郭文贵破产案 · EXHIBIT · ECF #440-16

元数据

当事人: 郭文贵 (Guo Wengui / Miles Guo / Ho Wan Kwok)
法院: CTB
案号: 22-50073
ECF #: 440
类型: EXHIBIT
立案日: 2022-05-25

原始法庭文件为英文，下方为英文全文。

全文

# **EXHIBIT PAX 18**

October 15, 2020 Hearing Transcript, *PAX v. Kwok*, Index. No. 652077/2017 (N.Y. Sup. Ct.), Dkt. 647

| | 22-50073 | | | | |--------|----------|----------------------------|----|--| | IN RE: | | Ho Wan Kwok | | | | | | | | | | | PAX | | 18 | | | | | | | | | | | 5/25/2022 Admitted in Full | | | | | | P.E. | | | | | | | | | | | | | | |

**FILED: NEW YORK COUNTY CLERK 11/10/2020 02:41 PM** INDEX NO. 652077/2017 NYSCEF DOC. NO. 647 RECEIVED NYSCEF: 11/10/2020 Case 22-50073 Doc 440-16 Filed 05/25/22 Entered 05/26/22 15:30:37 Page 2 of 29

tav SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: TRIAL TERM PART 61 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X PACIFIC ALLIANCE ASIA OPPORTUNITY FUND L.P., Plaintiff, - against - KWOK HO WAN, a/k/a KWOK HO a/k/a GWO WEN GUI a/k/a GUO WENGUI a/k/a GUO WEN-GUI a/k/a WAN GUE HAOYUN a/k/a MILES KWOK a/k/a HAOYUN GUO, GENEVER HOLDINGS CORPORATION and GENEVER HOLDINGS LLC, Defendants. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X Index No. 652077/2017 October 15, 2020 Teams Proceeding B E F O R E: THE HONORABLE BARRY R. OSTRAGER, Justice A P P E A R A N C E S: O'MELVENY & MYERS LLP Attorneys at Law 7 Times Square New York, New York 10036 BY: STUART SARNOFF, ESQ. EDWARD MOSS, ESQ. BAKER & HOSTETLER LLP Attorneys at Law 45 Rockefeller Plaza, 14th Floor New York, New York 10111 BY: JOHN SIEGAL, ESQ. MELISSA CARVALHO, ESQ. ERICA BARROW, ESQ. (Appearances continued on next page.) 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

#### **FILED: NEW YORK COUNTY CLERK 11/10/2020 02:41 PM** INDEX NO. 652077/2017 NYSCEF DOC. NO. 647 RECEIVED NYSCEF: 11/10/2020 Case 22-50073 Doc 440-16 Filed 05/25/22 Entered 05/26/22 15:30:37 Page 3 of

| 1 | A P P E A R A N C E S: (Continuing) | |----|--------------------------------------------------------| | 2 | LAWALL & MITCHELL LLC Attorneys at Law | | 3 | 162 East 64th Street New York, New York 10065 | | 4 | BY: AARON A. MITCHELL, ESQ. | | 5 | | | 6 | | | 7 | | | 8 | Terry-Ann Volberg, CSR, CRR Official Court Reporter | | 9 | | | 10 | | | 11 | | | 12 | | | 13 | | | 14 | | | 15 | | | 16 | | | 17 | | | 18 | | | 19 | | | 20 | | | 21 | | | 22 | | | 23 | | | 24 | | | 25 | | | | tav |

| | 3 Proceedings | |----|--------------------------------------------------------------| | 1 | THE COURT: Good morning. | | 2 | There are a few housekeeping matters that I want | | 3 | to address before we discuss the application for a temporary | | 4 | restraining order. | | 5 | If you are not speaking, please mute your | | 6 | microphone so we don't get static. Thank you. | | 7 | So, as I started to say, there are a few | | 8 | housekeeping matters I want to resolve before we address the | | 9 | application for a temporary restraining order. We are | | 10 | technically scheduled to discuss plaintiff's application for | | 11 | attorney's fees, and there's in the motion part a motion by | | 12 | the defendant to add an affirmative defense of failure to | | 13 | mitigate damages. With respect to the latter issue, | | 14 | Mr. Moss, I would like you to stipulate that at trial we | | 15 | will conform the pleadings to the proof adduced at the | | 16 | trial, and because I addressed the mitigation of damage | | 17 | issue in my September 15th decision and order, and because | | 18 | that issue has always been at least peripherally in the | | 19 | case, I would like you to stipulate that that will be one of | | 20 | the issues that will be addressed at the plenary trial, and | | 21 | avoid the necessity of motion practice, and so I would like | | 22 | to mark that motion as withdrawn without prejudice on | | 23 | consent. Is that acceptable to you? | | 24 | MR. MOSS: Your Honor, I just -- I just would like |

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to understand, my understanding was that the Court was going

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to make a determination on damages. You had ordered us to put our calculation in. I thought the mitigation issue had already been decided by the Court on summary judgment, and that there was not going to be a trial on damages, that this was going to be done so that you could get the calculation so that the Clerk of Court could issue the judgment. That's what was in the order, and so I did not understand that there was going to be a trial, and we do not believe that there are any issues of fact for a trial.

THE COURT: My understanding is that I granted you summary judgment on liability which is why you're privileged to make the 5229 application that you're making today, and we deferred the calculation of damages because there are issues of fact relating to the quantum of damages. I found that your proof was insufficient for me to grant summary judgment on the issue of damages. So that's something that's going to be addressed at the hearing which I believe we scheduled for January. 10 11 12 13 14 15 16 17 18

MR. MOSS: So my understanding, your Honor, was that the January trial was on the veil piercing issues -- 19 20

THE COURT: It is, it is.

MR. MOSS: -- and that the only defense on damages that Mr. Kwok has proffered, your Honor, is mitigation. Mitigation was something that the Court has already rejected as a matter of Hong Kong law on summary judgment. 22 23 24 25

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THE COURT: I specifically referenced it in the September 15th decision. Now I referenced it in a manner suggesting that I thought it was a dubious claim, and I still think it's a dubious claim because I don't think it was incumbent upon your client post facto to purchase an apartment from the Communist Chinese Party at what would appear to be an above-market price, and that's what I said in my September 15, 2020, decision.

So there's a motion by the defendant to amend his answer to assert a defense of failure to mitigate damages. Whenever we get around to assessing damages, I'm going to hear the defendant on the mitigation issue. Now if you want him to make a motion, and you want me to decide the motion, there is nothing I can do other than allow him to make the motion, have you respond to the motion, and then decide the motion. And since any hearing that we have is one at which I'm going to conform the pleadings to the proof that's adduced at trial, I thought as a housekeeping matter we'd have the defendant withdraw that motion without prejudice and for you to be content with that state of play. 9 10 11 12 13 14 15 16 17 18 19 20

MR. MOSS: Okay, that's fine. If your Honor is going to grant the motion anyway on the motion for leave to amend, we can stipulate to that. 21 22 23

We have a pending motion for damages, and they -- THE COURT: Yes. 24 25

6 tav Proceedings MR. MOSS: So how would your Honor like to resolve the damages issue? THE COURT: We are going to have a hearing on the damages issue and that hearing is not today. MR. MOSS: Yes. THE COURT: So at that hearing whatever the defendant wants to proffer in connection with this mitigation of damage theory which I strongly indicated in my September 15, 2020, decision and order is quite dubious, they will be permitted to adduce whatever evidence they have, if any, on that theory in connection with the damages hearing. Let me ask counsel for the defendant if we can mark the motion to amend the answer as withdrawn without prejudice in light of what is now on the transcript of proceedings of today? MR. SIEGAL: Yes, John Siegal, Baker Hostetler, for defendant Kwok. We certainly consent to that result, and will serve our Second Amended Answer following today and file it so it's of record and that's the basis on which we will proceed to the hearing. THE COURT: Fair enough. It's really not necessary for you to file a Second Amended Complaint, but I think it's very clear on the transcript of the proceedings 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

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of today that we are going to have a damages hearing, and at the damages hearing you will be able to adduce whatever testimony you wish or whatever documents you wish to introduce on the mitigation portion claim, and it's really just burdensome to the Court and burdensome to the plaintiff for you to file a Second Amended Complaint and for the plaintiff to have to respond to it.

So the record speaks for itself. I would just like a little cooperation from you and Mr. Moss here.

MR. SIEGAL: Yes, your Honor. We appreciate the Court allowing us the opportunity to adduce evidence on that issue, and we will be ready at the hearing, and we have had good cooperation with Mr. Moss since we have appeared in the case, and I'm sure we will continue to, and we look forward to that opportunity to try to convince your Honor, who we understand it's dubious, that on full examination there's a mitigation defense here that has a very substantial impact on the damages, so thank you. 10 11 12 13 14 15 16 17 18

THE COURT: All right.

We will not have any Second Amended Complaint, and we are not going to have any motions, correct?

MR. SIEGAL: Yes, your Honor, understood.

THE COURT: All right.

Now the second housekeeping matter that we have is attorney's fees. Since there are going to be further 24 25

8 Proceedings proceedings, it doesn't make any sense to address attorney's fees today because there will be more attorney's fees in connection with the two hearings that we are going to have, one on damages and the other that's been previously scheduled for January 15th. So with your consent, Mr. Moss, I would like to adjourn your application for attorney's fees to a more appropriate time. MR. MOSS: That's fine. That's fine, your Honor. I guess, you know, the attorney's fees are contract damages just like the principal and interest, and I would propose that we submit our evidence at the hearing or concurrently with the hearing. I guess we really wouldn't have any witnesses on the attorney's fees other than Mr. Lewis. I think we should do it at the hearing, your Honor, that would make the most sense to me, at the damages hearing, because they are really part of the damages. THE COURT: When all proceedings in this case are concluded you will be awarded whatever contractually entitled attorney's fees are due you. It's just not a today issue, it's an issue that awaits future resolution. All right. MR. MOSS: Yes, your Honor. And do we have -- do you have a sense of when you 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

would like to conduct the hearing on damages?

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| | 9 Proceedings | |----|----------------------------------------------------------------| | 1 | THE COURT: As soon as I can. | | 2 | Not for anything, you're all aware of the fact | | 3 | that Justice Scarpulla has been elevated to the Appellate | | 4 | Division, Justices Friedman and Sherwood are retiring in the | | 5 | near term, so there are only five Commercial Division judges | | 6 | who are currently in the wheel, and Justice Scarpulla's | | 7 | cases have been reallocated to the five justices who remain | | 8 | in the wheel. So we are all a little busy now. | | 9 | MR. MOSS: Yes, your Honor. | | 10 | THE COURT: You have a January 15th date on your | | 11 | other issue. We will try and find a convenient time to | | 12 | resolve damages and attorney's fees. | | 13 | So now let's get to the only thing that I want to | | 14 | deal with this morning which is your application under CPLR | | 15 | 5229 for a restraining order that extends to Mr. Kwok's | | 16 | assets, and which you believe should be extended to entities | | 17 | that he controls whether they be single purpose LLCs or | | 18 | family members like his son. | | 19 | So I will hear you, Mr. Moss. | | 20 | MR. MOSS: Thank you. | | 21 | Your Honor, as far as the relief goes under 5229, | | 22 | I don't think Mr. Kwok disputes that we are entitled to some | | 23 | relief. He does not contest that Pacific Alliance meets the | | 24 | standard. He does not dispute our contention that he | | 25 | intends to dissipate his assets, a process that has already | | | |

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| | Proceedings | |----|-----------------------------------------------------------------| | 1 | begun with this sham bankruptcy proceeding. | | 2 | The Court has suggested that there's a showing | | 3 | necessary beyond the fact of just prevailing on the | | 4 | judgment. We have submitted that all you need to do is | | 5 | prevail on summary judgment. The Court suggested that there | | 6 | might be a an additional showing necessary so we did set | | 7 | that forth in our papers. | | 8 | There's a clear and significant risk here that if | | 9 | left unchecked Mr. Kwok will continue to do everything in | | 10 | his power to shield assets and render this judgment | | 11 | uncollectible whether it's committing perjury, whether it's | | 12 | disobeying Court orders or whether it's making this sham | | 13 | bankruptcy petition. We have been saying this judge for | | 14 | years. It's why we requested the attachment. We also knew | | 15 | what was going to happen. We would win because Mr. Kwok had | | 16 | no legitimate defense, and then Mr. Kwok would evade the | | 17 | judgment, and that he would do whatever he can do to ensure | | 18 | that my client is left holding the bag. |

So the two issues specifically before the judge on the 5229, there are two arguments that Mr. Kwok makes to sort of limit the relief that we are requesting. So I will deal with it, what I think is the easier one first.

First, Mr. Kwok does not dispute that we are entitled to depose him and to discovery into him, but he argues that the discovery should only be into assets that we 23 24 25

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have not sought discovery for, that we have not gotten discovery for. The only asset related to discovery in this case was during the attachment phase, and Mr. Kwok and his prior counsel vehemently and consistently refused to provide any discovery into any assets other than the Sherry-Netherland residence. I think we are all in agreement, actually, that all of the other assets are fair game.

As for the apartment, the residence, there's no reason to limit the discovery on that. This is the only asset we have identified that Mr. Kwok has in New York. It seems to be the largest asset that he has in this country, and it's perhaps the largest asset he has anywhere that has not been frozen by the Chinese government. 9 10 11 12 13 14

Now, Mr. Kwok's prior counsel denigrated us, they said we were hysterical, we were afraid of the merits because we kept seeking to attach the apartment. We knew who we were dealing with and we knew we would end up here, that this asset was our best chance to collect.

We are entitled to discovery into that asset. There's no appreciable burden associated with this discovery, and we have not taken any discovery on the apartment for two years.

There are new arguments, there are new things to discover. For example, Mr. Kwok is now claiming in his 24 25

| | Proceedings | |----|---------------------------------------------------------------| | 1 | bankruptcy petition that there's another company, not just | | 2 | the New York company owned by the BVI company, the two | | 3 | Genever entities, there's a new company, a new shell company | | 4 | called Bravo Luck, and that's really the beneficial owner of | | 5 | the apartment, and that has been paying the expenses, and | | 6 | that is owned wholly by his son. So his argument in the | | 7 | bankruptcy is not that he has any legitimate creditors, it's | | 8 | that the apartment is held in trust for his son, and his son | | 9 | should take priority over Pacific Alliance. | | 10 | It's all a shell game. We are entitled to explore | | 11 | that and whatever else had is happening in the last few | | 12 | years. They put the apartment on the market, and then they | | 13 | took it off the day of the attachment proceeding so that | | 14 | they could argue to you in court, hey, it's not on the | | 15 | market any more, you shouldn't attach it. We are entitled | | 16 | to that discovery, and that's what CPLR 5229 is intended to | | 17 | give us, giving the judgment creditor precisely the |

information of who owns the assets, where they are located.

The second issue that they raise, your Honor, and that's the one that you started this conversation with, is what should be the scope here, should the restraining order relate only to Mr. Kwok's assets, to Mr. Kwok's assets that he indirectly and directly owns? What they are trying to say here is that it should only pertain to assets he "owns directly." That is an exception that would swallow the rule 19 20 21 22 23 24 25

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because Mr. Kwok does not hold any assets directly. That is his MO. He holds assets through multiple layers of family members, multiple layers of shell companies precisely for this reason so creditors like us can't reach them.

Mr. Kwok admitted it in his deposition in another case. He said, he testified under oath, we quote this, "In reality I don't have any assets under the law. I'm penniless." He makes those claims because of the way he structures his holdings like the apartment. I told you, for example, shell company, shell company that he now says his son owns, and this is a company, Bravo Luck, that he says his son owns even though he used to hold it, 50 percent of it, and apparently says now he sold it to his son for a dollar based on documents he didn't produce in this case, backdated, forged documents. 5 6 7 8 9 10 11 12 13 14 15

This entire thing is a sham, that his 20-something year old son at the time was really the one to pay \$70 million for the apartment, he's the rightful owner of the apartment? It's all a game to make sure we are unable to collect.

There's also a 30 million-dollar yacht. That one is held by a Hong Kong company. 21 22

THE COURT: I thought it was \$27 million.

MR. MOSS: I'm sorry, I was rounding up. I was rounding up. 24 25

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There's a 27 million-dollar yacht held by a Hong Kong company, and once we are allowed to take discovery we will find more assets held by more shell companies of which Mr. Kwok or one of his children is the sole owner.

Here's the issues: If they ask you to only enjoin him from dissipating his assets that he holds directly, that would exclude everything, and it would exclude everything even though Mr. Kwok has said that these are his assets.

He submitted an affidavit to this Court saying he owned the apartment. He submitted, he filed a complaint last month in New York saying that the yacht was "his yacht." These are his assets, and it's permitted by the statute, CPLR 5229, to have a restraining order that applies to assets held directly and indirectly. 9 10 11 12 13 14

CPLR 5229 provides that a plaintiff can have prejudgment restraint in the same way it can have post-judgment restraint. Post-judgment restraint is governed by CPLR 5222, and that says that the restraints apply to property in which he or she, meaning the judgment debtor, "has an interest." It doesn't say direct interest, it says an interest. Mr. Kwok has already testified, he's already submitted evidence in this case that he owns the apartment, and he has judicial admissions that he owns the yacht. 15 16 17 18 19 20 21 22 23 24

So their cases that they cite for the proposition

| | Proceedings | |----|--------------------------------------------------------------| | 1 | that CPLR 5229 and 5222 only apply to direct assets are | | 2 | completely inapposite because none of them involve a | | 3 | situation whereas here the defendant has actually claimed | | 4 | that he owns these assets. | | 5 | THE COURT: Mr. Moss, I understand your argument. | | 6 | Let me hear from Mr. Siegal. | | 7 | MR. MOSS: Thank you, your Honor. | | 8 | MS. CARVALHO: Good morning. Melissa Carvalho | | 9 | from Baker & Hostetler for Mr. Kwok. | | 10 | I just want to begin by saying we have repeatedly | | 11 | heard this morning Mr. Moss saying "Mr. Kwok's bankruptcy." | | 12 | The bankruptcy petition that was filed was not Mr. Kwok's. | | 13 | We have been made aware of it as the Court has been made | | 14 | aware of it. On its face it says that it's filed by an | | 15 | entity, one of the entities who has counsel here present | | 16 | today. So if any questions or issues are arising relating | | 17 | to the bankruptcy, I cannot speak to it, but Mr. Mitchell | | 18 | certainly can. | | 19 | So on CPLR 5229 the relief being sought by | | 20 | plaintiff in the TRO and order to show cause is far broader | | 21 | than that provided under CPLR 5229. Plaintiff seeks to | | 22 | enjoin and restrain defendant Kwok with respect to "any | | 23 | property in which he has an interest," but CPLR 5229's | | 24 | application is limited to Mr. Kwok, the adverse party. | | 25 | CPLR 5229 specifically states that "the trial |

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judge may order examination of the adverse party and order him restrained with the same effect as if a restraining notice had been served upon him after judgment." Courts have strictly construed the language of CPLR 5229. The adverse party is Mr. Kwok, and the Court's decision and order on summary judgment is limited to him individually.

Plaintiffs have spent a lot of time in their reply seeking to continue to poison the well against Mr. Kwok, but that is simply because plaintiff cannot present authority to support its unilateral expansion of CPLR 5229.

Plaintiff presented the Court with various categories of cases where CPLR 5229 relief has been granted, but that goes to the Court's discretion to grant this relief. The statute says the Court "may order relief under 5229," and we are not disputing that. Yes, a Court can award CPLR 5229 relief in many different fact patterns, but the relief is still limited to what is provided in CPLR 5229, and plaintiff has not shown any basis supporting its unilateral expansion of the statute besides it's just what they want. 11 12 13 14 15 16 17 18 19 20

The cases cited by plaintiff, in fact, do not expand the scope of CPLR 5229. The APF case, Gallegos case, Safeco case, Unex case and Leser case all limit the relief to the specific adverse party and not to any "interest" that party may have. In the Eastern District of New York in the 21 22 23 24 25

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## Proceedings Leser v. U.S. Bank case the Court specifically stated, "Plaintiff is correct, however, that the scope of the order should be limited to the restraint on the assets of plaintiff Leser." USB had originally sought restraints against "plaintiff Leser and any person, company or other entity controlled by him," but then USB conceded during argument that it was only seeking restraint as to plaintiff Leser, and the Court found that appropriate and proper. Nothing plaintiff says can change that. The statute only provides the relief that it provides. So let's look at the statute. The statute provides for examination and restraints. Examination: Here Mr. Kwok's assets have already been addressed in discovery. Mr. Kwok has been deposed three times in this matter, on October 3rd, 2018, November 25, 2019, and December 11, 2019. Mr. Kwok has produced over 14 pages of documents. Plaintiff has had multiple opportunities to sufficiently examine Mr. Kwok, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

and, in fact, if you look at plaintiff's second set of document requests attached to my affirmation you see that they were, in fact, targeting assets.

Now plaintiff argues that passed discovery is insufficient, but the record shows that there was, in fact, disclosure. Objections were certainly made based on the scope. There were questions asked of Mr. Kwok such as, 22 23 24 25

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Proceedings "Were any of your assets received by the Chinese government," but by not allowing fishing expeditions that does not mean that discovery was not sufficient. I also note there were disputes in the past, and those discovery disputes have been resolved, but creating confusion by making these broad-sweeping statements, and attaching e-mails without original letters that they are responding to does not change that. Now turning to the second part that the statute allows restraint, but restraint is limited to CPLR 5229 and is distinguishable from the restraint provided under CPLR 5222. The relief sought here pursuant to 5229 is applicable before a judgment has been entered so unlike post-judgment devices which are available against third-parties, the restraining powers under CPLR 5229 can only be used against "the adverse party." However, at any posture restraint is always limited to property in which Mr. Kwok has a direct and actual interest. Restraint will not apply to indirect interests including interest held in a corporation, proceeds of property, or even assets of an alter ego until alter ego status has been adjudicated and liability has been determined. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Plaintiff also cannot use CPLR 5229 as an end run under the requirements for prejudgment attachment statutes. Here plaintiff's application relies ad nauseam and we have

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heard his counsel repeat this morning and admit that the sole focus here is on the ownership of the residence at the Sherry. Plaintiff himself says Mr. Kwok is not the owner of the Sherry. The Court has acknowledged and stated Mr. Kwok is not the owner of the Sherry. And even though Mr. Kwok does not have a direct interest in the residence at the Sherry, he agreed on consent to a court order where he would provide plaintiff with immediate written notice of any contract to sell, assign, pledge or transfer any assets of the respective defendant entity to any third-party. So plaintiff has received broader relief on subsequent than it would have been entitled on this instant publication under CPLR 5229 so, therefore, there's no concern with respect to dissipation of the Sherry.

Now plaintiff argues that Mr. Kwok is trying to weaken the relief that they are seeking, but in actuality we are adhering to the statute and the powers that the Court has given under the statute. Plaintiff is relying on statements allegedly made by Mr. Kwok regarding his ownership of assets. Mr. Kwok can say anything he wants to, ownership is a factual legal issue. If he does not own it, he does not own it, period. That is not enough to give you broader relief under CPLR 5229. 15 16 17 18 19 20 21 22 23

Discovery has been conducted. The plaintiff's focus here is solely on the Sherry, as we have repeatedly 24 25

Proceedings heard this morning. Any further examination is a waste of time and money. The subject is already -- the Sherry is already subject to an order and it's restrained. None of plaintiff's arguments change the application of CPLR 5229 here. That's it. Now importantly relief under 5229 rests within the sound discretion of the Court, absolutely, but Mr. Kwok has already been examined, and any further examination should be limited to assets and topics not previously addressed in discovery. Redundant and duplicative discovery are not authorized under CPLR 5229. And the transfer of the Sherry, as we have already mentioned several times, it's already been restricted, and any further restraints should be denied. We have a consent order in place that Mr. Kwok has agreed to, and Mr. Kwok does not have a direct interest in the residence at the Sherry. So Mr. Kwok requests that this Court vacate the TRO, deny plaintiff's motion for CPLR 5229 relief as it far exceeds the scope of CPLR 5229. Mr. Kwok has already been examined, and his assets have already been discovered and restrained by this Court, but should this Court be inclined to grant plaintiff's relief under CPLR 5229, Mr. Kwok would 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

request that this Court use its discretion to modify such relief to Mr. Kwok's assets in his individual capacity as

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NYSCEF DOC. NO. 647 RECEIVED NYSCEF: 11/10/2020 29

| | Proceedings | |----|----------------------------------------------------------------| | 1 | the "adverse party," and Mr. Kwok's assets not previously | | 2 | the subject of prior discovery and court orders relating to | | 3 | a transfer. | | 4 | Thank you, your Honor. | | 5 | THE COURT: Okay. Does anybody from Genever want | | 6 | to say anything? | | 7 | MR. MITCHELL: No, your Honor. I think that was | | 8 | well said. I join Ms. Carvalho in her argument. | | 9 | THE COURT: All right. | | 10 | Look, this is a 2017 case. We've had multiple | | 11 | motions relating to Mr. Kwok's assets. The Court believes, | | 12 | as reflected in the September 15, 2020, order that Mr. Kwok | | 13 | has attempted to mislead the Court. The Court believes that | | 14 | Mr. Kwok is, as the plaintiff contends, playing a shell game | | 15 | with his assets, and has violated if not the letter of court | | 16 | orders, the spirit of court orders. This is going to come | | 17 | to an end on or shortly after January 15, 2021, when we have | | 18 | the trial on the alter ego issue, but between now and the | | 19 | commencement of the January 15, 2021, trial Mr. Kwok and any | | 20 | entities that he directly or indirectly controls are | | 21 | restrained from alienating or transferring any property that | | 22 | Mr. Kwok has a direct or indirect interest including most | | 23 | specifically the apartment at the Sherry-Netherland Hotel | | 24 | which was the subject of 2018 discovery and a consent order | | 25 | to which counsel for Mr. Kwok referenced, and also the yacht |

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which Mr. Kwok has at various times claimed ownership of. So the net result is that I exercise my discretion under CPLR 5229 to restrain any further transfers of the Sherry-Netherland apartment which Mr. Kwok once owned, and the 27 million-dollar yacht which Mr. Kwok once claimed to have owned.

So we are not going to have any more shell games. Wherever these assets are held, they are going to remain held where they presently reside, and if it's determined that the entities that are presently listed as the owners of the assets are the alter ego of Mr. Kwok or are wholly dominated and controlled by Mr. Kwok, those assets will be made available to satisfy any judgment that the plaintiff recovers.

In the interim, between now and the January 15, 2021 trial on the alter ego issues, the plaintiff can conduct discovery of any of the entities that claim to own the Sherry-Netherland apartment or the yacht, and counsel for Genever and counsel for Mr. Kwok are directed to forthwith provide counsel for the plaintiff with information identifying the record owners of those two assets. 15 16 17 18 19 20 21

That's the order of the Court.

MS. CARVALHO: Your Honor, could I ask for some clarification? 23 24

We understand the order of the Court today,

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however, I am confused where it comes to indirect ownership because, I'm just thinking off the top of my head here, there could be entities that will be restrained from conducting regular and ordinary business, and to what extent can someone decide that something would be an indirect interest and prevent ordinary transfers? I mean, I don't know how far this goes with other independent autonomous companies.

THE COURT: It goes this far: There is no ordinary course transfer of a 70 million-dollar apartment at the Sherry-Netherland. There is no ordinary course transfer of a 27 million-dollar yacht. If Mr. Kwok wants to get a haircut or if Mr. Kwok wants to buy a newspaper or if Mr. Kwok wants to take a vacation in the middle of the coronavirus pandemic, that would be ordinary course, but I think everybody on this Microsoft Teams platform understands that there's been a lot of moving around of these two assets that have an aggregate value of at least \$75 million, and the plaintiff is entitled to ascertain the entity that presently has title to these assets, how those entities came to have title to those assets, and any intermediate transfers that were made between the time Mr. Kwok was the record owner of these assets and the time that the present record owner came into possession of these assets. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

MS. CARVALHO: Understood.

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So the assets specifically are the Sherry and the yacht, but the position, just to make sure I understand it, is that with respect to other autonomous corporations, they can continue in the ordinary course, there's no ceasing or stopping of business for other legally autonomous entities.

THE COURT: It's not clear to me what other business and what other entities Mr. Kwok has formed. The intent here which is very clear and specific is that in this 2017 case in which there's been a great deal of gamesmanship, a great deal of dissembling, and some flagrant disregard of court orders, I want to know if any transaction is going to take place in which Mr. Kwok is the guiding hand that's something other than an ordinary course of business transaction. 6 7 8 9 10 11 12 13 14

> MS. CARVALHO: Okay. I think we understand. Thank you, your Honor.

MR. MOSS: Your Honor, if I may, just two points. Number one, in terms of the assets, we know that

there are also shell companies in Connecticut that own Greenwich real estate that he just bought for like \$7 million. I think the most efficient -- and we don't know what we don't know. I think the most efficient way to proceed would be for us to be able to serve some sort of interrogatory at the outset, what are the assets and what are the entities that hold them, and then we can proceed to 19 20 21 22 23 24 25

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## depose Mr. Kwok and those entities if they are entities or Mr. Kwok as the 30(b)(6) for those entities. I want to do this efficiently and with minimal burden, and rather than just asking him questions that he is going to say he does not know the answer to, I think the most efficient way would be to try to use written discovery to get a list of what the actual assets are. THE COURT: Look, I'm not going to tell you how to practice law. You have the transcript of today's proceedings. I think I've made it very clear what you can do. You can conduct discovery of any assets -- you can conduct discovery of any entity that you have a good faith basis for believing Mr. Kwok directly or indirectly controls. It can be written discovery, it can be oral discovery. I'm not going to play schoolyard monitor while you jockey back and forth with discovery disputes about the scope of what you can do. I think Mr. Kwok's counsel and I think Genever's counsel full understand what is reflected in the transcript of proceedings. We are dealing with a telescoped period of time here. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

There's a restraining order that's been entered with respect to two specific assets, and only two specific assets, and there's an alter ego trial that's scheduled for January 15, 2021, and there's a damages hearing that's going 22 23 24 25

| | 26 Proceedings | |----|-----------------------------------------------------------------| | 1 | to take place sometime before or in conjunction with the | | 2 | alter ego trial. | | 3 | Again, this is a 2017 case, and it's occupied a | | 4 | considerable amount of the Court's time. It's resulted in | | 5 | several written decisions. While orders of the Court are | | 6 | either flaunted or exceedingly liberally interpreted, and | | 7 | while intentional or unintentional misstatements that have | | 8 | misled the Court have been made to the Court, we are going | | 9 | to have closure in this case in January of 2021. | | 10 | So the court reporter will give you her e-mail | | 11 | address. You will order a copy of the transcript. I can't | | 12 | be any clearer than I've been on this transcript. | | 13 | If any party or any counsel disregards the orders | | 14 | of the Court, there will be serious sanctions. | | 15 | Are we all clear? | | 16 | MR. MOSS: Yes. | | 17 | Your Honor, may I just -- one question on the | | 18 | damages motion. | | 19 | We filed our motion, they opposed. I understand | | 20 | the Court is going to have a hearing as soon as possible on | | 21 | this issue. May we reply because there are some things we | | 22 | would like to put before the Court given that they have | | 23 | opposed and we have not yet replied? | | 24 | THE COURT: If you wish. I have explained to you | | 25 | that I am backed up with trials and motions. I have carved | | | tav |

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out a January 15th date. That's chiseled in stone. We will have the alter ego trial on January 15, 2021, if we can get to the damages hearing before, then we will, but there's not a lot of time between now and January 15th, and you, Mr. Moss, are probably going to be quite busy.

MR. MOSS: Yes, your Honor.

MR. MITCHELL: Your Honor, one last question regarding the order here today just because, as you're aware, Genever New York has filed bankruptcy. I doubt that any assets within the bankruptcy estate would be sold or anything between now and January 15th, but I want to make sure that myself particularly or any party to the action wouldn't draw the ire of a potential sanction for whatever happens in the bankruptcy court.

THE COURT: No, I cannot -- I have no jurisdiction over any entity that's in bankruptcy. That doesn't mean applications can't be made by Mr. Moss to the bankruptcy court. It doesn't mean that Mr. Moss can't refer in any proceedings before the bankruptcy court to the transcript of the proceedings here today, but I well understand the automatic stay of the bankruptcy court with respect to entities that have filed for bankruptcy. 15 16 17 18 19 20 21 22

MR. MITCHELL: Thank you, your Honor. THE COURT: All right. 23 24

Terry, can you give the parties your e-mail

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| | 28 | |----|--------------------------------------------------------------------------------| | | Proceedings | | 1 | address from which they can order a copy of the transcript | | 2 | which will be so ordered and e-filed? | | 3 | Thank you very much. | | 4 | Have a nice day everyone. | | 5 | MR. MOSS: Thank you, your Honor. | | 6 | *** | | 7 | C E R T I F I C A T E | | 8 | I, Terry-Ann Volberg, C.S.R., an official court reporter of | | 9 | the State of New York, do hereby certify that the foregoing | | 10 | is a true and accurate transcript of my stenographic notes. | | 11 | | | 12 | _______________________ | | 13 | Terry-Ann Volberg, CSR, CRR Official Court Reporter SO-ORDERED 11-9-2020 | | 14 | | | 15 | | | 16 | | | 17 | | | 18 | | | 19 | | | 20 | | | 21 | | | 22 | | | 23 | | | 24 | | | 25 | | | | | | | tav |