Guo Wengui / Miles Guo — bankruptcy case · TRANSCRIPT · ECF #1832

METADATA

Defendant: Guo Wengui / Miles Guo / Ho Wan Kwok
Court: CTB
Case No.: 22-50073
ECF #: 1832
Type: TRANSCRIPT
Filed: 2023-05-30

FULL TEXT

UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT BRIDGEPORT DIVISION In Re \* Case No. 22-50073 (JAM) \* HO WAN KWOK and GENEVER \* HOLDINGS CORPORATION, \* Bridgeport, Connecticut \* May 23, 2023 Debtor. \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* TRANSCRIPT OF STATUS CONFERENCE BEFORE THE HONORABLE JULIE A. MANNING UNITED STATES BANKRUPTCY JUDGE APPEARANCES: Chapter 11 Trustee: LUC A. DESPINS, ESQ. Paul Hastings 200 Park Avenue New York, NY 10166 For the Chapter 11 Trustee: G. ALEXANDER BONGARTZ, ESQ. Paul Hastings LLP 200 Park Avenue New York, NY 10166 PATRICK R. LINSEY, ESQ. Neubert Pepe & Monteith, PC 195 Church Street New Haven, CT 06510 For the U.S. Trustee: HOLLEY L. CLAIBORN, ESQ. Office of the United States Trustee The Giaimo Federal Building 150 Court Street, Room 302 New Haven, CT 06510 Proceedings recorded by electronic sound recording, transcript produced by transcription service. **Fiore Reporting and Transcription Service, Inc. 4 Research Drive, Suite 402 Shelton, Connecticut 06484 (203)929-9992**

APPEARANCES: (Cont'd) For the Creditor, Pacific STUART SARNOFF, ESQ. Alliance Asia Opportunity MIA GONZALEZ, ESQ. Fund L.P.: O'Melveny & Myers LLP Times Square Tower 7 Times Square New York, NY 10036 PATRICK M. BIRNEY, ESQ. Robinson & Cole 28 Trumbull Street Hartford, CT 06103 For HK International Funds SAM DELLA FERA, JR., ESQ. Investments, LLC and Chiesa Shanhinian & Mei Guo: Giantomasi, P.C. 105 Eisenhower Parkway Roseland, NJ 07068 For the Creditors Committee: IRVE GOLDMAN, ESQ. Pullman & Comley 850 Main Street Bridgeport, CT 06601

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Ho Wan Kwok - May 23, 2023 3 (Proceedings commenced at 1:02 p.m.) THE CLERK: Case Number 22-50073, Ho Wan Kwok and Genever Holdings, LLC. THE COURT: Good afternoon. If we could have appearances for the record, starting with the Chapter 11 trustee, please? MR. DESPINS: Good afternoon, Your Honor. Luc Despins, Chapter 11 Trustee. MR. LINSEY: Good afternoon, Your Honor. Patrick Linsey for the trustee. MR. SARNOFF: Good afternoon, Your Honor. Stuart Sarnoff, O'Melveny & Meyers, for creditor, PAX. MS. GONZALEZ: Mia Gonzalez, O'Melveny & Myers for PAX. MR. BIRNEY: Patrick Birney, Robinson & Cole for PAX. MR. GOLDMAN: Good afternoon, Your Honor. Irve Goldman, Pullman and Comley for the Creditor's Committee. MR. DELLA FERA: Good afternoon, Your Honor. Sam Della Fera, Chiesa Shanhinian & Giantomasi, for Mei Guo and Hong Kong -- HK International Funds Investments USA Limited, LLC. MS. CLAIBORN: And good afternoon, Your Honor. Holley Claiborn for the U. S. Trustee. THE COURT: Good afternoon. So everyone on the

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| | Ho Wan Kwok - May 23, 2023 4 | |----|------------------------------------------------------------------| | 1 | remote hearing -- Attorney Claiborn is here in the | | 2 | courtroom. She was here for other matters today, so just so | | 3 | you know, I think you can kind of see her, but in any event, | | 4 | Attorney Claiborn is in the courtroom. | | 5 | Okay. Trustee Despins, you asked for this status | | 6 | conference regrading a possible -- | | 7 | MR. DESPINS: Yes, Your Honor. | | 8 | THE COURT: -- sale of the Lady May, so please | | 9 | proceed. | | 10 | MR. DESPINS: And first, thank you very much, Your | | 11 | Honor, for allowing this status conference on such short | | 12 | notice. | | 13 | And I am going to try to cover these points fairly | | 14 | quickly, and I'm going to address -- to be clear, the Lady | | 15 | May only, not the Lady May II. The Lady May II is being | | 16 | prepared for I guess launch. There's a part that's missing | | 17 | for the repairs. That should be completed by next week. So | | 18 | we're talking only about the Lady May. | | 19 | So as Your Honor knows, we moved the Lady May to | | 20 | Newport. In fact, it was first in the regular zone, but it | | 21 | was transferred to the free-trade zone on May 17th, and it | | 22 | remains docked there. | | 23 | In terms of the sale process, Your Honor will | | 24 | recall that you approved the retention of Edmonson as the | | 25 | broker and the broker has engaged in various -- this is on | | | |

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Ho Wan Kwok - May 23, 2023 5 Page 2 of the presentation. Actually, Your Honor, I want to make sure if -- can we put this up? Do we have control over -- we need to have control. Mr. Bongartz needs to be given control of the screen, Your Honor, so we can put up those slides if it's possible. THE COURT: Okay. Just give us a moment, please. MR. DESPINS: Thank you. THE COURT: We're working on that. MR. DESPINS: And then we also sent these to the courtroom deputy probably an hour or so ago. And the people on the phone all have copies of that -- of that presentation. THE COURT: All right. It's not loading at the moment, Attorney -- Trustee Despins, so give us a second and we'll see what we can do. MR. DESPINS: Okay. THE COURT: What about Attorney Baumgartz? If we give him control -- MR. DESPINS: Yes, if you could do that. THE COURT: -- can he share his screen? (Pause) MR. DESPINS: Mr. Bongartz is prepared to post if he's given control of the screen. THE COURT: We can -- we can do that?

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| | Ho Wan Kwok - May 23, 2023 6 | |----|-----------------------------------------------------------------| | 1 | THE COURT: Okay. Give us a moment. We should be | | 2 | able to give Attorney Bongartz control. | | 3 | (Pause) | | 4 | THE COURT: I think if we -- I think I've now | | 5 | given Attorney Bongartz some -- | | 6 | MR. DESPINS: I think we have it. | | 7 | THE COURT: I got it. Yep. I did it. | | 8 | MR. DESPINS: We have it, Your Honor. | | 9 | THE COURT: I got him to share the screen. Okay. | | 10 | It's taken care of. | | 11 | MR. DESPINS: Okay. Great. Okay. Apologies for | | 12 | the interruption, Your Honor. | | 13 | So we're on Page 2 of the presentation, talking | | 14 | about .2, the sale process. Edmonson has done various -- | | 15 | has taken various steps to market the Lady May, contacted | | 16 | all the brokers, the yacht brokers through email and other | | 17 | communications. Also listed the Lady May on YACTCO. YATCO | | 18 | is really the equivalent of multiple listing system for real | | 19 | estate, but it's for luxury yachts, so it was posted there. | | 20 | And there's an electronic brochure for the Lady May that | | 21 | includes photographs and specification that was circulated | | 22 | -- widely circulated to brokers around the world. | | 23 | To date, Your Honor, we have received five formal | | 24 | offers from prospective buyers, both U.S. residents and | | 25 | non-U.S. residents. There have been several showings of the | | | |

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| | Ho Wan Kwok - May 23, 2023 7 | |----|-----------------------------------------------------------------| | 1 | Lady May to prospective buyers or their brokers, and we -- I | | 2 | want to say, we countered these five offers, but -- turning | | 3 | to Page 3, we need a catalyst in the sense that these five | | 4 | bidders know that there are other bidders. Some have moved, | | 5 | but not sufficiently in our view, and we need a catalyst to | | 6 | force people to put their final and best foot forward, | | 7 | essentially. | | 8 | And I know, Your Honor, that in Connecticut you | | 9 | have a very elaborate set of rules governing sales of assets | | 10 | in bankruptcy cases, and I know right up front, and I've | | 11 | been cautioned both by Mr. Linsey and by Mr. Goldman, that | | 12 | we're not compliant with all these rules. | | 13 | And we're not asking for relief now, but that's | | 14 | certainly the goal of this status conference is to get Your | | 15 | Honor up to speed so that we don't proceed in a direction | | 16 | that you would find unacceptable. | | 17 | So I'll say right off the bat, what we're | | 18 | proposing is neither a sole private sale, nor a full public | | 19 | sale. It's a hybrid. And as I said, we need a catalyst to | | 20 | force people to put their best bid forward. | | 21 | After extensive discussion with the broker, the | | 22 | sort of the conclusions reached are that the five bidders | | 23 | are highly motivated. They're not offering us the price | | 24 | that we want at this stage. As I said before in court, | | 25 | there's always that -- or, you know, a bankruptcy sale, | | | |

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| | Ho Wan Kwok - May 23, 2023 | 8 | |----|--------------------------------------------------------------|---| | 1 | therefore discounted prices, and you know, we want to | | | 2 | counter that to the extent we can. | | | 3 | But these five bidders will not stay around the | | | 4 | hoop, for a lack of better expression, in an -- for an | | | 5 | indefinite period of time. | | | 6 | They need to see a path towards a final process | | | 7 | and that's what we want to offer them. And the broker is | | | 8 | really of the view that we need to move quickly. Quickly | | | 9 | being defined as asking them, and also the rest of the | | | 10 | world, and I'll describe what we're going to do there, to | | | 11 | put final and best bids forward by May 30th, which is | | | 12 | Tuesday of next week, at 5:00 p.m. | | | 13 | But we want to provide guidance to the bidders so | | | 14 | that we're not wasting our time with bids that turn out | | | 15 | later to be illusory or not serious, and therefore, we're | | | 16 | putting the guidance that's on that page, Page 3, and so | | | 17 | that only offers in excess of 20 million will be considered, | | | 18 | and that gives Your Honor a sense of where we are in terms | | | 19 | of the offer received. | | | 20 | Bids must be based on the former purchase | | | 21 | agreement to be provided by the trustee to prospective | | | 22 | bidders or buyers. | | | 23 | That's very important because the typical yacht | | | 24 | sale agreement, Your Honor, allows the buyer to change their | | | 25 | mind for whatever reason until a date which is referred to | | | | | |

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Ho Wan Kwok - May 23, 2023 9 as the -- the date at which the evaluation, the review process that's called the survey, is completed. So I want to be precise. Under the customary agreement as a buyer, you can change your mind for whatever reason, I don't like the color anymore or something like that, while the survey is ongoing. So it's not only that you need to raise issues that are -- that come to light as a result of a survey, you can change your mind for any reason. That doesn't work, obviously, from the bankruptcy point of view, and we told the broker that so we're going to have a tailor made agreement that would basically say, you're going to sign an agreement, you're going to be bound by that agreement, you need to put a 20 percent deposit, cash deposit, early on by June 1st. And yes, there will be a survey. It's called a survey, but it's really like a house inspection, Your Honor. It takes typically three weeks, but we're giving them -- essentially, we're giving them three weeks to complete the survey. By the way, the ship needs to be taken out of the water for that inspection. And they cannot change their mind during that survey period except that if it turns out that -- I'm making this up now -- that one of the engines is defective, they

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Ho Wan Kwok - May 23, 2023 10 can raise their hand and say, no, I'm not going to buy it at the price that I bid, because of that problem. And this is like a home. You know, I'm sure Your Honor has been through this. There's two negotiations. The purchase price and there's the inspection negotiation where people find all sorts of problems. I'm not saying that would be the case here, but that's the nature of the beast and we want to be protected against that, and I'll explain to Your Honor how we're going to be protected against that later, but one of the reasons we would protect against that is that, we can only walk as a result of issues raised in the survey and they need to document that, and we have the ability if they want, to purchase the survey from them. 15 So typically -- the survey process typically costs \$40,000, and you might say, wow, you're out of money, why are you spending \$40,000? It's potentially spending \$40,000, but that allows us to take the survey and go to other bidders and say, look, this is the -- this is the problem, or whatever the problem was. Are you ready to proceed accordingly? That allows us to pivot, Your Honor, in terms of switching bidders, much faster than if we didn't have that provision that allows us to essentially get the survey at cost. And so the survey would have to be completed by

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| | Ho Wan Kwok - May 23, 2023 11 | |----|----------------------------------------------------------------| | 1 | June 28th, and the -- as I said, the purchase agreement | | 2 | would have to be signed by June 9th, so that's very soon. I | | 3 | had left -- we've left blank there on Page 4 as to when the | | 4 | closing would take place, because that really depends not | | 5 | entirely but in part, on Your Honor in the sense that one of | | 6 | the things that we put in there at the end is that the | | 7 | winning bid is subject to bankruptcy court approval. We all | | 8 | know what that means. That means that anything could happen | | 9 | at that hearing in terms of additional bids being submitted. | | 10 | But the point is that we need to understand how | | 11 | quickly, assuming we have a binding bid, the survey is | | 12 | completed and all that, how quickly we could proceed. | | 13 | The intent would be to file the motion to approve | | 14 | the transaction while the survey is ongoing, because we have | | 15 | the ability to pivot to another buyer. | | 16 | And basically what we would do is that if Buyer | | 17 | Number 1 doesn't come through for some reason, or he | | 18 | exaggerates the issues in the survey, we would amend the | | 19 | motion to say we're selling to Bidder Number 2 at the | | 20 | following price, et cetera, et cetera. | | 21 | So the idea is to get the process going so that we | | 22 | can pivot quickly, because Your Honor knows, it's costing us | | 23 | a fortune to own that ship. | | 24 | So now the question you probably are asking in | | 25 | your mind about ruling it, there are all these procedures |

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| | Ho Wan Kwok - May 23, 2023 12 | |----|---------------------------------------------------------------| | 1 | and all that. We don't have a court order approving these | | 2 | procedures, which I note, Your Honor, as I've sold many | | 3 | assets in bankruptcy before, I know that getting a court | | 4 | order with a breakup fee, expense reimbursement, and the | | 5 | whole panoply of protections is the norm. I understand | | 6 | that, Your Honor. | | 7 | But after talking to the broker, the conclusion | | 8 | was that we would lose a lot of bidders in this process in | | 9 | the sense that (indiscernible) to explain that, but this is | | 10 | not your typical buyer, real estate, or a building, or a | | 11 | company. | | 12 | These are very rich people that obviously if you | | 13 | own a boat like that you have to have a lot of money. They | | 14 | don't have an appetite to be involved with bankruptcy | | 15 | lawyers on negotiating all these provisions. | | 16 | And therefore I realize, Your Honor, that this is | | 17 | a hybrid process that technically it would be preferable in | | 18 | a normal case to have all of the bells and whistles covered | | 19 | through an interim bidding procedure order, et cetera, but | | 20 | in this case, given where we are, given the interest, given | | 21 | the risk of losing bidders that are interested today if we | | 22 | prolong the process, the conclusion that I reached in | | 23 | support of the discussions, extensive discussions with the | | 24 | broker, that it is better to pursue it like this knowing | | 25 | that, you know, it's not your standard procedure, Your | | | |

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Ho Wan Kwok - May 23, 2023 13 Honor. So again, I have no motion on file. I am doing this largely because it is a hybrid procedure. I think that this will maximize value, and so that's really the presentation, Your Honor. I'm sure I'm hitting you with a lot of new issues, concepts, but we think that the -- one, there needs to be a catalyst for people to put up their best bid. Two, that catalyst must be soon, fairly soon, meaning a week or so from today. And remember, it's subject to bankruptcy court approval. So if somebody shows up at the hearing and says, I'll bid 30 million for that ship, I'm sure Mr. Goldman would be standing up and saying, Your Honor, don't listen to the trustee, you should approve that other bid. So the point is, there is a failsafe built in protection despite the fact that we don't have a -- we wouldn't have a bidding procedure order specifically. And oh, by the way, I have socialized this issue with PAX and with the creditor's committee, so they may have views as well. I don't want to preempt them, but that's the -- that's what I wanted to cover today, Your Honor. THE COURT: Okay. Well, I, as you correctly noted, am just learning of all this and there are a lot of issues associated with it, which may or may not need to be

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Ho Wan Kwok - May 23, 2023 14 addressed. I'm not certain. But I do have a few questions. MR. DESPINS: Sure. THE COURT: When I'm looking at this presentation, you're not asking the Court to enter an order with regard to what you plan on doing next Tuesday, which is obtain the best offer from these five bidders that you have in place. Is that correct? MR. DESPINS: Yes, that's correct, but it's not only the five bidders, it's the rest of the world as well. Yes. THE COURT: Well, so my question is, to me, and maybe I'm wrong, again, I haven't really had any time to think about it, but aren't you just really trying to get a stalking horse bidder. By getting the five people to give you their best, you're going to then take that person, and that's going to be -- or whatever it is, you know, whoever the bidder is. That's going to be the bid that is subject to the sale motion and to approval unless somebody outbids them. Is that how you see this unfolding? MR. DESPINS: Yes, except I would not describe it as a stalking horse. I would describe it, you know, with the caveat that it's subject to bankruptcy court approval, and they know that coming in, they understand that -- THE COURT: Okay.

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| | Ho Wan Kwok - May 23, 2023 15 | |----|--------------------------------------------------------------| | 1 | MR. DESPINS: -- and but in -- so the broker will | | 2 | -- they will be known to not only the losing four bidders, | | 3 | but to the rest of the world, what this ship is going to | | 4 | sell for, which allows anyone in the world to come in and do | | 5 | their thing. | | 6 | But I don't -- that's the issue -- I know it | | 7 | sounds a bit opaque, but it's -- the broker doesn't think | | 8 | it's in our interest to go and explain to them that -- this | | 9 | sole stalking horse concept, because we will lose them in | | 10 | that context. | | 11 | Just, if we tell them to put your best foot | | 12 | forward and then we'll take the highest bid, highest and | | 13 | best bid, and then you're absolutely right that the | | 14 | consequence of the fact that there is subsequent court | | 15 | approval is what it is, which is that there's always the | | 16 | possibility of someone else showing up with more. | | 17 | THE COURT: Well, okay. So let me go to the next | | 18 | question. So I'm not -- you're not asking the Court to | | 19 | enter any kind of order with regard to your proposed process | | 20 | to obtain what would be in your judgment the highest and | | 21 | best bid, which would then become subject of a motion to | | 22 | sell? | | 23 | MR. DESPINS: Correct. | | 24 | THE COURT: Okay. | | 25 | MR. DESPINS: It would be -- | | | |

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Ho Wan Kwok - May 23, 2023 16 THE COURT: Okay. MR. DESPINS: -- to file a motion to sell after that. So, yes. THE COURT: Okay. And then -- okay. That -- I'm with you. I -- okay. So then the motion to sell gets filed and you say in that motion, ABC Company has bid \$20 million to buy the Lady May. The trustee is -- supports that bid and will be proceeding to take any steps necessary to have that bid be the successful bid and have a closing of the sale on X date, but on Y date, there will be a hearing prior to that closing date to approve that bid subject to any other bids that might be received by the trustee and deemed to be a higher or better offer for the sale of the yacht. Is that what you're contemplating? MR. DESPINS: Practically, yes, but I don't think that I would -- I would just say subject to bankruptcy court approval, which is implicit. What you're saying is absolutely implicit. I have a fiduciary duty to get the highest price possible at any given time, and that may evolve, you know, over time. But you're correct, that -- THE COURT: Go ahead. I'm sorry. MR. DESPINS: No. You're correct that the practical implication of that is that somebody else could

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| | Ho Wan Kwok - May 23, 2023 17 | |----|--------------------------------------------------------------| | 1 | show up, and as long as it's a real bid that has -- and | | 2 | they're willing to close, you know, on the same terms and | | 3 | conditions and all that, if it's higher -- and by the way, | | 4 | you said 20. That's a minimum that we would -- | | 5 | THE COURT: No, I'm just using -- | | 6 | MR. DESPINS: -- agree to 20 -- | | 7 | THE COURT: -- an example. | | 8 | MR. DESPINS: Yes. Yes. Yes. Yes. Yes. | | 9 | THE COURT: I'm not saying that that's the amount. | | 10 | I'm just -- | | 11 | MR. DESPINS: No. No. Yes. Yes. So yes, at | | 12 | that point I think that if I didn't go in that direction, | | 13 | Mr. Goldman would be standing up and saying, Your Honor, we | | 14 | need to override the trustee's business judgment here | | 15 | because there's a higher bid. | | 16 | THE COURT: All right. Then -- | | 17 | MR. DESPINS: And I think you would grant that | | 18 | relief. | | 19 | THE COURT: So let's continue down the path. So | | 20 | what happens if the bid that you deem to be the highest and | | 21 | best offer, purchase price for the yacht after next Tuesday, | | 22 | doesn't close for whatever reason? | | 23 | So say they do the survey and they find something, | | 24 | they can walk away. Are you in a position -- is there | | 25 | another bidder that's in place of the original five, or do | | | |

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Ho Wan Kwok - May 23, 2023 18 you have to start all over again? MR. DESPINS: Well, technically, I don't have a backup bidder, which is what you're referring to, that is bound to close. I don't have that, because I would have to pay for that through some kind of fee, and I really -- and also, it's not only the fee but the complications that we just -- and spook these types of bidders. But, Your Honor is correct. Technically, I don't have a backup bidder, but that's why I have the option to buy the survey, because I don't want to have another bidder with a new survey that would take another three or four weeks. We want to be in a position to pivot and to amend the motion to say, we're going to Bidder Y from Bidder X, and we also -- we have the 20 percent deposit, Your Honor. So if the -- there -- if they're not closing because they just changed their mind, or they're raising issues that are exaggerated or non-existent, 20 percent -- you know, they're going to forfeit their deposit and Your Honor is going to have exclusive jurisdiction over the contract, over enforcement of the contract. That's our protection. But you're right that -- I know that. Typically you have a backup bidder that's bound to close, but you need to pay them for that and then the buyer number one will say,

well, if you have that, I won't be compensated if I get

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Ho Wan Kwok - May 23, 2023 19 topped. So now we get into -- THE COURT: I understand. MR. DESPINS: -- permutations around three percent -- well, you understand. Okay. Sorry. THE COURT: Okay. I understand. All right. So then let's -- I'm not doing anything as far as an order is concerned for your plan between now and next Tuesday. MR. DESPINS: Okay. THE COURT: So then I would assume you'll be filing a motion by the end of next week with regard -- maybe even, you know, on Wednesday, I don't know, with regard to -- MR. DESPINS: Well, it would be -- the scheduling, Your Honor, would be first they need -- we need to have a contract signed, and then once they have the contract signed and 20 percent deposit, then we'd file our motion as soon as possible. THE COURT: Okay. And then -- okay. Then once you file that motion, are you looking for a truncated process for a hearing? MR. DESPINS: Well, that's one of the -- that's why we left some of these dates as blanks because -- you know, just to give an example. Let's assume everything goes well, we have a signed purchase agreement on June 9th, which is Friday -- no, sorry. It's Friday -- so two weeks. Two

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Ho Wan Kwok - May 23, 2023 20 weeks. We would file our sale motion on Monday the 12th, and in theory, 21 days from there brings you to July 5th because of the July 4th holiday. That's 21 days. The feedback I'm getting from the broker is these people don't need financing. They all have sums of money and they're hot to close and that's always a good thing and should never lose advantage of that. So that if we can shorten that by a bit, not too much because if there's somebody that for some reason has not heard of this sale -- and by the way, it's been widely advertised -- but you know, they need to have the ability to try to top it. And so we would, you know, maybe look for an objection deadline of maybe the 30th instead of the 5th. So shortened, but not in a massive way. THE COURT: Okay. And then have a hearing when? If you have an objection deadline of June 30th, when would you expect to have a hearing? MR. DESPINS: Maybe on July 6th or something or other. THE COURT: Okay. Hold on a second. Let me just -- okay. That looks possible. I'm just -- let me just check another source and -- I'm asking because I need -- you know, there's a lot of things already scheduled for June. MR. DESPINS: I know.

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| | Ho Wan Kwok - May 23, 2023 21 | |----|---------------------------------------------------------------| | 1 | THE COURT: So I want to make sure that -- yeah, | | 2 | July the 6th is definitely possible if -- assuming the time | | 3 | frame that you set forth. And then that would be the sale | | 4 | -- that would be the -- that would be the hearing on the | | 5 | sale, to approve the sale and -- | | 6 | MR. DESPINS: Correct. | | 7 | THE COURT: And then you would close after that. | | 8 | MR. DESPINS: Correct, Your Honor. | | 9 | THE COURT: Okay. So under our, you know, local | | 10 | rules, you would -- you are proposing to move differently | | 11 | than our local rules, so you'll have to ask for relief from | | 12 | the local rules to do that, if -- and see whether or not | | 13 | that's acceptable, right? Number one. | | 14 | Number two, what we do in this district -- you | | 15 | know, many other districts do it as well. Let's assume you | | 16 | file this motion to approve a sale by June -- on June 9th, | | 17 | on or around June 9th, and the hearing then would be | | 18 | scheduled, let's assume, for July 6th. | | 19 | What we do, but you might need to talk to the | | 20 | broker and/or tell us that we're wrong in this circumstance | | 21 | -- and again, you'd need relief is -- you'd have to file a | | 22 | document that gets put on the Court's website that shows | | 23 | that this is an asset for sale and, you know, set forth its | | 24 | general terms and conditions and things like that, because | | 25 | I'm not saying that would happen in this case, but in many | | | |

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Ho Wan Kwok - May 23, 2023 22 other cases, not the sale of a yacht, but posting that on the court's website has resulted in higher purchase price for assets, believe it or not, because I guess people, you know, out there look at court web sites for sales of assets. They're -- you know, that's what they do. So that you would have to do along with filing your motion on or around June 9th so that it's out there to provide another source of essentially marketing, that then also would become part of the evidentiary record at your hearing to approve the sale to show what was done to obtain the highest and best price for the asset. I have no idea, and I'm not suggesting you need to answer the question now, but I'm just telling you, that's how it normally works, and that's how the clerk's office would handle it. They'd say, oh, they didn't file a notice, that's a deficiency. You know, and that could stop the process down -- that could slow it down. So I'm throwing that out to you to think about, okay? MR. DESPINS: We can file that notice, Your Honor. THE COURT: Okay. And then as far as the time frame that you set forth, are you -- you are anticipating that you'll have some -- you'll have what you, as the -- in your business judgment determine is the highest and best offer by next Tuesday, and then you believe you're going to be filing -- you hope and believe you're going to be filing

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Ho Wan Kwok - May 23, 2023 23 a motion to approve a sale under Section 363. Now I have no idea, but I mean, I have a thought, but are there -- is anyone -- I'm sure you have, but there are no liens on this property, are there? MR. DESPINS: No, Your Honor. THE COURT: Not even like -- not even a, you know, a maritime lien or anything with regard to any unpaid dockage fees or anything like that? MR. DESPINS: I should have answered, no liens known. So we will -- THE COURT: Right. MR. DESPINS: -- we will check on that. THE COURT: Right. Because obvious -- MR. DESPINS: But a lien would attach to the proceeds in any event, so I don't think that would stop it. THE COURT: True. But there's a notice issue, right? Notice and service on the people that if they had a lien, right? MR. DESPINS: Yes. Yes, Your Honor. THE COURT: That you might need to make -- because if you're going to need to make the presentation that everybody was served, they were served appropriately, they had the opportunity to object, if they have an interest in the property, they know all those kind of things, right? MR. DESPINS: Absolutely.

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Ho Wan Kwok - May 23, 2023 24 THE COURT: So then, who else -- well, I shouldn't say who else because you didn't tell me, so I'm jumping ahead a little bit. In addition to the notice that would be filed in the case and then on the court's website, you're obviously going to have to have the broker show whatever the broker did, right, to market the property. And that may include serving parties who are not parties in this case with the motion to sell and/or related documents, such as the other four bidders that you don't choose as the highest and best, but not only the other four bidders, right? I mean, you know, there may be a need to show that it was whatever -- however the broker markets that it's really been out there to everyone that might have an interest in purchasing it. 17 So I just -- again, I'm highlighting that issue because that's an expectation that the -- that presentation on the sale will include all of that information as well, because you're asking the Court to make those findings, right? So every finding that you're asking the Court to make would have to be substantiated with some evidence. Okay? MR. DESPINS: Yes, Judge. THE COURT: And so one of the -- just to follow

Ho Wan Kwok - May 23, 2023 25 this through, and then I think this is my last question for now. The motion to sell gets filed, an objection deadline is set, a hearing date is set, and the closing date is after that hearing date. One of the four bidders who did not -- whose bid was not chosen on May 30, comes to court and says they'll -- no contingencies, ready to close, accept the survey that the bidder -- that the bidder -- the original purchaser had undertaken and wants to outbid -- you know, pay a higher price. What do we do at that point in time? You're saying, I just have to make the determination as to whether or not I'll allow that based upon what the parties -- what everyone in the courtroom has to say about that? MR. DESPINS: Yes. I don't want to be flippant about that, but we owe no duties to the -- to bidders. We owe duty to the estate, Mr. Goldman and I owe a duty to the estate and to maximize value, and we'll have to adjust our thinking based on what happens at that hearing. If -- and that will be a good problem to have frankly, Your Honor, but that's -- THE COURT: I under -- I agree with that, but I want to at least think it through. I don't see that I'm entering any kind of order until -- MR. DESPINS: That precludes that, no. Case 22-50073 Doc 1832 Filed 05/30/23 Entered 05/30/23 09:15:14 Page 25 of 41

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Ho Wan Kwok - May 23, 2023 26 THE COURT: -- until the hearing on July -- if it's, for example, July 6th, right? MR. DESPINS: That's correct. THE COURT: So if I'm not entering any kind of order, then I don't see how anyone's precluded from coming in and trying to purchase it at a higher price. MR. DESPINS: That's correct, Your Honor. THE COURT: Okay. All right. I don't have any other questions at the moment, but I -- doesn't mean I might not after I hear what other people have to say, so who would like to be heard? MR. GOLDMAN: Good afternoon. I just wanted to add to what Mr. Despins had presented. THE COURT: Attorney Goldman, will you just do me a favor and just state your name for the record, because we're on -- you know, we're on audio. And also, for some reason, you're a little muffled in your voice. I don't know if you can get closer to your microphone. MR. GOLDMAN: Is this better, Your Honor? THE COURT: A little better. MR. GOLDMAN: Okay. I'll get closer. Irve Goldman, Pullman Comley, for the creditor's committee. You know, I just wanted to add to what Mr. Despins had presented. He was good enough to include me in the discussions and the thinking that led to what he's presented Case 22-50073 Doc 1832 Filed 05/30/23 Entered 05/30/23 09:15:14 Page 27 of 41

Ho Wan Kwok - May 23, 2023 27 as the preferred way of going about selling this asset. And I know we're all used to the typical breakup fee, sales procedure order, which I view as serving really two purposes. One is to protect the highest bidder with a breakup fee, and the other is to, you know, establish a benchmark of interest per the asset and create interest in others for that asset. Now from the estate's point of view, we're not necessarily interested in protecting the buyer, and so that purpose of the breakup fee clearly is inapplicable. To the extent that it's used to create interest in others, from what I've heard so far, due to the unique nature of this asset and the unique nature of the market for it, I am convinced, at least at this point, that what they have said about what will maximize value in terms of this particular procedure is really going to substitute for what a sales procedure order and a breakup fee would do. And so that's the committee's thinking at this point of view. So at this preliminary stage, you know, we have no objection to his going forward in the way that he presented it, and -- but we'll -- as Your Honor said, you know, we'll have to see how the evidence comes out at the sale hearing. But I just wanted Your Honor to understand our way of thinking on this.

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Ho Wan Kwok - May 23, 2023 28 THE COURT: Okay. Thank you. Does PAX wish to be heard? MR. SARNOFF: Your Honor, only that -- excuse me. My daughter's wedding was this weekend and I have no voice left, so I apologize. Stuart Sarnoff on behalf of Creditor, PAX. Mr. Despins was good enough to, as he did with Mr. Goldman, to sort of preview his thinking, and at this point we concur with Mr. Goldman that we're on board at this stage. THE COURT: Okay. Thank you. And I hope you had a wonderful time, even if your voice is gone, which probably means you did have a wonderful time. MR. SARNOFF: I may have had too good a time, but thank you. Thank you very much, Your Honor. THE COURT: Okay. That's nice to hear. Does counsel for HK International wish to be heard? MR. FERA: Your Honor, Sam Della Fera for HK and Ms. Guo. As the Court may recall, we reserved -- we reserved the right to -- of our client to connect to any sale and, you know, we're prepared to address any proposed sale at the time that the motion described by the trustee is filed.

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| Ho Wan Kwok - May 23, 2023 | |---------------------------------------------------------------| | 29 THE COURT: Okay. Thank you. Attorney Claiborn, | | | | is there anything that you'd like to say to the Court on | | this issue? | | MS. CLAIBORN: No, Your Honor. | | THE COURT: Okay. Well, I understand, Trustee | | Despins, what you're proposing, and I -- the time frames | | that you've laid out appear to be fine. | | Again, as I stated, you'll have to, in your | | motion, you know, seek relief from following the processes | | under our local rules, and you'll have -- you know, you'll | | address those things but you'll need to do that and you'll | | need to be prepared to have, you know, evidence submitted at | | the sale hearing so that the Court can determine that all | | the procedural and substantive issues have been properly | | addressed. | | I don't think there's anything else that we can | | talk about with regard -- I have other things to talk to you | | about today, but not with regard to the Lady May and the | | proposed sale. So unless anyone else wishes to be heard | | about the Lady May the proposed sale, then I do have a few | | things that I wanted to talk about. | | Okay. Hearing nothing, then I received yesterday, | | I believe, the-- now I'm turning completely to the AIG | | Adversary proceeding, okay? And I received -- or I was | | forwarded, which was appropriate, an email from Attorney | | |

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| | Ho Wan Kwok - May 23, 2023 30 | |----|----------------------------------------------------------------| | 1 | O'Connor, that says that AIG is voluntarily extending the | | 2 | cancellation date to the end -- of that insurance policy to | | 3 | the end of June, and that there's going to be some informal | | 4 | discovery conducted, and that AIG will file its opposition | | 5 | to the preliminary injunction motion by May 31st, and that | | 6 | Genever will file its reply by June 6th, and both parties | | 7 | will file their witness lists and exhibits by June 13th. | | 8 | And then it said Genever has a preference for June | | 9 | 20 or 21st on -- based on the -- excuse me, I'm sorry -- on | | 10 | the availability of counsel for a hearing. Unfortunately, | | 11 | the Court is not available on June 20 or 21st. Those dates | | 12 | do not work. So we need to figure out when we could have a | | 13 | hearing before the expiration of the policy. | | 14 | So I'm going to need you, Trustee Despins, to have | | 15 | some discussions with Attorney O'Connor, because I can't -- | | 16 | we don't have the availability. We just don't. There are | | 17 | scheduling conflicts throughout the month of June. | | 18 | It is possible that -- and Attorney Claiborn is in | | 19 | the courtroom right now, and I had alerted her this morning | | 20 | that there might be -- something that she has scheduled on | | 21 | the 28th and 29th of June might need to be continued if we | | 22 | have that preliminary injunction hearing in the AIG | | 23 | adversary proceeding on the 28th and 29th of June. | | 24 | But you'll have to contact him, Trustee Despins, | | 25 | and find out whether or not -- I don't even know if that | | | |

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| | Ho Wan Kwok - May 23, 2023 31 | |----|------------------------------------------------------------------| | 1 | works for you, but if it doesn't, then we're into July and | | 2 | then you've got an issue of, will they consent to a further | | 3 | extension of time before they believe -- they assert that | | 4 | the policy is canceled. I don't know. But -- so I need you | | 5 | to have that discussion and then someone get back to us | | 6 | through the courtroom deputy box as soon as you can so that | | 7 | I can schedule things. Okay? | | 8 | MR. DESPINS: Yes, Your Honor. So just to be | | 9 | clear, you're not available in the week before the 19th, | | 10 | like from the 12th or the 16th? | | 11 | THE COURT: The 14th, and 15th, and 16th, I am not | | 12 | available, and the 20th, 21st, and 22nd, I am not available. | | 13 | MR. DESPINS: And the 19th? | | 14 | THE COURT: That's a Monday. | | 15 | MR. DESPINS: Oh, you have your regular docket. | | 16 | THE COURT: And we're closed, because that's a | | 17 | federal holiday. That's Juneteenth. | | 18 | MR. DESPINS: Okay. Oh, yes. Of course. Okay. | | 19 | So we really have to move this to July. Okay. Let me -- | | 20 | let me come back to Your Honor on this. Thank you. | | 21 | THE COURT: Thank you. It just is what it is. We | | 22 | have things scheduled that -- and/or that I have to be | | 23 | places that I have no control over, and it's not for a | | 24 | wedding or anything fun like that, so that -- so I don't | | 25 | have a lot of availability in June, unfortunately. | | | |

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| | Ho Wan Kwok - May 23, 2023 32 | |----|---------------------------------------------------------------| | 1 | MR. DESPINS: Understood. | | 2 | THE COURT: At the early part, it's better, but | | 3 | that's not going to work for you because you won't even have | | 4 | -- you and Attorney O'Connor wont even have addressed your | | 5 | discovery issues at that point. So that's the first issue. | | 6 | Then there is, I believe, some pending 2004 | | 7 | examination motions and objections that haven't been | | 8 | scheduled yet for a hearing, and I think there's a couple of | | 9 | motions still outstanding, a motion to seal and a motion to | | 10 | compel compliance with other 2004 issues. I don't know | | 11 | where that stands. | | 12 | And then also in HK v. Despins, 22-5003, there was | | 13 | -- as you know, there have been orders granting partial | | 14 | summary judgment on the first and second counterclaims, but | | 15 | I don't know where we're going from there. Are we | | 16 | scheduling a pretrial conference? There's -- to see where | | 17 | we are with regard to the remaining counterclaims or -- I | | 18 | don't know, but we already have something scheduled on July | | 19 | 18th on another adversary, I think it is. Let me take a | | 20 | look. | | 21 | Yes, in Despins v. Mei Guo, et al, 23-5008, | | 22 | there's a pretrial conference set at 1:30 on July 18th, and | | 23 | then in -- then -- and there is a pretrial conference -- the | | 24 | original pretrial conference that would be -- would have | | 25 | been set by the clerk's office in the ordinary course of | | | |

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| | Ho Wan Kwok - May 23, 2023 33 | |----|--------------------------------------------------------------| | 1 | business in the Genever v. AIG adversary, which may or may | | 2 | not be necessary depending upon what happens with the | | 3 | preliminary injunction hearing and ruling. So those are | | 4 | what I see as outstanding issues. | | 5 | MR. DESPINS: The we need to -- I mean, Mr. Linsey | | 6 | is handling some of the 2004, but on the adversary | | 7 | proceeding that includes our counterclaims against HK and | | 8 | Mei Guo, I think it's okay to move that pretrial to July | | 9 | 18th, because as Your Honor pointed out in your decision | | 10 | last week, you know, clearly there is an appeal pending, but | | 11 | the more appeals pending -- and the other counts should | | 12 | probably be dormant until those are resolved, but -- and | | 13 | again, I am speaking out turn here because I need to talk to | | 14 | my colleagues, but I believe that moving that pretrial to | | 15 | July 18th would be fine, but Mr. Linsey, I'm assuming is | | 16 | handling some of the 2004 that you eluded to. | | 17 | THE COURT: Okay. | | 18 | MR. LINSEY: As far as the 2004 motion goes, Your | | 19 | Honor, there are objections from (indiscernible)and from the | | 20 | debtor. I was involved in the meet and confers yesterday | | 21 | regarding those objections. | | 22 | I don't want to argue those, the merits, or really | | 23 | get too much into it because counsel aren't on, but I can | | 24 | say I'm comfortable that Your Honor is familiar and has | | 25 | dealt with the issue before, that is raised in those papers, | | | |

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Ho Wan Kwok - May 23, 2023 34 and we would like to get Your Honor's ruling on that motion resolved as soon as we can so as not to delay progress in the estate. I don't anticipate that matter -- those objections to the 2004 motion being substantially time consuming. I know that we had dates on -- for various matters on May 30th, and I believe again on June 6th. I would be prepared to go forward with those on May 30th, Your Honor. THE COURT: I don't think we will be prepared to go forward with those matters on the 30th, though, so it may be June 6th. MR. LIEBMAN: Understood, Your Honor. THE COURT: Then what about the motion to compel compliance and a motion to stay that have been -- I mean, sealed, that have been out there? MR. LIEBMAN: As far as compliance is -- with respect to UBS, I am engaging in sort of day-by-day negotiations with UBS, and we have hit some points of disagreement. What I told UBS's counsel, and actually I told her this yesterday, is that we think that June 6th is time enough to figure out whether we can move forward cooperatively with a communications production, search procedure, and package, or whether we need the Court's intervention and not my -- the estate's intention, or that

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Ho Wan Kwok - May 23, 2023 35 there is not at least a framework of an understanding with UBS that we're going to file something next week, whether that's in the form of a sort of a supplemental memorandum with respect to the pending cross-motion to compel, or whether that's an amended cross-motion to compel. We will file something next week so that the Court has some -- has the benefit of a document that lets the Court know exactly where things stand, rather than looking at papers that are several months old when we move into a hearing on June 6th. But the estate believe the UBS discovery is important (indiscernible). THE COURT: I lost you, Mr. Linsey. We can't hear you. Can they not hear us? THE CLERK: I don't know what -- THE COURT: They can't hear us. Hold on. Everybody stop. Stop. THE CLERK: That's weird. THE COURT: Stop. Stop. We can't hear you. We can't hear you. Hold on. (Pause) THE COURT: I'm going to say something. Mr. Linsey, can you hear me? Nope, he can't hear. (Off the record 1:38 p.m. to 2:04 p.m.) MR. DESPINS: And what was the -- what was the

Ho Wan Kwok - May 23, 2023 36 question? We're ready to proceed on that at the Court's earliest convenience. THE COURT: So that needs to be scheduled for a hearing is what I'm asking. MR. DESPINS: Correct, Your Honor. THE COURT: Okay. And then there's a motion to seal that's out there. We'll take a look at that too, and probably the 2004 examination issues that we talked about before the connection was lost, and now the motion to compel compliance on the latest 2004 issues regarding G-Club and others, and the motion to seal will likely all get set the same date and time, and that may be June 6th. We'll take a look at that after we're done here today. Okay? MR. DESPINS: Yes, Your Honor. MR. LIEBMAN: Thank you, Your Honor. THE COURT: All right. Let me make sure there isn't anything I'm -- I have forgotten to ask you about, but I think that I am okay. Yeah, I think that is it. Those are the things that I wanted to ask while we were in this status conference. Is there anything else anyone would like to add for the record today before we conclude the status conference? MR. DESPINS: Your Honor, Your Honor. Very Case 22-50073 Doc 1832 Filed 05/30/23 Entered 05/30/23 09:15:14 Page 36 of 41

Ho Wan Kwok - May 23, 2023 37 briefly and this goes under the rubric of nothing is easy in this case. Your Honor entered a decision on Count 2 of the -- on our summary judgment, Count 2 of the counterclaims, and the order was pretty precise in terms of the experts on the Kwok estate as to the funds, et cetera, but those funds are held by an escrow agent and -- THE COURT: Yes, we know. MR. DESPINS: -- I'm quoting them now and basically they're saying, well, we're like -- we're like a machine. We don't think. You need to point us to provisions of the escrow agreement that allows us to turn this over to you. And of course we tell them, then -- well, there's a court order that says that we need to do that, and they're looking in that. So the point to this, Your Honor, is that we may be back in front of Your Honor to get the escrow agent to transfer the money to us. Obviously, from their point of view, they're not in law. They don't want any exposure. This could be resolved by a joint letter, by us and by HK International or only HK International, so we'll reach out to them. To be fair, we have not reached out to them yet, but -- so that issue is percolating in the background and -- THE COURT: Well, it's not -- Case 22-50073 Doc 1832 Filed 05/30/23 Entered 05/30/23 09:15:14 Page 37 of 41

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| | Ho Wan Kwok - May 23, 2023 38 | |----|--------------------------------------------------------------| | 1 | MR. DESPINS: -- I understand from -- | | 2 | THE COURT: -- as though we didn't think about | | 3 | that issue when the decision was being issued, but there was | | 4 | nothing in any of the papers submitted that talked about | | 5 | directing the escrow agent to do -- specifically to do | | 6 | anything or be served with any of these issues, because we | | 7 | didn't know -- I don't know what this communications, if | | 8 | any, were had with the escrow agent. | | 9 | And so it's not in that order purposefully, | | 10 | because there was nothing that I saw in any of the papers | | 11 | that would have either specified specific sections of the | | 12 | escrow agreement, or that had the escrow agent under -- | | 13 | aware that there was -- I have no idea if they know even | | 14 | about this adversary proceeding. | | 15 | MR. DESPINS: They know now, but the point is that | | 16 | the order clearly says the escrow funds belong to the estate | | 17 | -- | | 18 | THE COURT: I agree. | | 19 | MR. DESPINS: -- so if there's a plumbing issue -- | | 20 | I understand that there's plumbing that needs to be -- to be | | 21 | dealt with, so we hopefully -- | | 22 | THE COURT: Right. And I didn't think I should be | | 23 | the plumber, so I -- | | 24 | MR. DESPINS: Correct. Understood. | | 25 | THE COURT: -- we didn't put that in, because I | | | |

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| | Ho Wan Kwok - May 23, 2023 39 | |----|----------------------------------------------------------------| | 1 | had no idea what discussions, if any, you might -- all of | | 2 | you might be having with the escrow agent. I have no -- I | | 3 | had no idea and so I was not going to put anything in that | | 4 | could impede or -- you know, any discussions or negatively | | 5 | impact any discussions. So I understand what your point is, | | 6 | though, clearly. | | 7 | MR. DESPINS: Yeah. | | 8 | THE COURT: And we'll see what happens whenever | | 9 | whatever happens, happens, and you'll let the Court know. | | 10 | But I agree that the order -- | | 11 | MR. DESPINS: Will do. | | 12 | THE COURT: -- clearly states that the escrowed | | 13 | funds are property of the Chapter 11 estate of the | | 14 | individual debtor. | | 15 | MR. DESPINS: Okay. Thank you, Your Honor. | | 16 | That's all we have for today. | | 17 | THE COURT: Okay. Thank you all, then, and -- | | 18 | MR. DESPINS: Thank you. | | 19 | THE COURT: -- we'll issue -- I'm sure there will | | 20 | be a few -- there will probably be an order scheduling that | | 21 | pretrial conference in the HK USA v. Despins adversary | | 22 | proceeding for July 18, and then we'll look to schedule | | 23 | hearings on the other matters we discussed regarding the | | 24 | discovery this afternoon. Okay? | | 25 | MR. DESPINS: Your Honor, just one last thing. I | | | |

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Ho Wan Kwok - May 23, 2023 40 apologize. The hearing tomorrow on AIG, could we keep that as a Zoom for scheduling purposes only so that -- that facilitates the -- everyone can get on the -- THE COURT: Yes. MR. DESPINS: -- line and then we can talk about -- -okay. THE COURT: Yes, so -- MR. DESPINS: So therefore -- THE COURT: -- I think it's scheduled -- MR. DESPINS: -- it should go forward -- THE COURT: -- it's scheduled at 10:00 tomorrow, correct? MR. DESPINS: Correct. But it needs to be turned into a Zoom hearing. THE COURT: Yes. We'll -- we will -- we will do that. I just want you to know, we've got another matter at 11:00, because I knew you weren't going forward with the preliminary injunction hearing, so I would ask you to -- MR. DESPINS: Yeah. THE COURT: -- talk to Attorney O'Connor and let both of you -- both of you be aware that we've got another conference at 11:00 a.m. MR. DESPINS: Yes. And hopefully one hour will be more than enough for us to figure out scheduling issues, but one never knows.

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Ho Wan Kwok - May 23, 2023 41 THE COURT: Maybe it will only be -- MR. DESPINS: Thank you, Your Honor. THE COURT: -- maybe it will only be three minutes because you'll have already figured them out. MR. DESPINS: Right. Okay. Thank you, Your Honor. THE COURT: Okay. All right. Thank you. Then that is the last matter on the calendar today, so court is adjourned. MR. DESPINS: Thank you. UNIDENTIFIED SPEAKER: Thank you, Your Honor. THE COURT: Thank you. (Proceedings concluded at 2:10 p.m.) I, CHRISTINE FIORE, court-approved transcriber and certified electronic reporter and transcriber, certify that the foregoing is a correct transcript from the official electronic sound recording of the proceedings in the above-entitled matter. 22 May 30, 2023 23 Christine Fiore, CERT