants that the trustee seeks relief from, but if Your Honor were to examine Counts 3, 4, 5, 6, and even Claims 1 and 2, Your Honor, no prayer for relief is made against Ms. Guo or Hudson Diamond Holding.

15 16 17 18 We would submit that as a result, the trustee has failed to state a cause of action against those two Defendants under Federal Rule 12(b)(6) and Federal Bankruptcy Rule 7012.

19 20 21 22 23 24 25 With respect to the other Defendants, against whom there are claims for relief, we would submit -- again, not to belabor the point -- it's in the papers, Your Honor, that the Court lacks jurisdiction under the Wagoner rule and the in pari delicto doctrine, with respect to claims that the trustee seeks to bring against those Defendants, given the debtors' alleged and/or established at this point, Your Honor

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1 2 3 made reference earlier today to certain findings that this Court has made with respect to beneficial ownership and alter-ego.

4 5 6 7 8 9 But nonetheless, with respect to Hudson Diamond New York and Leading Shine, those Defendants would submit that pursuant to the in pari delicto doctrine and the Wagoner rule, that the trustee's claims do not appropriately sound against them given that the trustee stands in the shoes of Mr. Kwok, the debtor.

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Similarly, the Leading Shine makes the same arguments and, again, based upon the arguments set forth in the briefing, Your Honor, those Defendants all six of those -- I'm sorry, all four of those Defendants submit that the complaint fails to state a claim. And, again, in particular, with respect to Ms. Guo and Hudson Diamond Holding, the absence of any prayer for relief, any claim or cause of action, we submit, should result in this Court dismissing the complaint, with respect to those two Defendants and for other reasons, with respect to all of them. Thank you, Your Honor. THE COURT: Okay. Thank you. Attorney Bassett? MR. BASSETT: Thank you, Your Honor. Actually, may I approach the podium?

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Sure. MR. BASSETT: Again, for the record, it's Nick Bassett from Paul Hastings on behalf of the Chapter 11 Trustee. Your Honor, I think the Court is likely aware at this point from our papers and the history of this case that, you know, all of the arguments that have been raised in the motions to dismiss that we are discussing today have already been made and ruled upon by this Court. The Court has already decided that allegations exactly like those contained in the complaint against these Defendants are sufficient to state a claim for alter-ego and/or beneficial ownership and the Court has already considered and rejected the applicability of the Wagoner rule and the in pari delicto defense on claims nearly identical to these. In fact, certain of the Defendants are collaterally estopped and/or barred by res judicata because they, themselves, were the subject to prior rulings from the Court on these issues; in particular, in this very adversary proceeding, the Court already decided Defendant Leading Shine's motion under Rule 55(c) to vacate the default. And while the Court did end up granting that motion, in the course of its analysis, as the Court is very much aware, I'm sure, ruled that Leading Shine had failed to set forth a meritorious defense. And the grounds for its meritorious

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1 2 3 4 defense are the same grounds that it now raises in its motion to dismiss. So those arguments have already been presented to the Court in this very adversary proceeding and have been rejected.

5 6 7 8 9 10 11 12 13 14 15 16 As to the remaining Defendants, I will take the Wagoner and in pari delicto defense argument first. The Court has decided that issue not only against Lamp Capital, but -- or sorry -- against Leading Shine, but I think in doing that, the Court referred back to the decision also in this adversary proceeding against Lamp Capital when the Court denied Lamp Capital's Rule 55(c) motion to vacate the default, and also the Court's prior ruling in the HK USA adversary proceeding, where the Court denied the Defendants, including Mei Guo, who's a Defendant here, their motion to dismiss and then ultimately granted summary judgment in the trustee's favor in that adversary proceeding.

17 18 19 20 21 22 23 24 25 In both of those rulings, in the case of Lamp Capital and in the case of HK USA, the Court appropriately recognized that the trustee was, in those cases, and is doing the same here, is bringing his claims under Section 544 of the Bankruptcy Code on the behalf of creditors. And there's very clear precedent, including the PepsiCo case from the Second Circuit, which indicates that the in pari delicto and with the Wagoner rule issue does not apply when the trustee is bringing claims on behalf of creditors, as opposed to

1 2 3 claims that may be brought standing in the shoes of the debtor, under Section 541 of the Bankruptcy Code. That is not the case here.

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4 5 6 7 8 9 10 11 12 That is also what distinguishes the Flanagan case, which Defendants are relied upon repeatedly from the District of Connecticut. The District Court in that case expressly noted that the successor to the trustee there had failed to bring his claims and, in fact, was time-barred from bringing his claims under Section 544 of the Bankruptcy Code, therefore, the analysis of the Wagoner rule and in pari delicto in that case is irrelevant here. It was a 541 case, not a 544 case.

13 14 15 16 17 18 19 20 The Court also recognized, as it relates to Mei Guo, specifically, in the HK USA order, that Mei Guo falls within the insider exception to the in pari delicto doctrine. The Court clearly held that in the context of the HK USA case on the grounds that she is the debtor's daughter and she has been placed as the nominee owner of the alleged alter-ego and held that, therefore, the insider exception would apply even if the Section 544 issue were not dispositive.

21 22 23 24 25 The same goes for Defendant Hudson Diamond New York, which is alleged to be the true, or is alleged to be the nominal owner of the entity and, therefore, under the control of the debtor. Also, the Court held in the HK USA adversary proceeding that for those same reasons, HK USA was

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1 an insider that fell within the insider exception.

2 3 4 5 6 So I think for all those -- the analysis that I went through and briefed, which the Court went through in much more detail in its prior rulings, are dispositive of the Wagoner and in pari delicto arguments that have been raised here.

7 8 9 10 11 12 13 As it relates to the other two Defendants that counsel bucketed separately, that would be Hudson Diamond Holding and Mei Guo, this argument has also been decided by the Court and rejected previously. Essentially, the argument that counsel was making is that the complaint contains no or very few substantive allegations as to Hudson Diamond Holding and Mei Guo, therefore, it fails to state a claim.

14 15 16 17 18 19 20 21 22 23 24 25 But what that argument fails to appreciate is that the entire reason both of those Defendants are named Defendants here is that they are the ones who claimed to hold ownership interests in the alleged alter-ego entities, specifically, Hudson Diamond Holding is the purported sole member of Hudson Diamond New York and Mei Guo has asserted that she is the owner of Defendant Leading Shine. So the whole reason they are named Defendants is because if we prevail on our alter-ego and/or beneficial ownership claims, such that all assets and/or ownership interests in these entities are turned over to the estate, they are the ones who must be compelled to effectuate that turnover.

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1 2 3 4 5 6 7 The fact that we don't have many or few allegations against them should not be surprising at all, because that's the whole point: the debtor, not these Defendants, were the ones who controlled these entities, made decisions on their behalf, et cetera. They were mere nominee stand-ins. That's why they're not mentioned much in the complaint, but we need relief against them.

8 9 10 11 12 13 14 15 16 And as I mentioned at the outset of this portion of the argument, the Court already decided this, too. In the Lamp Capital, in the decision denying Lamp Capital's Rule 55(c) order, the Court at page 23 of that order, reached the exact same conclusion. I won't read the entire quote, but the punchline from the Court's order was that the complaint was necessarily filed against Infinity Treasury. The Lamp entity's objection, to the contrary, lacks any merit.

17 18 19 20 21 The argument there had been that Infinity Treasury should be dismissed because there weren't really many allegations against it. It was merely the nominee owner of Lamp Capital. The Court rejected that argument appropriately. I should reject it again here.

22 23 24 25 Your Honor, I think that is all I had. I won't belabor the point, given that these issues have been discussed a number of times, but, obviously, if the Court has questions, I'm happy to address those.

109 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: I do not have any questions at this time. Thank you. MR. BASSETT: Thank you, Your Honor. THE COURT: Mr. Della Fera, is there anything else you would like to add? MR. DELLA FERA: Nothing further, Your Honor. THE COURT: Okay. Thank you. All right. With regard to the -- I'm sorry, I just lost my place. Just give me a second. I'm sorry. (Pause) THE COURT: With regard to the motion to dismiss Counts 3 and 4 against Hudson Diamond New York, Hudson Diamond Holding, Mei Guo, and Leading Shine -- well, Leading Shine is in the other motion. I'm sorry. I'm going to take that under advisement, although, I think there'll be a ruling very soon. I am familiar with the arguments of the parties and the arguments made in this adversary proceeding, so I think that will enable there to be a ruling in short order, okay. Thank you. With regard to the other motion, Attorney Kindseth, are you going to be arguing that motion? MR. DELLA FERA: I -- THE COURT: Or whomever. It's fine. MR. DELLA FERA: No, I think the motion has been Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 109 of 112

110 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 effectively argued. THE COURT: All right. As long as you're fine with that -- MR. DELLA FERA: Yes. THE COURT: -- that you're -- that it applies to both motions? UNIDENTIFIED SPEAKER: I think that's right. THE COURT: Okay. That's fine. MR. BASSETT: But I intended to address both in my response. THE COURT: Okay. I just wanted to be clear for the record, that's why I asked the question at first. I wasn't actually sure if you were addressing both motions. MR. DELLA FERA: Sure. And I appreciate it, Your Honor. THE COURT: And I apologize if I didn't understand that. So, then, with regard to both motions, my statements are applicable, which are that I understand the arguments. I don't have any questions about the arguments. I'm going to take the matters under advisement and rule accordingly. But as I said, I have familiarity with the arguments, so I will have to go back and look and then rule accordingly, but I believe it will be in short order, okay. Thank you. Is there anything else we need to address this afternoon in any of the matters? Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 110 of 112

| | Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 Page 111 of 112 | |----|------------------------------------------------------------------------------------------------| | | 111 | | 1 | MR. DESPINS: I don't believe so, Your Honor. | | 2 | THE COURT: Anything from your perspective, | | 3 | Attorney? | | 4 | MR. DELLA FERA: No, Your Honor. | | 5 | THE COURT: Okay. All right. | | 6 | Well, those matters, if I am correct, and we all | | 7 | made it through the ability to breathe, which is helpful, in | | 8 | the courtroom, then the only thing I would say is in the next | | 9 | month or two, we may be having court upstairs because of | | 10 | construction down here, but you'll know if that happens. I | | 11 | mean, it's going to happen, I just don't know when, okay. | | 12 | So if you come into the building someday and the | | 13 | marshals tell you, you have to go upstairs, that's why, okay. | | 14 | All right. So that concludes all of our hearings | | 15 | today, therefore, Court is adjourned. Thank you, all. | | 16 | COUNSEL: Thank you, Your Honor. | | 17 | THE CLERK: All rise. | | 18 | The Court is adjourned. | | 19 | (Proceedings concluded at 4:23 p.m.) | | 20 | | | 21 | | | 22 | | | 23 | | | 24 | | | 25 | | | | | | | |

| | Case 22-50073 Doc 3054 Filed 03/28/24 Entered 03/28/24 09:21:31 | Page 112 of | |----|--------------------------------------------------------------------------|----------------| | | 112 | 112 | | 1 | CERTIFICATION | | | 2 | I certify that the foregoing is a correct | | | 3 | transcript from the electronic sound recording of the | | | 4 | proceedings in the above-entitled matter to the best of my | | | 5 | knowledge and ability. | | | 6 | | | | 7 | /s/ William J. Garling | March 22, 2024 | | 8 | William J. Garling, CET-543 | | | 9 | Certified Court Transcriptionist | | | 10 | For Reliable | | | 11 | | | | 12 | | | | 13 | | | | 14 | | | | 15 | | | | 16 | | | | 17 | | | | 18 | | | | 19 | | | | 20 | | | | 21 | | | | 22 | | | | 23 | | | | 24 | | | | 25 | | | | | | | | | | |