郭文贵破产案 · ORDER · ECF #838

# *In re Ho Wan Kwok,* **Chapter 11 Case No. 22-50073 (JAM)**

## **REPORT OF CHAPTER 11 TRUSTEE FOR SEPTEMBER 6, 2022 STATUS CONFERENCE**

Disclaimer: This presentation is based on preliminary observations of the Chapter 11 Trustee based on information available at this time and remains subject to ongoing review and investigation. Accordingly, the information contained herein remains subject to material changes. In addition, certain sections reflect the Chapter 11 Trustee's views on legal issues and no assurances can be given that the Court (or any other court) would agree with the Chapter 11 Trustee's views on such legal issues.

### **A. UPDATE ON GENEVER BVI**

Pursuant to the Court's order entered on August 10, 2022 [Docket No. 717] (the "Corporate Governance Order"), the Debtor's shares in Genever Holdings Corporation ("Genever BVI") were transferred to the Trustee. In addition, Harneys Corporate Services Limited ("Harneys Corporate")\* was appointed as registered agent, and Genever BVI was restored to the British Virgin Islands ("BVI") corporate registry effective August 26, 2022. However, two issues have recently arisen in connection with Genever BVI.

#### **1. Appointment of Director for Genever BVI**

- The Trustee will appoint a director at Genever BVI, and the Trustee has selected Harneys Corporate to provide such a director. - o In recognition of the estate's current financial condition (the estate has only approximately \$16,700 in its bank account), Harneys Corporate has agreed to a significant modification of its typical director fee structure. In particular, Harneys Corporate will accept payment of **\$6,667** on account of the pro-rated portion of the remaining four months of 2022 (i.e., 1/3 of the annual fee of \$20,000) and **will not seek payment on its 2023 director fees (\$20,000) until after the estate has collected additional funds**. - o The Trustee considers the payment of **\$6,667** by the estate for Harneys Corporate's director services to be a transaction in the ordinary course of business that may be undertaken pursuant to section 363(c)(1) of the Bankruptcy Code without a notice or hearing because the services are provided for a non-debtor.

PAGE 1 \*Harneys Corporate is a separate legal entity and operationally independent from the Trustee's proposed BVI counsel, Harney Westwood and Riegels ("Harneys Legal"), as is discussed in more detail in the supplemental declaration of Andrew Thorp filed at Docket No. 815.

### **A. UPDATE ON GENEVER BVI**

### **2. Bravo Luck's Actions to Revive BVI Court Litigation**

- In 2020, prior to the filing of Genever US's chapter 11 case, Pacific Alliance Asia Opportunity Fund LP ("PAX") commenced litigation in the Eastern Caribbean Supreme Court Virgin Islands (the "BVI Court") against Genever BVI, Bravo Luck Limited ("Bravo Luck"), the Debtor, and the Debtor's son (the "BVI Litigation"). - o In the BVI Litigation, PAX sought, among other things, declarations that the purported trust with respect to the Sherry Netherland and the Genever entities is invalid and that Bravo Luck is beneficially owned by the Debtor. - o In response, Bravo Luck and the Debtor's son filed counterclaims seeking a declaration that Genever BVI and Genever NY are beneficially owned by Bravo Luck. - o The BVI Litigation has been dormant since the filing of the Debtor's chapter 11 case in February 2022. - On September 2, 2022, Bravo Luck notified counsel for the parties in the BVI Litigation that Bravo Luck would file a request with the BVI Court on September 7, 2022 to schedule a case management conference. - The Trustee has serious concerns regarding Bravo Luck's request for a case management conference. - o In requesting a case management conference, Bravo Luck apparently seeks to revive the BVI Litigation. Given that this litigation involves an attempt by Bravo Luck to claim an interest in Genever BVI and the shares of Genever BVI are property of the Debtor's bankruptcy estate (and now held by the Trustee), Bravo Luck's actions constitute a violation of the automatic stay in the Debtor's chapter 11 case.

## **B. UPDATE ON OTHER DEBTOR-RELATED ENTITIES**

#### **1. Ace Decade and Dawn State**

- The Trustee has identified at least two other Debtor-controlled BVI entities, Ace Decade Holdings Limited ("Ace Decade") and Dawn State Limited ("Dawn State") over which he intends to exercise corporate control. - Ace Decade and Dawn State are the Debtor's co-plaintiffs in his litigation against UBS in the United Kingdom. - o According to the **September 2020** complaint in the UBS litigation in the United Kingdom (and signed by the Debtor under penalty of perjury), Ace Decade was acquired by the Debtor in 2014 and Ace Decade has owned and controlled Dawn State since 2015. - The Trustee has reached out to the Debtor's counsel to request that, in accordance with the corporate governance order, the Debtor execute and deliver to the Trustee by 10:00 a.m. (ET) on September 6 (i.e., today) a share transfer instrument and related director's resolution to effectuate the transfer of the Ace Decade shares to the Trustee (in the same form as the corresponding documents with respect to the transfer of the Genever BVI shares).

## **C. DEBTOR'S WHEREABOUTS**

### **1. Debtor's Whereabouts**

- The Trustee has been advised that the Debtor has vacated the Sherry Netherland apartment by removing his personal effects and moving out the furniture that had been installed in 2015 when he moved in. - The Trustee is concerned that this may indicate that the Debtor has left the United States or is preparing to do so. - Debtor's counsel has represented to the Trustee that the Debtor is now residing in Greenwich, Connecticut.

## **D. HOUSEKEEPING MATTERS**

### **1. HK USA Adversary Proceeding (Lady May)**

- On August 24, 2022, the Trustee filed a motion seeking to extend his time to respond to the adversary complaint filed by HK International Funds Investments (USA) Limited, LLC ("HK USA") seeking a declaration of ownership of the *Lady May* from August 29, 2022 to September 28, 2022 [Adv. Proc. Docket No. 28]. HK USA filed an objection to the motion on August 26, 2022 [Adv. Proc. Docket No. 31] - o In addition, the Trustee filed a motion seeking to continue the pre-trial conference currently scheduled for September 13, 2022 to October 13, 2022. [Adv. Proc. Docket No. 32]. The Trustee understands that HK USA also opposes this motion.

### **2. Monthly Operating Reports**

- On August 22, 2022, the Trustee filed the monthly operating report ("MOR") for the period from July 8,. 2022 through July 31, 2022 [Docket No. 775]. - The Debtor has still not filed MORs for May 2022, June 2022, and the first seven days of July 2022 (*i.e.*, the period prior to the order appointing the Trustee on July 8, 2022). - o The May 2022 MOR was due on June 21, 2022, the June 2022 MOR was due on July 21, 2022, and the July MOR (for the first 7 days) was due on August 21, 2022.

## **D. HOUSEKEEPING MATTERS**

#### **3. Continuing Failures to Produce Documents**

The Debtor and HK USA have failed to produce the books and records their counsel promised, during the hearing held on July 21, 2022, would be turned over to the Trustee. In particular, counsel stated at the July 21 hearing:

"With respect to the corporate books and records and so forth, we received the request from the trustee. We fully understand our obligations and the debtor understands the debtor's obligations post trustee appointment while the debtor is out of possession under the code and the bankruptcy rules to cooperate with the trustee. And we're in the process of assembling information and records.

And HK International, although not a debtor entity, it's owed -- it's owned by the daughter. As counsel, I understand that the records will need to be produced and we fully intend to cooperate with the trustee in that process."

Debtor's Counsel, July 21, 2022 Hr'g Tr. at 60:5-16.

### **4. Trustee's Application to Retain BVI Counsel**

On August 30, 2022, the Trustee filed his application to retain Harneys Legal as BVI counsel. [Docket No. 807]. The hearing on the application has been scheduled for September 27, 2022, at 2:00 p.m.

## **D. HOUSEKEEPING MATTERS**

- **5. Status Conference in Genever US Case Before Judge Garrity** - Currently scheduled for September 27, at 10:00 a.m.

#### **6. Derecktor Fees (Expert re Lady May Inspection)**

Derecktor fees of \$2,500 to be submitted as an expense of Paul Hastings without the filing of a separate fee application for Derecktor as expert.

### **7. Scheduling Next Status Conferences**

- Proposed dates: - o Wednesday, September 21 - o Monday, October 3