郭文贵破产案 · TRANSCRIPT · ECF #3252

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., . . (Jointly Administered) . . Courtroom 123 . Brien McMahon Federal Building Debtors. . 915 Lafayette Boulevard . Bridgeport, Connecticut 06604 . . Monday, June 10, 2024 . . . . . . . . . . . . . . . 1:06 p.m. TRANSCRIPT OF HEARING BEFORE THE HONORABLE JULIE A. MANNING UNITED STATES BANKRUPTCY JUDGE APPEARANCES: For the Chapter 11 Trustee: James C. Graham, Esquire NEUBERT PEPE & MONTEITH, P.C. 195 Church Street 13th Floor New Haven, Connecticut 06510 -and- Luc A. Despins, Esquire PAUL HASTINGS, LLP 200 Park Avenue New York, New York 10166 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 3252 Filed 06/17/24 Entered 06/17/24 08:18:10 Page 1 of 33

| | Case 22-50073<br>Doc 3252<br>Filed 06/17/24 | Entered 06/17/24 08:18:10<br>Page 2 of 33 | | | |----|------------------------------------------------|--------------------------------------------------------------------|--|--| | | | 2 | | | | | | | | | | 1 | APPEARANCES (CONTINUED): | | | | | 2 | For the U.S. Trustee: | Holley L. Claiborn, Esquire<br>OFFICE OF THE UNITED STATES TRUSTEE | | | | 3 | | The Giaimo Federal Building<br>150 Court Street, Room 302 | | | | 4 | | New Haven, Connecticut 06510 | | | | 5 | For Pacific Alliance<br>Asia Opportunity Fund: | Annecca H. Smith, Esquire | | | | 6 | | ROBINSON & COLE, LLP<br>270 Trumbull Street | | | | 7 | | Hartford, Connecticut 06103 | | | | 8 | | -and- | | | | 9 | | Stuart M. Sarnoff, Esquire<br>O'MELVENY & MYERS, LLP | | | | 10 | | 1301 Avenue of the Americas | | | | 11 | | Suite 1730<br>New York, New York 10019 | | | | 12 | For Lamp Capital, LLC: | Robert J. Grand, Esquire | | | | 13 | | LAX & NEVILLE, LLP<br>350 Fifth Avenue | | | | 14 | | Suite 4640<br>New York, New York 10118 | | | | 15 | For Merrill Lynch: | Shawn R. Fox, Esquire | | | | 16 | | MCGUIRE WOODS, LLP<br>1251 Avenue of the Americas | | | | 17 | | 20th Floor<br>New York, New York 10020 | | | | 18 | For the Official | | | | | 19 | Committee of<br>Unsecured Creditors: | Jonathan A. Kaplan, Esquire | | | | 20 | | PULLMAN & COMLEY, LLC<br>90 State House Square | | | | 21 | | Hartford, Connecticut 06103 | | | | 22 | | | | | | 23 | | | | | | 24 | | | | | | 25 | | | | | | | | | | | | | | | | | | | | | | |

INDEX MOTIONS: PAGE Matter No. 3203 Motion for Order Approving Liquidation of VCTR Shares, Distribution of Proceeds, and Related Relief Filed By Patrick R. Linsey on behalf of Luc A. Despins, Chapter 11 Trustee Court's Ruling: 32 Transcriptionist's Certificate 33 Case 22-50073 Doc 3252 Filed 06/17/24 Entered 06/17/24 08:18:10 Page 3 of 33

4 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 1:06 p.m.) THE CLERK: 22-50073, Ho Wan Kwok. THE COURT: Good afternoon. If we could have appearances for the record, please, starting with the Chapter 11 Trustee. MR. DESPINS: Good afternoon, Your Honor. Luc Despins, Chapter 11 Trustee. THE COURT: Good afternoon. MR. GRAHAM: Good afternoon, Your Honor. James Graham from Neubert Pepe & Monteith, on behalf of the trustee. THE COURT: Good afternoon. MS. CLAIBORN: Good afternoon. Holley Claiborn for the U.S. Trustee. MR. SARNOFF: Good afternoon, Your Honor. Stuart Aronoff from O'Melveny & Myers, on behalf of creditor, PAX. MS. SMITH: Good afternoon, Your Honor. Annecca Smith, Robinson & Cole, Connecticut counsel for creditor PAX. THE COURT: Good afternoon. MR. KAPLAN: Good afternoon, Your Honor -- MR. GRAND: Good afternoon, Your Honor. Robert Grand from Lax & Neville, on behalf of Lamp Capital. THE COURT: Good afternoon. MR. KAPLAN: Good afternoon. Jonathan Kaplan, of Pullman & Comley, on behalf of the Committee. Case 22-50073 Doc 3252 Filed 06/17/24 Entered 06/17/24 08:18:10 Page 4 of 33

5 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: Good afternoon. MR. FOX: Good afternoon, Your Honor. Shaun Fox from McGuire Woods, LLP, on behalf of Merrill Lynch. THE COURT: Good afternoon. I think, Attorney Fox, you do not have an appearance, but my understanding is you would like to observe the hearing, since the matter at hand may involve some action on behalf of Merrill Lynch; is that correct? MR. FOX: That is correct, Your Honor. We're the custodian of the securities at issue. THE COURT: Okay. Thank you. All right. Trustee Despins, this is your motion, so go right ahead. MR. DESPINS: Yes, Your Honor. Thank you. Your Honor, on May 21st, we filed a motion to approve various things relating to an LP interest that Lamp Capital had in the fund called "Reverence Fund." That's at Docket 3203. And, basically, we learned of this position that Lamp Capital had in the Reverence Fund after litigation was commenced on February 15th or so, against Reverence Capital, the manager of the fund, for the receipt of funds from some of the debtors' alter-egos. But to make a long story short, they told us, Hey, the Lamp Capital is a limited partner in the fund and has various rights that you should know about. Case 22-50073 Doc 3252 Filed 06/17/24 Entered 06/17/24 08:18:10 Page 5 of 33

1 2 3 4 5 6 7 8 9 10 11 12 And through their collaboration, we have essentially, or Lamp Capital has two types of rights vis-avis, the Reverence Fund. One, it has these shares, and that's the principal part of the motion, the VCTR shares, which are publicly traded; actually, a number of shares, with 55,383. Plus, it has cash around \$700,000 -- \$715,000, I should say. And in addition to that, Lamp Capital has a limited partner interest that's kind of a less-liquid ownership right, which gives it, Lamp Capital, the right to receive distributions as the fund gets wound down and assets of the funds are being disposed of.

13 14 15 16 17 18 19 20 21 22 23 And, obviously, we wanted to deal with this, both aspects of this, the shares, the cash, and on the other hand, the continuing limited partnership interest in the fund, so we filed this motion, essentially, to get authorization to sell the shares. And there's a mechanism that's reflected in the order where Reverence Capital, as the manager, would give the notice to Merrill Lynch to sell the shares, but, basically, the trigger would be the entry of this order. I will come back to that provision, because we may want to make slight technical modifications about that, but let's park that issue aside for now.

24 25 But, essentially, we're seeking authorization to sell the shares or to have the shares sold by Merrill Lynch,

1 2 3 4 5 6 at the direction of Reverence Capital, pursuant to this order, and the proceeds transferred to the trustee, and the same thing for the \$715,000. In addition to that, we're seeking an order from the Court approving the trustee's decision to keep the limited partnership interest in place and I'll explain why we're doing this.

7 8 9 10 11 12 13 14 We actually investigated, because cash is king, we would like to get as much cash as we can, but we have investigated various possibilities of selling and disposing of the limited partnership interests, which would require some legal work, heavy lifting, which would be costly, and we would ask to dispose of this, likely, at a discount, because this really gives you the right to receive future distributions, as no immediate distributions are due.

15 16 17 18 19 20 21 22 And on behalf, my decision was that we're better off holding that part of the limited partnership interests for the future because the fund is likely to wind-down in the next two years or so. There's no set date, but our estimation is it's going to wind-down in the next two or three years or so and, therefore, it's better to hold on to the limited partnership interests, and we're seeking the Court's blessing of that decision.

23 24 25 So that's to set the stage. By the way, the VCTR shares, as I said, are publicly traded. In the motion, we said they were trading at \$52 a share. Right now, they're

1 2 3 4 5 6 7 traded at \$49 a share, or so, so they're going -- and they were up to, I want to say \$54, perhaps \$56 a share after we filed the motion. So this is a stock that, you know, fluctuates a lot and, obviously, that's one of the reasons to sell it on the public market, but also, we should not be in the business of speculating as to future price of public stocks. So, that's the background.

8 9 10 11 12 13 14 We obviously served the motion on all parties, as directed by the Court, and we received a limited objection from Lamp Capital. And, basically, essentially, what they're saying is, We'd like to get the same deal that people involved with The Lady May had. And, you know, obviously, we're not agreeable to that, so let me set the stage for that discussion, as well.

15 16 17 18 19 Right now, there's an order from this Court finding that all assets of Lamp are assets of the estate. So there's no debate under that order that the VCTR shares, the cash, and the limited partnership interests are assets of the estate.

20 21 22 23 24 25 Lamp Capital has appealed that order. By the way, that order was dated February 1st. They appealed that order. Never sought a stay pending appeal to this date, and so, therefore, from our point of view, the legal status quo is the trustee has, absolutely, the right to get those shares, to sell them, and then to use the proceeds without any

1 limitations.

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2 3 4 5 And what Lamp Capital wants to do is basically say, Well, we would like the Court to put some strings on that and basically provide what will happen if Lamp Capital prevails on appeal.

6 7 8 9 10 11 12 13 And our point is, they have whatever rights they have. We're not trying to cut off those rights. If those rights include what they're seeking, they will get this, but short of a stay pending appeal, their only rights are to appeal. And to whatever rights they have, if they prevail on appeal, and this Court should not issue an advisory opinion saying, Well, if you prevail on appeal, this will happen or that will happen.

14 15 16 17 18 19 20 21 22 23 24 The Lady May order was heavily negotiated. It was the first order that the Court entered, with respect to an alter-ego finding. It was a totally different context and we did this consensually. That order is not a (indiscernible) of any kind, because, again, it was consensual. And our view is that whatever rights they have -- and we're happy to put a "reservation of rights" language in the order that's saying, This order shall not affect whatever rights Lamp Capital has if it prevails on appeal. But to the go to the next step is to say, what that means is X, Y, Z. We're not prepared to do that and we don't believe the Court needs to do that.

The last point I would mention, Your Honor, is

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 that there is a potential change -- and to be candid with Your Honor, that came a little bit late in the process, like this morning. I'll take the blame for that -- where, in terms of what should be the trigger for the Reverence Fund to direct Merrill Lynch to sell the shares, instead of being entry of the order, we'd prefer to have a direction from the trustee. The reason for that is -- I'm making this up -- if the stock falls to \$2 a share tomorrow, I'm not sure I want to sell tomorrow. And to be candid, I'm not going to play the market, but on the other hand, I don't want to be in a position where we're locked into we're selling without any discretion as to the timing of that discretion. So we've asked Reverence and Merrill Lynch to agree to modify that language to provide that it's the trustee's direction that would trigger that sale process if the Court enters the order. If the Court doesn't enter the order, we're not going to sell the shares. But if the Court

23 24 25 To be fair, because this came up late, I'm not sure if we have sign-off from Reverence on that. I mean, I think we were allowed to say their counsel did not think that

enters the order, we would want the Court to allow us to

to allow us to basically -- to have the trigger being the

modify the second and third decretal paragraphs of the order

notice and the trustee, rather than the mere entry of a court

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order.

| 1 | there would be an issue with this, but they have not gotten | | | | | | |----|-----------------------------------------------------------------|--|--|--|--|--| | 2 | authorization from their client to do that, so I don't want | | | | | | | 3 | to oversell that.<br>So, what we would propose, again, if Your | | | | | | | 4 | Honor is inclined to enter the order, is to resolve these | | | | | | | 5 | issues after the hearing.<br>I don't think they'll be | | | | | | | 6 | contentious or they will not require further order from the | | | | | | | 7 | Court, and we would submit an order after, you know, sometime | | | | | | | 8 | later today after Reverence has had a chance to -- so counsel | | | | | | | 9 | for Reverence has had a chance to consult with their client. | | | | | | | 10 | I believe that counsel for Merrill Lynch was okay | | | | | | | 11 | with that change, but, again, I will let them speak for | | | | | | | 12 | themselves.<br>I saw some emails that went back and forth, but | | | | | | | 13 | I think that's the case. | | | | | | | 14 | So, Your Honor, that's our opening presentation on | | | | | | | 15 | that motion.<br>I'm happy to answer any questions that you may | | | | | | | 16 | have. | | | | | | | 17 | THE COURT:<br>The only question I have at the moment | | | | | | | 18 | is about the trigger that you just mentioned.<br>That you would | | | | | | | 19 | set, I would assume, some written direction to Merrill Lynch; | | | | | | | 20 | is that what you're saying? | | | | | | | 21 | MR. DESPINS:<br>Yes. | | | | | | | 22 | THE COURT:<br>And -- | | | | | | | 23 | MR. DESPINS:<br>Well, to -- first, if I may, Your | | | | | | | 24 | Honor, the second decretal paragraph says: | | | | | | | 25 | "Within two business days of entry of the order, | | | | | | | | | | | | | |

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 Reverence Fund shall direct Merrill Lynch to liquidate the VCTR shares." It would change that to say that, "Within two business days, with written direction by the trustee, the Reverence Fund shall direct Merrill Lynch to sell," and there would be a matching change or a conforming change to the third decretal paragraph to govern Merrill Lynch's obligation to liquidate the shares. So, obviously, none of this applies without the order being entered -- THE COURT: Understood. MR. DESPINS: -- but after that, there would have to be a supplemental action; it would be a written notice by the trustee to Reverence, copying Merrill Lynch, essentially, and, that would be the trigger. THE COURT: Okay, thank you. That was my question. Attorney Graham, did you wish to be heard? MR. GRAHAM: Yes, Your Honor. Thank you. Robert Graham from Lax & Neville on behalf of Lamp Capital. So, as Mr. Despins mentioned, the objection that Lamp filed is very limited; it's actually, there's no objection to the relief sought by the trustee here. It's really just with respect to the language of the proposed

1 order that the trustee submitted.

| 2 | As Mr. Despins mentioned, there's an appeal that's | | | | | | | |----|-----------------------------------------------------------------|--|--|--|--|--|--| | 3 | now fully briefed and pending by the District Court.<br>And the | | | | | | | | 4 | concern from Lamp's perspective is that in the event that the | | | | | | | | 5 | appeal is successful, the trustee will be in a position where | | | | | | | | 6 | it will either be permitted to keep or have already disposed | | | | | | | | 7 | of assets or money collected from liquidation of the shares | | | | | | | | 8 | based on a default judgment that will have been vacated. | | | | | | | | 9 | And so all Lamp is asking is just a reflection in | | | | | | | | 10 | the proposed order to sort of maintain the status quo | | | | | | | | 11 | (indiscernible), in the event that the appeal is successful. | | | | | | | | 12 | If the appeal is not successful, there's no harm, and so if | | | | | | | | 13 | the appeal is successful, Lamp is suggesting that the status | | | | | | | | 14 | quo of what was the situation prior to the entry of the | | | | | | | | 15 | judgment be reflected.<br>And based on the language of the | | | | | | | | 16 | proposed order, that's not the case. | | | | | | | | 17 | So, recognizing that, we had sent some proposed | | | | | | | | 18 | language prior to today's hearing.<br>I had discussions with | | | | | | | | 19 | counsel for the trustee last week, and as Mr. Despins | | | | | | | | 20 | mentioned, the trustee declined to make any changes to the | | | | | | | | 21 | proposed language. | | | | | | | | 22 | Again, there's no strings or restrictions that are | | | | | | | | 23 | being sought here by Lamp Capital; they're not asking for | | | | | | | | 24 | anything like that.<br>In the case of The Lady May, if I | | | | | | | | 25 | recall, the objection was to actually selling the yacht.<br>And | | | | | | |

1 2 3 counsel for the entity involved, I believe, argued vigorously that they did not want the trustee to actually go forward with the sale.

4 5 6 7 8 9 10 11 12 13 14 We're not asking that. We're not seeking to stand in the trustee's way in any respect, only to reflect that in the event that the appeal is granted, that the status quo be maintained; otherwise, Lamp would be in a position of having -- you know, if the appeal is successful and the default judgment is vacated and the litigation underneath has been active, Lamp Capital will be in the position of having, you know, nearly \$3 million of its property already transferred to the trustee and potentially disposed of, despite there being, you know, orders of alter-ego judgment in effect at that time.

15 16 17 18 19 20 21 So it's very limited relief that we're seeking, and given the precedent that has already been, you know, established in this case, with respect to similar relief, but not quite the same, in the context of The Lady May, arguably, I would say that, you know, this is much more narrow. We're just asking to be heard and to have the order modified on those grounds.

THE COURT: Okay. Thank you.

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23 24 Does anyone else wish to be heard with regard to the trustee's motion?

MR. DESPINS: I'd like to be -- to respond, but

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 after other parties. THE COURT: Sure. MR. DESPINS: Thank you, Your Honor. THE COURT: I just want to make sure that no one else wishes to be heard, the U.S. Trustee or the Creditors Committee, or PAX? MS. CLAIBORN: No, Your Honor, nothing to say. MR. SARNOFF: No, Your Honor. PAX does not have anything to add. THE COURT: Okay. Trustee Despins, you wanted to respond to Attorney Grand's statements? MR. DESPINS: Very briefly, Your Honor. The status quo is there's an order allowing us to use to liquidate all assets of Lamp; that's the status quo today and without any restrictions. And, obviously, we're not going to do that, because that's not the way we run cases. But the legal status quo is there's an order saying that all these assets are assets of the debtor and the trustee can dispose of them, you know, subject to the various provisions of the Bankruptcy Code. That's the status quo. This language that they want to add, there's no precedent to The Lady May order. That's not a precedent; that's something that we agreed to. As I said, in that context, it was the first such order that involved a very Case 22-50073 Doc 3252 Filed 06/17/24 Entered 06/17/24 08:18:10 Page 15 of 33

1 large asset and we agreed to that order.

2 3 4 5 6 7 8 But we have to realize, Your Honor, and you know this, there are going to be deadlines of these people that have alter-ego issues and if we're going to start establishing restrictions for each of them, without them having to go through the burden of obtaining a stay pending appeal, that's going to be chaos, Your Honor. And that's why, as a matter of principle, we're objecting to this.

9 10 11 12 13 14 15 And I know the argument sounds appealing. Why not, you know, basically, set this money aside? Practically, that's -- the order doesn't say that, but, practically, that would be the effect of that, because if you start doing this across the board, HCHK, Lamp, Golden Spring, all the others who want their own little protection, it's going to be chaos, Your Honor.

16 17 18 19 20 21 22 23 24 So the point is if they want to effect the rights of the trustee under the order that is -- that Your Honor entered on February 1st, which is really clear, they need to obtain a stay pending appeal. They haven't bothered doing that -- that's okay -- but they cannot, now, through the backdoor, say, Give me some of that without me having to go through the burden of seeking a stay pending appeal, putting up a bond, et cetera, et cetera. So that's why, Your Honor, that's why we're not agreeable to those changes.

Thank you very much.

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| | 17 | | | | | |----|---------------------------------------------------------------|--|--|--|--| | 1 | THE COURT:<br>Thank you. | | | | | | 2 | MR. GRAND:<br>May I respond briefly, Your Honor? | | | | | | 3 | THE COURT:<br>Yes, you may. | | | | | | 4 | MR. GRAND:<br>Thank you. | | | | | | 5 | We're not seeking a stay pending appeal because | | | | | | 6 | we're not objecting to the status quo today.<br>There's no | | | | | | 7 | dispute as to what the status quo today is, as to what the | | | | | | 8 | trustee is permitted to do under the order that was entered | | | | | | 9 | by the Court, with respect to the entry of a default | | | | | | 10 | judgment. | | | | | | 11 | The issue is in the event that default judgment is | | | | | | 12 | vacated, that changes the status quo.<br>That returns the | | | | | | 13 | status quo to the position that the parties were in before | | | | | | 14 | the Court entered the order on February 1, granting default | | | | | | 15 | judgment in favor of the trustee. | | | | | | 16 | And the relief that the trustee is seeking today | | | | | | 17 | in the proposed order, in the event that that -- is based | | | | | | 18 | entirely, 100 percent, on the entry of that default judgment. | | | | | | 19 | If that default judgment is vacated, then the trustee will | | | | | | 20 | have been granted relief based on a vacated judgment. | | | | | | 21 | And so all -- we're not seeking -- we're not | | | | | | 22 | asking for any restrictions to be put in place.<br>We're not | | | | | | 23 | asking -- we don't need it -- we're not seeking a stay to | | | | | | 24 | prevent the trustee from proceeding with the liquidation of | | | | | | 25 | the shares or the receipt of the proceeds of it; all we're | | | | | | | | | | | |

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 trying to do is just recognize that if the appeal is successful, then there should be some mechanism that reflects that that status quo is no longer the status quo upon the situation upon which the trustee is seeking relief by this order. And so it's not a string. It's not a restriction. It's not -- we're not seeking to stand in the way of the trustee's ability to proceed today in any respect; only, that in the event that the appeal is granted, that the status quo, at that point, reflect that eventuality. MR. DESPINS: Your Honor, perhaps an advisory opinion is what they're seeking. Whatever rights they have, they have. I've got at least 10 counsel or professionals retained by the trustee in the U.K., in Switzerland, in the

16 17 18 19 20 BVI, and all that. If we're going to adopt their language that says that all these people are subject to disgorgement, you know, they're going to say, what am I signing up for? It's going to be administratively chaos and that's why we cannot agree to this.

21 22 23 24 25 We agreed to this the context of The Lady May. It was very limited. It was a very special circumstance, given the state at which we were in the case. But at this point, they're not asking for the status quo. They're asking for you to declare that in the event that they prevail, the

1 2 3 following things will happen. The following things that will happen is that there'll be disgorgement across the board, et cetera, et cetera.

4 5 6 7 8 9 That may very well be. If those are their rights, those are their rights. But this is not the order for Your Honor to opine on what happens if you get reversed. What I ever their rights are, and we're happy to say that entry of this order shall not affect whatever rights they have in the event the appeal is granted.

10 11 12 But to have this at this stage, it's an advisory opinion. It's not appropriate and it renders the administration of the case really difficult, Your Honor.

13 14 15 16 MR. GRAND: Your Honor, we're not asking for an advisory opinion. We're -- this is precisely what happened with the situation with The Lady May. The recognition was that in --

17 18 19 20 21 22 23 24 THE COURT: It's not -- Attorney Grand, I just want to stop you for one second -- it's not precisely what happened with The Lady May, number one. But number two, I don't know what it means when you say, "In the event the order enters, vacating the Lamp judgment," because say you're right and the District Court vacates the judgment. Well, what if the trustee appeals that to the Second Circuit, what happens then?

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You're going to say, Well, he has to get a stay

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 pending appeal. And you didn't get -- MR. GRAND: No, I -- THE COURT: No, no, hold on. MR. GRAND: I'm sorry. THE COURT: You're going to say, He has to get a stay pending appeal, then, in order for him not to have to disgorge. But you didn't get a stay pending appeal of the judgment that was entered by this Court. And so I don't understand why the language that added that the entry of this order shall not affect whatever rights you have as of the date of the entry of this order. The disgorgement and all the reversion of interests, none of that is going to happen unless there's a final, non-appealable order that vacates, fully, by the way -- fully -- the default judgment. So -- and that may happen. I'm not suggesting that that couldn't happen. I'm saying, I don't know what the reviewing court is going to rule and I don't know what conditions, if any, they're going to place. It could be vacated in part. It could be not vacated in part. I don't know what they're going to do and I'm not going to presume to know what they're going to do. That's their job and they will handle it appropriately. But I think that you can add language to this Case 22-50073 Doc 3252 Filed 06/17/24 Entered 06/17/24 08:18:10 Page 20 of 33

1 2 3 4 5 6 7 8 9 order that says that you're reserving all your rights if there's a final, non-appealable order vacating the default judgment. I don't see any problem with that, but beyond that, I do see a problem. And I'm not even sure that I agree with Trustee Despins that it's an advisory opinion; it's just that I don't know what the reviewing court is going to do and I'm not going to make any presumptions about that. You can reserve your rights and whatever they may be as of the date of the entry of the order and that, I

10 think, is fair. I think that's fair.

11 12 13 14 15 16 But to go beyond that, I don't think that's fair to the Court. I don't think that's fair to this Court, because I have no idea what the District Court is going to do upon review and I'm not going to create some kind of right that may or may not exist, depending upon what the District Court is going to do.

17 18 19 20 21 22 And I think The Lady May situation is completely different. I know, Attorney Grand, you weren't involved and you may be looking at an order and think it's the same. But there was -- The Lady May issue was at issue for a long time, including well before this Chapter 11 case was filed, as PAX's counsel can tell you, if they haven't already.

23 24 25 And so I -- while I understand the argument, I'm not persuaded by the addition of the language about reverting an ownership interest in disgorgement and things of that

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 nature under the very specific circumstances and the facts of this case. The Lady May is not factually analogous to this. And you may disagree, and you have every right to, but I'm not going to add that language to this order. I'm happy to add language to the order or have both of you work on language, which I'm going to instruct you to do, about reservation of rights. But it won't -- I will not enter an order that goes beyond that. You say you're not objecting to the relief, okay, and I appreciate that. Then the interests in these shares will be sold and the money -- apparently, there's cash, as well -- will become part of this estate. If, somehow, in the future, which it very well may happen, that the default judgment is fully vacated and there's a final, non-appealable order on that, then you may have rights that exist as of today that won't change. The only issue that -- otherwise, you are, then, objecting to the relief sought, because, then, you're saying, Well, we don't have the shares and we don't have the money. Well, that's what happens; it gets sold. That's the point. So, I do understand your argument, but I'm not persuaded by it, with regard to this motion and this order, because I believe whatever rights Lamp Capital has, as of the entry of this order, will not be affected by the entry of this order if there is a final, non-appealable order fully

23 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 vacating the default judgment. So, do you have any questions? MR. GRAND: I have one, which is, I mean, the concern is I'm not sure -- I'm trying to understand why the entry of a final, non-appealable order is the trigger. THE COURT: Because what if you win on appeal and the Circuit overrules the District Court? MR. GRAND: Right. And so -- well, okay. But let's just take it one step at a time. If the District Court reverses the default judgment and it's vacated, on what basis, then, does the trustee have to be able to maintain ownership or dispose of nearly \$3 million of Lamp's property, which was based on a vacated judgment at that point in time? THE COURT: Well, he already -- MR. GRAND: Why should the trustee -- THE COURT: -- he would have already -- so, then, you are objecting to the relief, because he would have already -- MR. GRAND: No, only in that instance. THE COURT: He would have already liquidated it. MR. GRAND: That's okay. We're not -- the shares are not the concern. It's the value of the assets. It's the -- whether it's the \$2.9 million -- THE COURT: Then you need to seek a stay pending Case 22-50073 Doc 3252 Filed 06/17/24 Entered 06/17/24 08:18:10 Page 23 of 33

24 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 appeal and post a bond. See, this is the point. The point is -- MR. GRAND: I'm not seeking to stop anything. We're not seeking to stop anything. THE COURT: Yeah, but you are, because you're not -- MR. GRAND: We're not. We're not -- THE COURT: All right. Attorney Grand, let me finish, please. MR. GRAND: Sure. THE COURT: You are. That is what you are doing, because you're saying that I'm going to make some ruling in this order that if the District -- and you just stated it - if the District Court vacates the judgment, regardless of the trustee's rights to appeal to the Second Circuit, you want there to be an immediate revesting and disgorgement of those assets. So, then, you are objecting to the relief, because that's not going to happen. If you're really not objecting to the relief, then the assets are going to be sold, and the trustee has obligations as a trustee, to maintain those assets in the estate and those assets will be distributed, in accordance with further Court order. So, either you -- you can't have it both ways. You can't say, And the minute the District Court vacates Case 22-50073 Doc 3252 Filed 06/17/24 Entered 06/17/24 08:18:10 Page 24 of 33

25 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, I want it all back. I want the value of it back. And then Trustee Despins would say, No, I'm going to appeal to the Second Circuit. And you'd say, Well, you can't -- so what if you're going to appeal to the Second Circuit? You'd have to get a stay pending appeal in order for you not to have to return that to Lamp Capital. That would be the only recourse you'd have, Attorney Grand. That's what you'd have to argue. And then the Circuit would have to determine whether or not there should be a stay pending appeal. That's flipping the burden of the default judgment that's already entered onto the trustee, who was successful, and away from your client, who was not, that could have sought a stay pending appeal of the entry of the -- the impact of the entry of the default judgment. So that's - that is how it will work in this court, and I believe other appellate courts would agree that you're -- that, otherwise, you are either objecting to the relief sought or you're flipping the burden to the trustee to have a stay pending appeal, which I don't think is appropriate. MR. GRAND: Respectfully, I disagree. I don't think that Lamp Capital is asking for either of those things or arguing for either of those things. I mean, I -- all we're trying to accomplish is to Case 22-50073 Doc 3252 Filed 06/17/24 Entered 06/17/24 08:18:10 Page 25 of 33

1 2 3 4 5 have the ownership of that asset reflect the status quo at the time, in accordance with the procedure of this case. So, as of now, there's an order in place. The trustee has every right, based on the default judgment, to liquidate that asset and receive the proceeds.

6 7 8 9 10 11 If the default judgment is vacated, then what right does the trustee have to still hold, at that point, \$3 million of Lamp's property? If the trustee, at that point, seeks a stay -- seeks an appeal to the Circuit Court, then -- and ultimately is successful -- then the funds would be transferred back. That's -- it needs to reflect that.

12 13 14 15 16 All we're trying to do is just have the ownership of that asset reflect the status quo and to reflect the proper procedure of this case along the way. And that's - but we're not -- you know, we're not asking for anything more than that.

MR. DESPINS: And, Your Honor --

17

25

18 19 20 21 22 23 24 MR. GRAND: Absent that, Lamp is in the position if -- in the event that the appeal is successful, Lamp is in the position of having the trustee being able to permit - being permitted to keep money based on a default judgment that has been vacated -- THE COURT: You could file a motion -- MR. GRAND: -- that it's not entitled to.

THE COURT: You could file a motion, Attorney

27 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 Grand, requiring the trustee to return all the property to you. MR. GRAND: Well, that's my point. This is very simple language that avoids that, and that -- THE COURT: It doesn't avoid it; it does more than that. MR. GRAND: -- respectfully, it -- THE COURT: It does more -- because you might not be successful on your motion. You might not be successful. We don't know what's going to happen. You are putting -- you are making presumptions and I'm not going to enter an order on presumptions. MR. GRAND: Well, I'm not asking for a presumption. I'm asking -- this language doesn't speak of presumptions; it speaks of an actual occurrence. THE COURT: No, it doesn't. It says an order enters vacating the Lamp judgment. I don't even know what that means, number one, as I've already stated. Number two, the District Court could enter eight different kinds of orders regarding the Lamp judgment. It could vacate, in part. It could reverse, in part. It could remand, in part. It has -- it is within its determination at this point in time, not this Court's determination. Case 22-50073 Doc 3252 Filed 06/17/24 Entered 06/17/24 08:18:10 Page 27 of 33

Case 22-50073 Doc 3252 Filed 06/17/24 Entered 06/17/24 08:18:10 Page 28 of 33

28

So either you're objecting --

1

2

MR. GRAND: We're happy to --

3 4 5 THE COURT: -- to the underlying relief by the trustee or you are flipping the burden to the trustee to obtain a stay pending appeal.

6 7 8 9 10 11 12 And I think, as I think I've been very clear, that is not -- I'm not going to allow that. So I'm ordering you to work with the trustee on your "reservation of rights" language and we'll see where we stand. But I am not going to enter an order with the language about "in the event that an order enters vacating the Lamp judgment." That's not going to happen.

13 14 15 16 17 18 19 We don't know what's going to happen and I'm not going to enter an order with any of that language in it under the facts and circumstances, as they exist, with regard to Lamp Capital at this point in time, and the prior order that said, all the property of Lamp Capital is property of the estate and can be liquidated, and that's what the trustee is doing.

20 21 22 23 24 25 So, Trustee Despins and Attorney Grand, how much time do you think you're going to need to review this order and submit to the Court the revised order, which also will include, according to Trustee Despins, some additional language, with regard to the trigger date and things of that nature? How much time do you need?

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 I will give you a few days, but I won't give you -- MR. DESPINS: No, I -- THE COURT: -- beyond Thursday. And if there's still a disagreement, then you both will submit your own orders and I'll enter each and every order I think is appropriate. MR. DESPINS: Your Honor, we want to resolve this quickly, because, again, that stock fluctuates in value, so I'm not comfortable being at the mercy of the market on this. So, we will submit a revised order by noon tomorrow. THE COURT: Attorney Grand, are you available to do that with Trustee Despins? MR. GRAND: That's fine. I'm happy to work with the trustee on finding some, hopefully, some mutually agreeable language by the middle of the day tomorrow, or even the end of the day tomorrow. You know, we'll work as quickly as we can, too. THE COURT: All right. Well, I'll give you - tomorrow is Tuesday -- I'll give you both -- I'll give the parties until 5:00 p.m. tomorrow to either submit an order that you both agree to the language in or submit competing orders and the Court will enter whatever order it deems appropriate under the circumstances. MR. DESPINS: Thank you, Your Honor. Case 22-50073 Doc 3252 Filed 06/17/24 Entered 06/17/24 08:18:10 Page 29 of 33

30 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. GRAND: Thank you, Your Honor. THE COURT: Okay. Attorney Fox, since you're here -- MR. FOX: Yes, Your Honor? THE COURT: -- it does appear that regardless of the different opinions on the language about what would happen if the default judgment is overturned on appeal, that there will be some liquidation of the shares that Merrill Lynch, I believe, is holding -- well, not holding, but that you would liquidate. Merrill Lynch would be in the position to liquidate those shares. So, do you have any questions while you're here? MR. FOX: No, Your Honor. We worked with the trustee and his counsel earlier to ensure that things will be smooth, also with Reverence. So, once the order is entered, depending on how the language gets worked out, we're ready to move. THE COURT: And the only thing I would say, and I have no -- you both figure -- you can all figure out what works, but, you know, if this issue of fluctuation is an issue, then I think there's -- you might want to take a look at the time frame between the date of the direction, the written direction from the trustee and when Merrill Lynch will actually liquidate it. Because right now, it looks like there could be seven business days between those events or Case 22-50073 Doc 3252 Filed 06/17/24 Entered 06/17/24 08:18:10 Page 30 of 33

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 including those two events, but I don't know if I'm correct in that reading of the order, so I -- MR. FOX: Your Honor -- sorry. THE COURT: Go ahead. MR. FOX: Your Honor, the trade should happen within the day. The main issue is that until actually last week or two weeks ago, when we were initially agreeing to this order, once the trade set -- occurs, there's three days for it to settle in the market, then we have to get the proceeds to turn them over. So, really, the trade will be almost instantaneous; the issue is more of settlement of that trade through the various systems, but there should not be much of a delay. I can't imagine that it would be less than a day -- I mean, more than a day. THE COURT: Okay. I'm just -- whatever -- however it works, you will figure that out, but I was just pointing out what I read in a proposed order and I didn't know if that was a concern to the parties. MR. FOX: Not -- no, Your Honor. THE COURT: But it sounds like you can liquidate on the same day or the very next day, but the issue of the actual turnover of the proceeds may take some time, business days, is what your point is, Attorney Fox? MR. FOX: Yes, Your Honor.

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 THE COURT: Okay. Thank you. MR. DESPINS: Your Honor, that's perfectly acceptable. We know that Merrill Lynch is good for the money. If it takes them three or four days to turn it over, no problem. It's just, you're right that the execution should be almost immediate, but, okay. Thank you very much. THE COURT: Does anyone else wish to be heard this afternoon? (No verbal response) THE COURT: Are there any other matters that the Court needs to address or that the trustee needs to inform the Court about while we're here. MR. DESPINS: No, Your Honor. THE COURT: Okay. All right. Well, thank you, all. I'll look to see, either the joint order or competing orders on the motion. The motion will be granted, subject to the review of either a joint order or competing orders, and then the Court will enter the appropriate order. So, thank you, all. That being -- MR. DESPINS: Thank you, Your Honor. THE COURT: -- the only matter on the calendar this afternoon, Court is adjourned. (Proceedings concluded at 1:48 p.m.) Case 22-50073 Doc 3252 Filed 06/17/24 Entered 06/17/24 08:18:10 Page 32 of 33

| Case 22-50073 | Doc 3252 | Filed 06/17/24 | Entered 06/17/24 08:18:10 | Page 33 of 33 | |---------------|------------------------|----------------------------------|------------------------------------------------------------|---------------| | | | | | 33 | | 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 | | | June 13, 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<br>23 | | | | | | 24 | | | | | | 25 | | | | | | | | | | | | | | | | | | | | | | |