Guo Wengui / Miles Guo — bankruptcy case · ECF #1929

METADATA

Defendant: Guo Wengui / Miles Guo / Ho Wan Kwok
Court: CTB
Case No.: 22-50073
ECF #: 1929
Type: UNKNOWN
Filed: 2023-06-22

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, | * * * * | | | Debtor. | * | | | HK INTERNATIONAL FUNDS INVESTMENTS (USA) LIMITED, | * Adv. Proc. No. 22-05003 * * | | | Plaintiff, | * * | | | v. | * * | | | LUC A. DESPINS, | * * | | | Defendant. | * * | | | U.S. BANK NATIONAL ASSOCIATION, as escrow agent, | * Adv. Proc No. 23-05012 * * * | | | Plaintiff, | * | | | v. HK INTERNATIONAL FUNDS INVESTMENTS (USA) LIMITED, | * * Bridgeport, Connecticut * June 13, 2023 * * | | | Defendant. | * * | | | * * * * * * * * * * * * * * * * | | | | | TRANSCRIPT OF PROCEEDINGS BEFORE THE HONORABLE JULIE A. MANNING UNITED STATES BANKRUPTCY JUDGE | | | 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 | | |

#### TRANSCRIPT OF

| #1453 | MOTION FOR ORDER TO SHOW CAUSE WHY DEBTOR, MEI GUO | |-------|----------------------------------------------------| | | and HK(USA) SHOULD NOT BE HELD IN CONTEMPT OF | | | COURT FOR FAILURE TO COMPLY WITH ORDER COMPELLING | | | COMPLIANCE WITH RULE 2004 SUBPOENAS AND | | | SANCTIONS FOR SUCH CONTEMPT | | | |

- #1649 MOTION FOR A LIMITED STAY OF ORDER GRANTING IN PART MOTION TO COMPEL COMPLIANCE WITH RULE 2004 SUBPOENA - # 227 MOTION TO STAY PENDING APPEAL - # 11 STATUS CONFERENCE

APPEARANCES: Chapter 11 Trustee: LUC A. DESPINS, ESQ. Paul Hastings 200 Park Avenue New York, NY 10166 For the Chapter 11 Trustee: NICHOLAS A. BASSETT, 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 HK International Funds ERIC A. HENZY, ESQ. Investments, LLC and JAMES M. MORIARTY, ESQ. Mei Guo: Zeisler & Zeisler, P.C. 10 Middle Street, 15th Floor Bridgeport, CT 06604 For the Creditors Committee: IRVE J. GOLDMAN, ESQ. Pullman & Comley 850 Main Street Bridgeport, CT 06601 Special Criminal Defense WILLIAM BALDIGA, ESQ. For the Debtor: Brown Rudnick One Financial Center Boston, MA 02111 For U.S. Bank National Assn, LATONIA C. WILLIAMS, ESQ. as escrow agent: Shipman & Goodwin, LLP One Constitution Plaza Hartford, CT 06103

Ho Wan Kwok - June 13, 2023 4 (Proceedings commenced at 1:01 p.m.) THE CLERK: 22-50073, Ho Wan Kwok and Genever Holdings, LLC; 22-05003, HK International Fund Investment (USA) Limited vs. Despins; 23-05012, U.S. Bank National Association, as escrow agent vs. HK International Funds (USA) Limited. THE COURT: Good afternoon. If we could have appearances for the record, please, starting with the Chapter 11 Trustee. MR. DESPINS: Good afternoon, Your Honor. Luc Despins, Chapter 11 Trustee. THE COURT: Good afternoon. MR. BASSETT: Good afternoon, Your Honor. Nick Bassett from Paul Hastings on behalf of the Chapter 11 Trustee. THE COURT: Good afternoon. MR. LINSEY: Good afternoon, Your Honor. Patrick Linsey for the trustee. THE COURT: Good afternoon. MR. GOLDMAN: Good afternoon, Your Honor. Irve Goldman, Pullman & Comley, for the creditors committee. THE COURT: Good afternoon. MR. HENZY: Eric Henzy for the debtor, Mr. Kwok. THE COURT: Good afternoon. MR. MORIARTY: Good afternoon, Your Honor. James

Ho Wan Kwok - June 13, 2023 5 Moriarty from Zeisler & Zeisler for HK International Funds Investment (USA) Limited in both adversaries, 22-05003 and 05012. THE COURT: Thank you. MR. BALDIGA: Good afternoon, Your Honor. William Baldiga, Brown Rudnick, special criminal defense counsel to the debtor. THE COURT: Good afternoon. And then we have appearance on the -- on the remote appearance of Attorney Williams. MS. WILLIAMS: Yes. Good afternoon, Your Honor, and thank you so much for the opportunity to appear remotely. Latonia Williams of Shipman & Goodwin LLP, appearing on behalf of the interpleader plaintiff, U.S. Bank National Association, as escrow agent. THE COURT: Good afternoon. And as many of you may know, I was a partner at Shipman & Goodwin for years. I know Ms. Williams. Does any -- if anybody has a problem with me addressing these issues, I'd like you to let the Court know. Okay. Hearing nothing. Then we'll proceed. Trustee Despins, how would you like to proceed? MR. DESPINS: I think the first matter would be the stay pending appeal, Your Honor, which is the -- Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 5 of 100

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Ho Wan Kwok - June 13, 2023 6 Zeisler's motion. THE COURT: Okay. Go right ahead. Attorney Moriarty, are you handling that matter? MR. MORIARTY: Yes, Your Honor. MR. BASSETT: Your Honor, I did just want to -- apologies. I did just want to note that in terms of process and presentation of our position, I don't know if the Court wants to hear oral argument at the end. But we were planning to present some evidence by having the trustee provide testimony to the Court in support of the harm to the estate and otherwise that would be suffered in the event the Court were to grant a stay. So I don't know if the Court wants to do the evidentiary portion first or -- THE COURT: Well, maybe you and Attorney Moriarty need to discuss that for a second. I mean, I can do it either way. We can have Attorney Moriarty make his presentation, and then you can make your presentation. And that could include evidence. However you'd like to proceed. MR. BASSETT: That would be fine with me, Your Honor. I just didn't want him to start without having -- THE COURT: Does that work for you, Attorney Moriarty, or do you want a moment? MR. MORIARTY: Your Honor, I'd like a moment, because I was completely unaware that the trustee intended

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Ho Wan Kwok - June 13, 2023 7 to call a witness. THE COURT: Okay. Well, then take a moment. MR. MORIARTY: Thank you. (Counsel confer) MR. MORIARTY: Your Honor, James Moriarty for HK International. So Attorney Bassett is going to present his witness first. I just want to note my objection. I was unaware that a witness would be presented today. I had no advance notice that evidence would be offered. I will note that in -- THE COURT: Well, would you like to move to continue the hearing? MR. MORIARTY: I would, Your Honor. And just to be fair, in their brief which was filed yesterday -- THE COURT: Well, that was when it was ordered to be filed. MR. MORIARTY: Correct. I agree. There was a notation in the brief that there would be some information offered that would show the amount of interest that's currently being earned on the escrow versus what could be earned if there was an investment in T-Bills. I anticipated that that would be some type of demonstrative exhibit. And if that's all that they were going to offer, I would be okay with that. But my understanding is that it will go beyond that. So I would like to have the hearing

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Ho Wan Kwok - June 13, 2023 8 continued for a week. THE COURT: Attorney -- well, I'm not available in a week, so. Attorney Bassett? MR. BASSETT: Your Honor, as I explained to Attorney Moriarty, I would anticipate that Mr. Despins' testimony would take 10, 15 minutes top. And as I also explained, the testimony that we intend to offer is going to track almost exactly what we had stated in our papers are the categories of harm that this estate will suffer in the trustee's view if a stay were granted. So it's really just the evidentiary basis for the statements we've made. I think it was transparent from our filing that we would be offering evidentiary support for what we had said in our objection. MR. MORIARTY: It would have been transparent in the objection if they had said that they were going to be offering Trustee Despins as a witness. They could have obviously attached an affidavit also, which I believe the Court would have considered. They didn't do that. So now we're here for the hearing, oral argument, and the trustee is offering to call a witness to provide testimony with no advance notice at all. THE COURT: Well, if you'd like to continue the hearing, that's fine, but I'm not available next Tuesday or

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Ho Wan Kwok - June 13, 2023 9 the following Tuesday. So it'll have to be into the beginning of July. MR. MORIARTY: Okay. MR. BASSETT: And, Your Honor, on that note, the fundamental problem we have, which we've already addressed with the Court, I think, at the status conference we had last week and should be a fundamental component of the argument before the Court today, is that we have appellants who are, in our view, actively in defiance of the order of the Court. They're acting as if they are entitled to a stay pending appeal until there is a hearing on a motion -- THE COURT: There is no stay pending appeal. So they can act however they would like to act, but there's no stay pending appeal until there is a stay pending appeal, unless and until there is a stay pending appeal. They're saying they're not ready to proceed on their own motion. MR. BASSETT: But as -- THE COURT: So there's no stay pending appeal. MR. BASSETT: The issue, Your Honor, though, of course, is that their position is that these funds are in escrow, and they can't be released. THE COURT: Well, didn't we just get pleadings filed that the bank is willing to turn over the funds into the Court? MR. DESPINS: Yes.

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Ho Wan Kwok - June 13, 2023 10 THE COURT: I think that's what I just saw within the last half an hour, right? Attorney Williams is here. I think she can respond to those issues. I mean, the -- it's still -- I understand your concern in that you want the trustee to be in control of those funds. I understand that. And I understand that the trustee wants to be in control of those funds. But I also understand that there's an interpleader action that's been filed. The plaintiff in that interpleader is willing to transfer the funds minus -- I think, I didn't read it all thoroughly yet, so -- but I would assume minus any fees that it was owed as the escrow agent to be paid into the Court's registry. And then we're going to have to have an issue -- the debtors clearly -- the debtor, HK, whomever, clearly opposed that. You're correct that if I continue this hearing I'm, in fact, giving them -- you could argue that I'm giving them a stay pending appeal. So then we'll have to have the hearing as soon as possible. But I -- right now, it is what -- where it is. And the earliest the Court could have a hearing -- continue the hearing to is the 27th of June, which is two weeks from today. But, Mr. Moriarty, you got to be ready to go. I mean, it's your motion. Otherwise, you are -- by not

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Ho Wan Kwok - June 13, 2023 11 turning over the -- your clients are in violation of this order already. That's clear. It said that they were to turn over the funds to the trustee. You have filed an appeal. You haven't gotten a stay pending appeal. Now you're saying -- and I understand that you want a continuance, because you didn't know that the trustee was going to testify. Okay. I'll agree to that for now. But this is not -- you're going to either get a stay or you're not going to get a stay. And right now, there is no stay. So every day that there isn't a stay and that your client is in violation of an existing order, your client is risking further -- you know, further relief could be sought against your client, even if you ultimately get a stay pending appeal, because you're in violation of that order, and you have been since June 2nd. MR. MORIARTY: I -- THE COURT: So it's up to you. Do you really want to wait another two weeks, or do you want to go forward today? MR. MORIARTY: Well, Your Honor, I -- let me -- let me confer with my -- with Mr. Henzy. But before I do that, I just want to address what the Court just said. The money is in escrow. There is an escrow agreement. The -- THE COURT: I know all about that --

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Ho Wan Kwok - June 13, 2023 12 MR. MORIARTY: So -- THE COURT: -- Attorney Moriarty. MR. MORIARTY: My client is not in violation of a court order, because my client doesn't have the unilateral ability to get the funds to deliver them to the trustee. THE COURT: Well, I'm not sure I agree with you on that, number one. Number two, I entered an order finding that those funds are property of the estate and directed your client to turn them over. So the escrow agent doesn't have a problem. You're not going to get sued by the escrow agent. Who's going to sue you if they get turned over right now? The only people that could sue you would be the trustee or the escrow agent. Neither one of them is going to sue you. MR. MORIARTY: There is a -- THE COURT: So what's the problem? MR. MORIARTY: There's a prior order that Your Honor entered related to -- the stipulated order related to bringing the Lady May to Connecticut, which includes the escrow agreement. The escrow agreement has specific provisions as to when the money can be turned over, and it includes a final, non-appealable order which we do not have yet. So there are competing orders that this Court

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 13 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 13 | | 1 | entered. There's the stipulated order which has the escrow | | 2 | agreement as an exhibit to it, and then there's the order | | 3 | that was entered on summary judgment. | | 4 | THE COURT: And you could agree to turn over those | | 5 | funds regardless of your argument about a final | | 6 | non-appealable order. You could agree to do that. You | | 7 | could direct it. But you don't want to do that. And I | | 8 | understand that you don't want to do that. But you're still | | 9 | in violation of the order that found that the funds are | | 10 | property of the estate. | | 11 | MR. MORIARTY: Okay. | | 12 | THE COURT: So that's where we are. So you -- if | | 13 | you want to take a few minutes to decide whether you want to | | 14 | proceed today or two weeks from now, that's up to you. | | 15 | (Counsel confer) | | 16 | MR. MORIARTY: All right. Your Honor, we'll go | | 17 | forward today. | | 18 | THE COURT: You'll proceed today? | | 19 | MR. MORIARTY: Yes. | | 20 | THE COURT: So you're withdrawing your objection | | 21 | with regard to -- that you've made on the record with regard | | 22 | to the trustee going to be submitting some evidence in | | 23 | response to your motion for relief from -- oh, your motion | | 24 | for stay pending appeal? | | 25 | MR. MORIARTY: Correct. Obviously subject to |

Ho Wan Kwok - June 13, 2023 14 objections that I may make as he testifies. THE COURT: That's fine. MR. MORIARTY: Okay. THE COURT: Okay. It's your motion, though, so are you -- oh, you both agreed that you're going to proceed first? MR. MORIARTY: Yes. Well -- THE COURT: That the trustee is going to proceed with the evidence first? MR. MORIARTY: So that I can then address it in my argument. THE COURT: Fine. That's fine. That's fine. MR. BASSETT: And then he'll do his argument. Then I'll respond and -- THE COURT: That's fine. MR. BASSETT: Your Honor, the trustee would -- THE COURT: Trustee Despins? MR. BASSETT: The trustee would -- or the -- THE COURT: Could you please come to the stand? MR. BASSETT: The trustee would call the trustee to the stand. THE CLERK: Please raise your right hand up. LUC DESPINS, TRUSTEE, SWORN THE CLERK: Please state your name and address for the record. Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 14 of

Ho Wan Kwok - June 13, 2023 15 THE WITNESS: Luc Despins. Address -- work address is 200 Park Avenue, New York, New York, 10166. DIRECT EXAMINATION BY MR. BASSETT: Q Mr. Despins, good afternoon. Mr. Despins, as the trustee appointed in this case, you are in the process of conducting an investigation into the debtor's assets and affairs. Is that correct? A That's correct. Q And you also understand that we're here today on a motion that has been filed by HK USA and Mei Guo for a stay pending appeal of this Court's order ordering that funds sitting in escrow, approximately \$33 million, plus funds in a reserve account are property of the estate. You understand that? A That's correct. Q Do you have a view, Mr. Despins, as to how your investigation and/or the estate more generally would be impacted if the Court were to grant the stay pending appeal -- A I do. Q -- that the HK parties are seeking? And what is that view? A That it would have a material impact on the progress and continuation of our investigation. Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 15 of

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered |----|------------------------------------------------------------- | | Ho Wan Kwok - June 13, 2023 16 | 1 | Q Why is that? | 2 | A For several reasons. The first one is, and I want to | 3 | be very clear about this, you know, we intend to use the | 4 | funds to pay Paul Hastings what -- well, whatever the Court | 5 | will allow in terms of its professional fees. And without | 6 | that, we're going to have a material issue with the | 7 | continued involvement of certain attorneys working on the | 8 | case. | 9 | Q What do you mean by that? Has -- | 10 | date, has Paul Hastings been paid anything on account of the | 11 | services it's provided to the trustee in this case? | 12 | A No, it has not. | 13 | Q And how is it that that would impact the ability of you | 14 | to, I think, as you put it, retain the help of associates on | 15 | the case? | 16 | A So basically we're in -- the group -- the financial | 17 | restructuring group, now we're in an over-capacity position. | 18 | That means that we have more work than we can handle so | 19 | that -- and I'm sure Your Honor in private practice has | 20 | experienced that. We're trying -- everyone is trying to | 21 | staff their cases. | 22 | And, you know, we're -- as I often say jokingly, this | 23 | is not Paulhastings.org. It's Paulhastings.com. So | 24 | profit-making enterprise. And we cannot be in a position | 25 | where I'm going to continue to control a number of key | | 06/22/23 16:11:59 Page 16 of 100 | ----------------------------------| | | | | | | | | | strike that. To | | | | | | | | | | | | | | it's a | | | |

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| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 17 | | 1 | associates in the department to work on the case where we're | | 2 | not getting paid. Essentially, there'll be demands made | | 3 | elsewhere, and I'll have to release them to other paying | | 4 | clients, unfortunately. | | 5 | And that -- and there's a huge prejudice to not only me | | 6 | personally but to the case, because there's some associates, | | 7 | and they're mid-level to senior associates, who have spent | | 8 | the better part of last year working on this case. Without | | 9 | them, we're in a world of hurt, because they know every | | 10 | aspect of the case. | | 11 | So I know generally what's going on, and I think I know | | 12 | a lot about it. But they can tell you that there's a | | 13 | document in this file that says XYZ, which there's no way | | 14 | that I or, I'd venture say, even you would be able to do | | 15 | that. Because we're not, and we should not be, in the weeds | | 16 | the way they are. And so if I lose these people, there's a | | 17 | really material impact on our work. | | 18 | Q And what you're saying is that you fear losing them to | | 19 | work on matters with paying clients? | | 20 | A Correct. | | 21 | Q And is it -- I assume from what you're saying that it's | | 22 | atypical for Paul Hastings to take on an engagement like | | 23 | this where it's essentially on a contingency basis? | | 24 | A I've never seen -- I've never had a receivable of this | | 25 | size. I've never -- you know, we -- even at the firm, I |

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| | 100 | |----|------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 18 | | 1 | mean, I got probably three or four calls from the -- | | 2 | essentially the CEO of the firm about this receivable. So | | 3 | it's unprecedented in terms of what we -- what we have ever | | 4 | experienced. | | 5 | Q Other than using some portion of the funds to pay fees | | 6 | of counsel, of course, subject to the Court's approval, is | | 7 | there anything else that you would do if you did have access | | 8 | to the \$33 million in escrow funds if there was not a stay? | | 9 | A Yes. As I mentioned in court before during the | | 10 | preliminary injunction trial, the -- we're at a phase in the | | 11 | case where we've identified, although we get surprises all | | 12 | the time. But we've identified the hard assets. So we know | | 13 | there's a apartment. We know there's a yacht, although we | | 14 | now know there's another smaller yacht. And we know there's | | 15 | a house in Greenwich, et cetera, et cetera. | | 16 | But what is unknown precisely is the cash that flowed | | 17 | between these dozens, if not hundreds, of entities, and the | | 18 | tracing of those funds. And that is where our experience as | | 19 | lawyers kind of ends in the sense that we know that there's | | 20 | millions of dollars that flowed through these various | | 21 | accounts, but we need a professional to do asset tracing. | | 22 | And that's where we are in the case in the sense that, | | 23 | yes, there are a lot of skirmishes regarding the hard | | 24 | assets, but those, I venture to say, are progressing nicely. | | 25 | But the -- what -- where we have not made progress yet is on | | | |

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| | Ho Wan Kwok - June 13, 2023 19 | |---|-----------------------------------------------------------------| | 1 | the tracing of the hundreds, if not thousands, of transfers | | 2 | and to determine which account they ended up in. Are these | | 3 | accounts in the U.S.? Are they abroad? If they're abroad, | | 4 | are they in the U.K., or are they in the United Arab | | 5 | Emirates where our ability to recover those funds is maybe | | 6 | more difficult? | | 7 | So there's a whole panoply of issues that a financial | | 8 | expert, which we have not retained to date, would need to |

work on. And, you know, these people will need to get paid. They're not going to do this on a contingency basis. The reason being is that the only way they would do that, they would say, okay, well, I'm first. I'm going to be first as to whatever recovery is obtained.

And of course we're going to say no, because we are owed money. And Mr. Linsey's firm is owed money. And the British Virgin counsel is owed money. And the U.K. counsel is owed money. And, therefore, we don't have an asset to give to these people on a contingency basis, and we don't have cash to pay them on a regular basis unless we have access to the funds.

Q And if -- and I'm not going to ask you to reveal anything that, you know, remains sort of nonpublic information that's part of your ongoing, privileged investigation. But if you were able to hire the types of professionals that you just described and pursue this type

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| | 100 | |----|---------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 20 | | 1 | of investigation, do you, as the trustee, have a ballpark | | 2 | sense of whether you'd likely be successful in obtaining | | 3 | recoveries for the estate? | | 4 | MR. MORIARTY: Objection. Speculation. | | 5 | THE COURT: Overruled. | | 6 | THE WITNESS: So let me start with the stuff -- | | 7 | not the stuff, the assets that have been identified. So we | | 8 | know what they are -- those are, the yacht and all that and | | 9 | the apartment, the house in Greenwich, the \$10-million-plus | | 10 | airplane proceeds. And there's a -- you know, there's new | | 11 | litigation that we have commenced where, you know, there's a | | 12 | lot more money involved. | | 13 | So just on that, there's going to be a lot, you | | 14 | know, more money than the 33- or 37 million that's at stake. | | 15 | But in terms of what has not been identified precisely, it's | | 16 | obvious to me in my professional judgment that, you know, | | 17 | the family -- the debtor and his family had a game plan here | | 18 | which is to not disclose assets. | | 19 | MR. MORIARTY: Objection, Your Honor. It's | | 20 | outside the -- it's not responsive to the question. | | 21 | THE COURT: I'll overrule that part -- I'll strike | | 22 | that part of the answer. And he did -- I'll keep on the | | 23 | record the part of the answer that Trustee Despins talked | | 24 | about the hard assets, and he thinks that there's more than | | 25 | \$33 million out there than other -- than -- other than the | | | |

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 21 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 21 | | 1 | funds in the escrow. And if Attorney Bassett wants to ask | | 2 | another question, he can do so. | | 3 | BY MR. BASSETT: | | 4 | Q Okay. Trustee Despins, I don't need you to elaborate | | 5 | on all the specifics. But in your professional judgment | | 6 | based on the investigation that you've conducted this far, | | 7 | are you optimistic that in addition to the hard assets that | | 8 | you've identified, there are other potential assets that the | | 9 | trustee may be able to recover if it conducts this type of | | 10 | investigation? | | 11 | A Yes, I am. | | 12 | Q In addition to not being able to hire these types of | | 13 | advisors to conduct the type of investigation that you have | | 14 | described, is there anything else that you would do as | | 15 | trustee if given access to the funds in the event there is | | 16 | not a stay? | | 17 | A Well, we would invest the funds or the parts that's not | | 18 | used to pay professional fees, buying treasury bills, for | | 19 | example, something that is guaranteed by the United States. | | 20 | Q Do you know, by the way, what interest, if any, the | | 21 | funds are earning in the escrow account that they're | | 22 | currently in? | | 23 | A Yes. They're earning half a percentage point. So | | 24 | that's like .5 -- .05 percent. I'm sorry. | | 25 | Q And do you have an understanding based on publicly |

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| | 100 Ho Wan Kwok - June 13, 2023 | |----|-----------------------------------------------------------------| | | 22 | | 1 | available information that you researched prior to the | | 2 | hearing what roughly a treasury bill would return? | | 3 | A Yeah. About 5 percent, 5.1 right now for -- it depends | | 4 | on the term. It varies between six months and a year. But | | 5 | it -- it's about in the 5 percent range. | | 6 | Q And at the risk of asking you to do a little math, | | 7 | which I know you've done, do you know if, for example, the | | 8 | trustee on behalf of the estate were to invest \$20 million | | 9 | worth of the escrow funds over the next six months or a | | 10 | year, you know, what that interest income would be? | | 11 | A It would be about -- the delta would be about a million | | 12 | dollars over a period of a year. | | 13 | Q Over a year? Okay. And then to go back to the prior | | 14 | question that I asked, I just want to make sure, is there | | 15 | anything else that you haven't yet said that you would do on | | 16 | behalf of the estate in the absence of a stay? | | 17 | A Yes. Well, there are a number of, I would call, | | 18 | projects that have not been fully started because of a lack | | 19 | of funding. But that would involve recovering assets in | | 20 | certain jurisdictions -- I'm not going to say more than | | 21 | that -- on that -- and also other types of claims with a | | 22 | broader list of targets, just, you know, without elaborating | | 23 | on that. | | 24 | Q And I think this may be the last question that I have | | 25 | for you. It's one I meant to ask earlier. But you talked |

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| | 100 | | | | | | | |----|----------------------------------------------------------------|--|--|--|--|--|--| | | Ho Wan Kwok - June 13, 2023 23 | | | | | | | | 1 | about the types of investigation that you would like to | | | | | | | | 2 | pursue if you were able to retain the right professionals to | | | | | | | | 3 | do that. Is there any reason in your mind why you couldn't | | | | | | | | 4 | just wait? Let's say it takes the appeal three to six | | | | | | | | 5 | months to run its course, conservatively. Is there any | | | | | | | | 6 | reason you couldn't wait until the end of then to conduct | | | | | | | | 7 | this investigation, in your mind? | | | | | | | | 8 | A The problem with that approach is that the information | | | | | | | | 9 | is getting stale. We know that there are accounts that have | | | | | | | | 10 | been opened -- dozens of accounts that have been opened | | | | | | | | 11 | over the last, you know, two years. We know from -- and I'm | | | | | | | | 12 | sorry to mention this but that from the Zeisler disclosure | | | | | | | | 13 | as to whether they're getting paid, that there are new | | | | | | | | 14 | entities all the time that are created with new names and | | | | | | | | 15 | all that. That's not speculation. That's reality. | | | | | | | | 16 | And so that means that in two months from now, the | | | | | | | | 17 | information we have today will be completely stale. So now | | | | | | | | 18 | we have to restart it and at a huge cost to the estate. | | | | | | | | 19 | Q When you say the information could be stale, it's if | | | | | | | | 20 | there's -- you know, if the information that you have would | | | | | | | | 21 | show that money may exist in a particular account today, | | | | | | | | 22 | that money may be in a different account later? That's what | | | | | | | | 23 | you're saying? | | | | | | | | 24 | A Yeah. | | | | | | | | 25 | MR. MORIARTY: Objection. Leading. | | | | | | | | | | | | | | | |

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| | 100 | | | | | | | |----|----------------------------------------------------------------|--|--|--|--|--|--| | | Ho Wan Kwok - June 13, 2023 24 | | | | | | | | 1 | THE COURT: Could you rephrase the question, | | | | | | | | 2 | Attorney Bassett, please? | | | | | | | | 3 | BY MR. BASSETT: | | | | | | | | 4 | Q Yeah. Can you just explain what you mean by the | | | | | | | | 5 | information being stale? | | | | | | | | 6 | A Well, we have that in a number of cases where we have | | | | | | | | 7 | bank accounts and at the end the account was closed. Or the | | | | | | | | 8 | same thing with Golden Spring, you know, now which I had to | | | | | | | | 9 | find documents regarding Golden Spring. They're closed. | | | | | | | | 10 | They don't exist anymore, because it went on to another | | | | | | | | 11 | company. And so it went to another account. | | | | | | | | 12 | So we have to take the last entry in the account at | | | | | | | | 13 | Chase or Citibank and see where it went and then find those | | | | | | | | 14 | bank accounts and then hope that they're still open. And I | | | | | | | | 15 | would say that they don't have a long life span. Usually | | | | | | | | 16 | they don't stay open for more than six months or so. | | | | | | | | 17 | MR. BASSETT: Thank you. I don't have any other | | | | | | | | 18 | questions, Your Honor. | | | | | | | | 19 | THE COURT: Okay. Thank you. | | | | | | | | 20 | Cross-examination, Attorney Moriarty? | | | | | | | | 21 | MR. MORIARTY: Thank you, Your Honor. | | | | | | | | 22 | CROSS-EXAMINATION | | | | | | | | 23 | BY MR. MORIARTY: | | | | | | | | 24 | Q Good afternoon, Trustee Despins. | | | | | | | | 25 | A Good afternoon. | | | | | | | | | | | | | | | |

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| | 100 | | | | | | | | |----|----------------------------------------------------------------|--|--|--|--|--|--|--| | | Ho Wan Kwok - June 13, 2023 25 | | | | | | | | | 1 | Q You became trustee -- the Court approved your | | | | | | | | | 2 | appointment on July 8, 2022? | | | | | | | | | 3 | A That sounds right. | | | | | | | | | 4 | Q And how much money was in the debtor's estate at the | | | | | | | | | 5 | time that your appointment was approved? | | | | | | | | | 6 | A I forget, but de minimis. You know, 10-, 15,000. | | | | | | | | | 7 | Q Okay. So at the time that your appointment was | | | | | | | | | 8 | approved, there was 10- to \$15,000 in the estate, and there | | | | | | | | | 9 | was no guaranty that there was going to be additional assets | | | | | | | | | 10 | coming in, correct? | | | | | | | | | 11 | A No guaranties. That's correct. | | | | | | | | | 12 | Q All right. So there was a risk for you at the time | | | | | | | | | 13 | that you accepted this appointment that the professionals | | | | | | | | | 14 | you engaged could run up very high bills and not get paid, | | | | | | | | | 15 | right? | | | | | | | | | 16 | A Yes. Except that now we found the money. | | | | | | | | | 17 | Q And at the time that you accepted the engagement and | | | | | | | | | 18 | even going forward months into that, there were no assets in | | | | | | | | | 19 | the estate, right? | | | | | | | | | 20 | A I'm sorry. Can you rephrase that? | | | | | | | | | 21 | Q Sure. So let's say August of 2022. At that point in | | | | | | | | | 22 | time, had you on behalf of the debtor's estate recovered any | | | | | | | | | 23 | assets? | | | | | | | | | 24 | A No. | | | | | | | | | 25 | Q September of 2022, had you recovered any assets? | | | | | | | |

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| | 100 | | | | | | | | |----|------|------------------------------------------------------------|----|--|--|--|--|--| | | | Ho Wan Kwok - June 13, 2023 | 26 | | | | | | | 1 | A | Some but not a lot. | | | | | | | | 2 | Q | Okay. What was the date of the first material -- and | | | | | | | | 3 | | by material I'll say more than a million dollars -- asset | | | | | | | | 4 | | that you recovered on behalf of the estate? | | | | | | | | 5 | A | It would be the entry of summary judgment on the Lady | | | | | | | | 6 | May. | And I forget the precise date, you know, but -- | | | | | | | | 7 | Q | We'll agree that it was in late March of 2023? | | | | | | | | 8 | A | Something -- | | | | | | | | 9 | Q | Is that fair? | | | | | | | | 10 | A | Something like that. | | | | | | | | 11 | Q | And the fee application that Paul Hastings filed | | | | | | | | 12 | | recently, do you remember the date through which the | | | | | | | | 13 | | billings are sought? | | | | | | | | 14 | A | Through February. | | | | | | | | 15 | Q | Okay. So February of 2023? | | | | | | | | 16 | A | Correct. | | | | | | | | 17 | Q | So all the way through February 2023, Paul Hastings | | | | | | | | 18 | | incurred more than \$12 million in attorney's fees, right? | | | | | | | | 19 | A | Correct. | | | | | | | | 20 | Q | And there was no guaranty that they were getting those | | | | | | | | 21 | | paid, right? | | | | | | | | 22 | A | That's correct. | | | | | | | | 23 | Q | Now, this -- the \$33 million that's in escrow with U.S. | | | | | | | | 24 | | Bank, and there's another 3- or so that you're holding in | | | | | | | | 25 | | the repair reserve, correct? | | | | | | | | | | | | | | | | |

| | Case 22-50073 | Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 27 of 100 | | | | |----|---------------|------------------------------------------------------------------------------|--|--|--| | | | Ho Wan Kwok - June 13, 2023 27 | | | | | 1 | A | Correct. | | | | | 2 | Q | So let's say 36 million. Is that fair? | | | | | 3 | A | Something around -- it's 35- and change or 36-. Sure. | | | | | 4 | Q | And you as trustee obtained a prejudgment remedy of | | | | | 5 | | attachment against HK USA, correct? | | | | | 6 | A | Correct. | | | | | 7 | Q | And have you attached the funds that are in the escrow | | | | | 8 | account? | | | | | | 9 | A | I'm -- well, I'm not sure we've perfected this | | | | | 10 | | attachment, but certainly that was the intent. | | | | | 11 | Q | Okay. Did you attach the funds that you're holding, | | | | | 12 | | the \$3 million? | | | | | 13 | A | I'm not sure I would -- we would do that given that | | | | | 14 | | we're -- I'm the account holder, but -- | | | | | 15 | Q | Okay. But you're not going to give anybody that money, | | | | | 16 | right? | I mean -- | | | | | 17 | A | No. That's correct. | | | | | 18 | Q | All right. So there's \$36 million. 33 million is in | | | | | 19 | escrow. | You're holding 3 million. The 33 may or may not be | | | | | 20 | | attached. But we can agree that it will not be released at | | | | | 21 | | least subject to the terms of the escrow agreement and court | | | | | 22 | | order, correct? | | | | | 23 | A | Well, I'm not sure the escrow agreement governs, but it | | | | | 24 | | will not be released without the Court directing that it be | | | | | 25 | | released. | | | |

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| | 100 | |----|-----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 28 | | 1 | Q Okay. So would you agree with me that Paul Hastings | | 2 | invoices, the fee application through February of 2023, to | | 3 | the extent that you are successful on appeal of the Court's | | 4 | order granting you summary judgment on the second | | 5 | counterclaim, is secure? | | 6 | A Well, that depends as to the continuing burn rate | | 7 | and -- for us and the other professionals in the case. | | 8 | Q Well, your counsel estimated three to six months | | 9 | conservatively for the appeal to run its course. From July | | 10 | to February -- which you would agree with me is nine months? | | 11 | A Yes. | | 12 | Q I mean, maybe I'm off. | | 13 | A But that was before the district court. But go ahead. | | 14 | Yes. | | 15 | Q Actually, I am off. It's not nine months. It's eight | | 16 | months. So it's two-thirds of a year, right? | | 17 | A Okay. | | 18 | Q And so there's \$12 million -- \$12.6 million in fees. | | 19 | So Paul Hastings has been incurring about \$6.3 million every | | 20 | four months, right? | | 21 | A I'm not sure you can do it like that, because there are | | 22 | peaks and valleys. But I'm not sure what your question is | | 23 | precisely. I can't tell you precisely how much would be | | 24 | owed -- incurred during that time. Because if there's a | | 25 | trial, that's a lot more. It depends on what's happening in |

Ho Wan Kwok - June 13, 2023 29 the case. Q All right. So let's just assume that this appeal takes six months for purposes of my question. Okay? A So this is the appeal before the district court or the Second Circuit? Q Correct. So it's the -- what I'm asking you now about is the appeal of the order granting summary judgment on the second counterclaim -- A Uh-huh. Q -- which found that HK is the debtor's alter ego. That's what I'm asking you about. Okay? That appeal. A Correct. Yeah. Q So if that appeal, which has already been filed, takes six months, presumably it's done in December of 2023. Okay? You agree with me from June to December is six months? A Yeah. I agree with that. Yes. Q Okay. Thank you. So if you win that appeal, there's \$33 million, right? A Well, you're assuming that you're not going to appeal to the Second Circuit? Q Even if we do, if you win that appeal, there's \$33 million, correct? A I'm not sure that's correct. Meaning if you appeal to the Second Circuit, that could be another year. And then God knows -- another year plus. Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 29 of

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| | 100 | |----|-----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 30 | | 1 | Q So do you believe -- and we have \$36 million in total, | | 2 | 33- plus the 3- you're holding. Okay? Do you believe that | | 3 | even if we appealed, we being HK, so HKI appeals, it loses | | 4 | at the district court, it appeals to the Second Circuit, the | | 5 | appeals take 18 months -- you currently have \$12.6 million | | 6 | in fees. Okay? Do you believe that within the next 18 | | 7 | months Paul Hastings will incur another \$25 million in fees? | | 8 | A No. But I don't agree with your premise that it's | | 9 | going to be that short. The Second Circuit -- I know of | | 10 | cases that took a year-and-a-half to have a decision. | | 11 | Q Okay. So you do agree with me that there is a pot of | | 12 | money that Paul Hastings could look to, to get its fees at | | 13 | some point in time, if it is successful on appeal, correct? | | 14 | A Again, it depends on the length of the appeal process. | | 15 | Q Well, it doesn't depend on the length of the appeal | | 16 | process. It just depends on you, the trustee, being | | 17 | successful in the appeal, correct? | | 18 | A No, no. But -- | | 19 | Q I'm not asking you about the timing, Trustee Despins. | | 20 | I'm asking you -- there's \$36 million that could be used to | | 21 | pay professional fees, assuming you win on appeal, right? | | 22 | A Yes. But that doesn't mean I don't have the exposure | | 23 | in the meantime, because the appeal process could last | | 24 | years. | | 25 | Q So let's talk about the other -- you mentioned hard |

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 31 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 31 | | 1 | assets. So we have the Lady May, the Lady May II, correct? | | 2 | And you're in the process of seeking bankruptcy court | | 3 | approval to sell those assets, right? | | 4 | A Correct. | | 5 | Q And you have The Sherry-Netherland apartment. And are | | 6 | you seeking a buyer for that at this point in time? | | 7 | A Yes, we are. | | 8 | Q And do you have an estimate as to how much you think | | 9 | you might be able to get for that? | | 10 | A That's unclear. It depends on the insurance coverage | | 11 | issue, meaning whether we prevail on that issue, it would be | | 12 | a major differential in terms of recovery for that asset. | | 13 | Q Okay. So the Lady May, the -- I believe the offer in | | 14 | the motion to -- per the sale was \$24 million. Does that | | 15 | sound right? | | 16 | A That's correct. | | 17 | Q Okay. And so do you have a ballpark as to what you | | 18 | think you might be able to get for the apartment? | | 19 | A As I said, it depends on the insurance coverage, | | 20 | whether you sell it as is. Because there's no insurance | | 21 | coverage, or you can sell it to someone saying there is | | 22 | insurance to rebuild it to the way it was or to the standard | | 23 | that it was. The price is -- the differential is massive. | | 24 | Q Okay. So would it ever be zero, in your mind? | | 25 | A That's a complex question, because -- no, you would |

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 32 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 32 | | 1 | never sell it for zero. The question is, do you pocket more | | 2 | than zero. That depends on insurance coverage. | | 3 | Q What are the other hard assets that you're aware of? | | 4 | A Well, did we mention the Greenwich house? | | 5 | Q Not yet. | | 6 | A Okay. So there would be that. There would be the | | 7 | claims against the daughter -- the debtor's daughter for the | | 8 | airplane proceeds which are north of \$10 million. | | 9 | Q Okay. And the -- do you have an idea as to how much | | 10 | you believe the Greenwich house is worth? | | 11 | MR. BASSETT: Just I'm going to lodge an objection | | 12 | only because to the extent the trustee is going to be | | 13 | selling these assets, I don't know in a non-confidential | | 14 | setting if we want the trustee telling the world what he | | 15 | thinks they're worth. | | 16 | THE COURT: First of all, Attorney Bassett, I | | 17 | couldn't -- could barely hear you. | | 18 | MR. BASSETT: I'm sorry. | | 19 | THE COURT: But I did hear you, so that -- I did | | 20 | hear you. So just be -- | | 21 | MR. BASSETT: I'm sorry. | | 22 | THE COURT: Just try to make sure that we can hear | | 23 | you, number one. Number two, I'm not sure how this is -- I | | 24 | think this is beyond the scope of direct at this point. | | 25 | We're not -- we didn't have a direct examination about what |

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| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 33 | | 1 | the other assets would be worth. The direct examination was | | 2 | about what would the harm be that would -- what harm would | | 3 | be suffered by the trustee and the estate if a stay is | | 4 | issued. So I think you got to wrap this up, Attorney | | 5 | Moriarty. | | 6 | MR. MORIARTY: So, Your Honor, I agree with you. | | 7 | That was the line of questioning. And what I am trying to | | 8 | elicit from the witness is there are a number of additional | | 9 | assets that he's identified that have value. So there's -- | | 10 | THE COURT: But that's not what he talked about. | | 11 | He talked about on direct examination the harm that would be | | 12 | suffered was that he -- that his firm would not be paid for | | 13 | the services that they had rendered. This is what he | | 14 | testified about. And that it would impact the ability to | | 15 | retain associates, because his firm is a for-profit-making | | 16 | business, like everyone's firm in this courtroom is. And | | 17 | that he can't continue to be in control of the associates in | | 18 | a case where attorneys are not getting paid. And that the | | 19 | associates know every aspect of the case. And Paul Hastings | | 20 | does not take on cases on a contingency basis. | | 21 | And when Attorney Bassett asked him if there was | | 22 | anything else that he would do with the money other than pay | | 23 | the administrative expenses of the estate and possibly | | 24 | retain a financial expert to trace the funds, then that -- | | 25 | Trustee Despins talked about that there were other assets -- |

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 34 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 34 | | 1 | he thinks there's other assets out there and what would he | | 2 | do with the funds if he had them after the payment of | | 3 | administrative expenses. And he said he would invest them. | | 4 | And he would invest them in treasury bills. | | 5 | Because as of right now, they incur 5 percent interest. And | | 6 | the -- and the funds in the escrow account right now are | | 7 | incurring -- are about .5 (sic) percent interest. | | 8 | And that's what he talked about. He talked about | | 9 | going to other jurisdictions, maybe getting other assets. | | 10 | He didn't talk about the value of any assets. He didn't | | 11 | talk about what it is that he thinks that the -- that those | | 12 | assets could be sold for. He talked about what he was doing | | 13 | with regard to the investigation of the estate and how he | | 14 | needs funds to do that. | | 15 | So I do think you're -- I'll give you one or two | | 16 | more questions, but then I think you're getting beyond the | | 17 | scope of direct examination. | | 18 | MR. MORIARTY: All right. And, Your Honor, I | | 19 | heard Attorney Despins' testimony. I give you credit for a | | 20 | good summary of what he testified to. But the theme of his | | 21 | testimony was we need this money, because it's all we have. | | 22 | And my questions go to the fact that there are other | | 23 | potential assets. He's in the process of selling those. | | 24 | They're going to create additional cash. So this is not the | | 25 | only pot of money. |

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Ho Wan Kwok - June 13, 2023 35 THE COURT: How is that relevant to your stay pending appeal? The questions were all about what's the harm. He told you what his harm is. You may disagree with his harm. But that -- how is it relevant to your getting a stay pending appeal? MR. MORIARTY: If there's other assets that can be used, Your Honor, then there's no harm. His harm is I don't have the ability to pay -- THE COURT: Well, you -- MR. MORIARTY: -- which -- THE COURT: The other assets that you're talking about, including the Lady May, you've already -- that's on appeal too, isn't it? MR. MORIARTY: It is on appeal. THE COURT: Yeah. So then your argument doesn't really make sense, because then you're going to make the same argument when you come to the Lady May. MR. MORIARTY: Well, Your Honor, I don't know that I could make the same argument continuously, because at some point in time it becomes self-defeating. But for now, it's not. But I will move on. Okay. BY MR. MORIARTY: Q So, Attorney Despins, the professionals that you haven't hired yet, those would be, for example, accountants, right?

| | Case 22-50073 | Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 36 of 100 | |----|---------------|------------------------------------------------------------------------------| | | | Ho Wan Kwok - June 13, 2023 36 | | 1 | A | Yeah. AlixPartners is something like that. | | 2 | Q | Okay. So has any professional that you have inquired | | 3 | | about to engage for the estate refused an engagement because | | 4 | | there's no cash immediately available to pay them? | | 5 | A | Yes. | | 6 | Q | Okay. Who is that? | | 7 | A | AlixPartners. | | 8 | Q | Okay. Anybody else? | | 9 | A | No. I have not had the discussion with anybody else. | | 10 | Q | So was Alix -- what were you -- well, withdraw that. | | 11 | | Is AlixPartners the only professional firm that you've | | 12 | | spoken to about engagement for asset tracing? | | 13 | A | To date, yes. | | 14 | Q | Okay. So no other firm has -- no other firm related to | | 15 | | asset tracing or accounting-type work has refused to perform | | 16 | | services because there's no cash immediately available in | | 17 | | the estate? | | 18 | A | Well, I have not talked to any other firms, so -- | | 19 | Q | Okay. And you testified that information gets stale. | | 20 | | Do you recall that testimony? | | 21 | A | Correct. | | 22 | Q | Okay. But you've only spoken to one firm about taking | | 23 | | on the type of engagement where they would be tracing funds. | | 24 | | Is that correct? | | 25 | A | Yes. |

| | Case 22-50073 Doc 1929 | Filed 06/22/23 Entered 06/22/23 16:11:59 Page 37 of 100 | | |----|---------------------------|------------------------------------------------------------------|----| | | | Ho Wan Kwok - June 13, 2023 | 37 | | 1 | Q Okay. | And when you said the information gets stale, | | | 2 | | you were referring to the fact that you need additional | | | 3 | | professionals in order to avoid having that information get | | | 4 | stale, correct? | | | | 5 | A | I was referring to I need money to hire | | | 6 | professionals -- | | | | 7 | Q Okay. | | | | 8 | A | -- to do that. | | | 9 | Q Okay. | Mr. Linsey is your Connecticut counsel in this | | | 10 | case? | | | | 11 | A Yes, he is. | | | | 12 | Q Okay. | And has his firm refused to perform any tasks | | | 13 | | that you've asked them to perform because they haven't been | | | 14 | paid yet? | | | | 15 | A No. | | | | 16 | Q Okay. | Have you asked Mr. Linsey's firm to perform any | | | 17 | | additional services for the estate because your firm is | | | 18 | | apparently making a decision that associates should be doing | | | 19 | | other work for paying clients? | | | 20 | A | No, I have not had the discussion with Mr. Linsey about | | | 21 | that. | | | | 22 | Q | And the associates at Paul Hastings that have been | | | 23 | | working on this case, the junior mid-level associates who | | | 24 | | may be pulled off of it, does Paul Hastings, the firm, | | | 25 | | understand that you have obtained summary judgment on the | |

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| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 38 | | 1 | Lady May account and also on the escrow account and that | | 2 | between the two of those it's -- if you're successful in | | 3 | selling the Lady May and you're successful in getting these | | 4 | funds, \$60 million to the estate? | | 5 | A Well, they are aware of the progress of the case. | | 6 | Q Okay. And they're aware that there's potentially \$60 | | 7 | million that could be coming into the estate at some point | | 8 | in time this year? | | 9 | A You mean if you're not getting a stay pending appeal | | 10 | or -- I'm not sure I -- meaning -- the fact that it comes | | 11 | into the estate doesn't help us if we can't get paid. | | 12 | That's the issue. | | 13 | Q All right. So you haven't -- have you had discussions | | 14 | with anybody at Paul Hastings, a decision maker, the | | 15 | chairman of the firm where you said I understand why you | | 16 | want to move my associates off of this case -- | | 17 | A By the way, I didn't say he -- let's be careful. I | | 18 | didn't say that he said that he was moving associates. I | | 19 | said what's going to happen if we don't get paid is | | 20 | something along those lines, but -- | | 21 | Q Okay. And when is that going to happen? | | 22 | A Well, it's going to happen -- you know, the target was | | 23 | to get paid by the end of June. And if it doesn't happen, I | | 24 | don't know what's -- you know, what's going to happen. But | | 25 | I know for a fact that -- because I'm in management of my |

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| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 39 | | 1 | department that we -- I cannot argue with other people that | | 2 | need associates that they should not get them when I have a | | 3 | case on which they are where we're not getting paid. It's a | | 4 | losing argument for me to make that point. | | 5 | Q Okay. But sitting here right now, you cannot put a | | 6 | date as to when or even if these associates will be moved if | | 7 | Paul Hastings doesn't get paid by the end of June, correct? | | 8 | A It's a matter of weeks. | | 9 | MR. MORIARTY: Okay. I have nothing further. | | 10 | THE COURT: Thank you. | | 11 | Any redirect? | | 12 | MR. BASSETT: No, Your Honor. | | 13 | THE COURT: Okay. Thank you, Trustee Despins. | | 14 | You can step down. | | 15 | Any further evidence, Mr. Bassett? | | 16 | MR. BASSETT: No, Your Honor. Thank you. | | 17 | THE COURT: Okay. Thank you. So then | | 18 | Mr. Moriarty is going to argue the motion first, and then | | 19 | you will respond. | | 20 | MR. BASSETT: Yes. | | 21 | THE COURT: Okay. Thank you. | | 22 | Go ahead, Attorney Moriarty. | | 23 | MR. MORIARTY: Thank you, Your Honor. So as Your | | 24 | Honor is aware, this is a motion for stay filed by HK | | 25 | International Funds Investments (USA) Limited, LLC and | | | |

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 40 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 40 | | 1 | Ms. Guo to stay enforcement of the judgment that the Court | | 2 | entered on the second count of the trustee's counterclaims. | | 3 | THE COURT: May I just stop you for one second? | | 4 | And I don't mean to interrupt. When you gave your | | 5 | appearance, you only gave your appearance for HK | | 6 | International. Are you also appearing for Mei Guo in | | 7 | connection with this motion? I just want to be clear for | | 8 | the record. | | 9 | MR. MORIARTY: Yes, Your Honor. And if I did not | | 10 | do that, that is obviously my fault -- | | 11 | THE COURT: That's fine. | | 12 | MR. MORIARTY: -- and I apologize for that. | | 13 | THE COURT: And I could have misheard you. But I | | 14 | just want to be clear for the record. Okay? | | 15 | MR. MORIARTY: I appreciate that. | | 16 | THE COURT: Thank you. | | 17 | MR. MORIARTY: Thank you. And so, to be really | | 18 | clear for the record, I announce my appearance in two | | 19 | adversary proceedings. Ms. Guo I do not believe is a | | 20 | defendant in the U.S. Bank adversary proceeding. | | 21 | THE COURT: Okay. All right. Thank you. | | 22 | MR. MORIARTY: Yes. So the Court, as Your Honor's | | 23 | aware, entered a judgment on the second counterclaim finding | | 24 | that HK USA is the alter ego of the debtor, and the trustee | | 25 | is entitled to the property of HK USA. And so what my |

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 41 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 41 | | 1 | clients are seeking is a stay pending appeal. The appeal | | 2 | has already been filed. My clients have filed their list of | | 3 | the record, that's not the proper term, but as well as their | | 4 | issues on appeal. | | 5 | I believe the trustee's filing is due in about ten | | 6 | days or so, give or take. And then briefing will commence | | 7 | within 30 days from that date. So this appeal will probably | | 8 | be fully briefed sometime -- assuming no extensions, | | 9 | sometime in mid to late August. | | 10 | So as Your Honor is aware from having heard in | | 11 | this case and multiple other cases motions for stay pending | | 12 | appeal, there are four factors that courts look to in the | | 13 | Second Circuit in determining whether a stay should be | | 14 | granted pending appeal. The first factor is the probability | | 15 | or possibility of success on the merits or serious legal | | 16 | questions going to the merits. And so in this particular | | 17 | case, the crux of the decision is the debtor is the owner of | | 18 | the Lady May and the Lady May II. And I understand. I read | | 19 | the decision again this morning. There are other facts in | | 20 | there. But everything flows from the finding on the first | | 21 | counterclaim that the debtor is the owner of the Lady May | | 22 | and the Lady May II. Because if he wasn't, then none of the | | 23 | other factors would be indicia of alter ego as it relates to | | 24 | the debtor. They might be indicia of alter ego, but the | | 25 | debtor would have no connection to HK USA. |

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Ho Wan Kwok - June 13, 2023 42 So if we are successful, and by we I mean my clients, in convincing the district court that res judicata should not have applied, because that was the sole purpose -- or the sole basis for granting summary judgment on Count 1, res judicata as it related to Justice Ostrager's decision in New York, if res judicata was not applicable, then summary judgment should not have entered on Count 2, because there would be, at least at a minimum, issues of material fact. The second factor is irreparable injury, and it's the balances of the hardship tipping in favor of the movement or injury to the movement if the stay is denied. So in this case, we have, as you heard from Trustee Despins' testimony, \$36 million. 33- in escrow. He's holding 3-. And we know from Trustee Despins' testimony that as soon as the trustee has access to that money, it is going to be spent, \$12.6 million, assuming the Court grants the fee application in total. Maybe it will be less. But \$12.6 million is what Paul Hastings has asked for. I believe Mr. Linsey's firm has asked for \$550,000. So that's already north of 13 million. There's other professionals that, to the extent they haven't, will be submitting fee applications. So immediately upon that money being released to the trustee, without a stay, \$13 million, plus or minus, is

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| 100 | | | | | | | | |-----|----------------------------------------------------------------|--|--|--|--|--|--| | | Ho Wan Kwok - June 13, 2023 43 | | | | | | | | 1 | going to be spent. If HK USA is successful on appeal, that | | | | | | | | 2 | money was never property of the estate, and it should not | | | | | | | | 3 | have been spent to pay administrative fees. So HK USA is | | | | | | | | 4 | then in the position of having to come back and seek | | | | | | | | 5 | disgorgement. | | | | | | | | 6 | Now, maybe Trustee Despins' law firm immediately | | | | | | | | 7 | pays it back. Maybe they don't. Maybe Mr. Linsey's firm | | | | | | | | 8 | does. Maybe they don't. Other professionals, there could | | | | | | | | 9 | be additional litigation, additional motion practice. But | | | | | | | | 10 | HK USA is going to be in the position of having successfully | | | | | | | | 11 | appealed a judgment and now being able to recover, at least | | | | | | | | 12 | initially, maybe two-thirds of that money, maybe a little | | | | | | | | 13 | bit less. | | | | | | | | 14 | So there will be harm to HK. If everybody agrees | | | | | | | | | | | | | | | |

it can be disgorged, then maybe that harm's not irreparable. But if we start to deal with creditor claims, if we have other professionals who are coming in and they're doing one-off projects -- Trustee Despins has retained counsel down in the BVI. So they file a fee application. They get paid. Does HK then have to go to the BVI and chase them?

So there's a lot of factors that go into this. And there will be harm, irreparable harm, to HK, because it is going to have to chase its own money if it's successful on appeal. If it's not successful on appeal, then no harm, no foul. But that brings me to --

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Ho Wan Kwok - June 13, 2023 44 THE COURT: Do you have a case that says that irreparable harm exists when the remedy is money, when there's -- MR. MORIARTY: I do not, Your Honor. THE COURT: -- when there's a remedy at law? MR. MORIARTY: No, because that is not the law. And I agree with Your Honor that that's not the law, that if you can -- that if money damages can make you whole, then you haven't be -- been irreparably harmed. I will note for the Court that the trustee cited in his opposition yesterday, and this is at page 12, In Re Tribune Company, which is 477 B.R. 465. It's a Bankruptcy District of Delaware 2012. THE COURT: Yep. MR. MORIARTY: And in that case, the Court discusses the fact that other courts have held, and it wasn't the holding in this case, because it wasn't necessarily at issue, but other courts have held that if a stay is not granted, and as a result additional litigation is likely to occur if the appellant is successful, that could be irreparable harm. So in this case, if HK is successful and HK has to come back, and it has to file lawsuits, it has to engage in motion practice to get its money back which the estate should have never had in the first place, that would be

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Ho Wan Kwok - June 13, 2023 45 irreparable harm. The third point is substantial injury to the party opposing a stay. We just heard Attorney Despins' testimony as far as retention of other professionals. There was a lot of argument in the opposition brief that Attorney Despins was unable to hire other professionals, because there's no money in the estate. He told us that there was one firm that refused an engagement. And he hasn't sought to retain anybody else. And to the extent that evidence is really getting stale and these professionals are that important, he should be talking to others. Nobody else has said, no, there's \$33 million in an escrow account that the Court has held is property of the estate. There's the Lady May that the Court has held is property of the estate. There's tens of millions of dollars potentially coming into this estate. I find it hard to believe that the trustee cannot find a professional firm to work with him in this bankruptcy case. And we know from his testimony that he's only spoken to one. As far as the associates at Paul Hastings, you

know, maybe they're going to be taken off the case. Maybe they're not. We don't have a date. We don't know whether there's other associates that can come in and work. You know, I don't doubt Attorney Despins'

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| | 100 | | | | | | |----|----------------------------------------------------------------|--|--|--|--|--| | | Ho Wan Kwok - June 13, 2023 46 | | | | | | | 1 | testimony that Paul Hastings would like to be able to | | | | | | | 2 | recover the money that its associates are billing, because | | | | | | | 3 | it's paying its associates. But he didn't tell us this is a | | | | | | | 4 | drop-dead date. He even said towards the end of his | | | | | | | 5 | testimony I don't know. And if the Court goes back and | | | | | | | 6 | reads the transcript, you will see that. | | | | | | | 7 | Mr. Linsey's firm has not refused to do any work. | | | | | | | 8 | Trustee Despins has not asked Attorney Linsey's firm to take | | | | | | | 9 | on any additional responsibilities, even though we know from | | | | | | | 10 | the fee application that Attorney Linsey's fees firms (sic) | | | | | | | 11 | are 20 times less than the trustee's fees. | | | | | | | 12 | The trustee testified on direct that he's | | | | | | | 13 | optimistic about recovery of other assets. Certainly he | | | | | | | 14 | could sell that to professionals that he's looking to hire. | | | | | | | 15 | As far as the amount of interest on the money that | | | | | | | 16 | the trustee could make if it was invested in T-Bills as | | | | | | | 17 | opposed to with U.S. Bank, I would have to ask my client, | | | | | | | 18 | but I would venture to guess that my clients would not be | | | | | | | 19 | opposed to that money being put into a product that was | | | | | | | 20 | riskless. Because we're not defaulting on the debt anymore | | | | | | | 21 | and was earning 5 percent interest. | | | | | | | 22 | So we could address that issue by agreement. I am | | | | | | | 23 | confident of that. The last factor, Your Honor, is -- | | | | | | | 24 | THE COURT: Well, let me stop you right there on | | | | | | | 25 | that. | | | | | | | | | | | | | |

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Ho Wan Kwok - June 13, 2023 47 MR. MORIARTY: Sure. THE COURT: So you're saying your clients would agree for the money to come out of escrow and be put in some form of an investment that would earn 5 percent? MR. MORIARTY: I'm saying that my -- I'm saying that I would recommend to my clients -- THE COURT: Okay. MR. MORIARTY: -- that subject to -- THE COURT: Have you done that yet? MR. MORIARTY: I haven't, because I haven't had a chance to have the discussion. I'm not going to tell Your Honor what the discussions were, but there were discussions between -- THE COURT: I'm not asking for you to tell me what the -- MR. MORIARTY: -- my office and the trustee this morning. THE COURT: -- the discussions were. MR. MORIARTY: So -- THE COURT: I'm asking, have you asked your client. You just made a representation on the record during your oral argument that you think you could work out an arrangement, that's what you just said, that the \$36 million or 33 -- I don't know if you put the 3 in, whatever -- your clients would agree, that's what you just said, to put that

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Ho Wan Kwok - June 13, 2023 48 into some form of a product that would earn 5 percent. Which you've already said you don't want the money out of escrow. Now you're saying you will do that with an agreement. So I need to understand. What's your position? MR. MORIARTY: Okay. And I will explain it, Your Honor. And if I haven't articulated it well, I apologize to the Court. THE COURT: It's okay. MR. MORIARTY: I believe I started by saying, and if I didn't, I should have said, that I haven't had this discussion with my client yet, but I would recommend to my client that subject to the terms of the escrow agreement that the money could be put into a higher-interest-rate-earning product that is safe, which is what the -- THE COURT: Well, I don't understand that, subject to the terms of the escrow agreement. It's either going to be in escrow, or it's not. MR. MORIARTY: But it could be in escrow earning a higher rate of return, or it could be with the Court. It could be with the trustee. But it could still be subject to the terms of the escrow agreement. In other words, the money is sitting somewhere other than with the escrow agent, but the terms of the escrow agreement as to when and -- when and if it comes out

Ho Wan Kwok - June 13, 2023 49 would still be applicable. THE COURT: Well, that doesn't -- MR. MORIARTY: That's what I'm saying. THE COURT: I don't think that works. So you can have that conversation, but I don't see how that could possibly work. MR. MORIARTY: Okay. So the public interest is the last factor. And in this particular case, what we're talking about is do we have a stay pending appeal. The appeal is done in hopefully six months, give or take. We have an order. And the money gets disbursed, either back to HK or to the trustee. Or do we do this in a piecemeal fashion where the trustee gets access to the funds, the trustee then spends them down. HK is successful on appeal, and HK then has to come back to the Court, seek disgorgement of fees that were paid to the professionals of the trustee. So the public interest here is in finality and efficiency. Enter a stay. Let's let the appeal play out. If the trustee is successful, the trustee gets paid. If the trustee is not successful, that was never money of the estate in the first instance to pay the trustee. If the Court has any questions, I'm happy to answer them. THE COURT: I don't have any at the moment. Thank you. Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 49 of

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| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 50 | | 1 | MR. MORIARTY: Thank you. | | 2 | THE COURT: Attorney Bassett? | | 3 | MR. BASSETT: Yes, Your Honor. Again, Your Honor, | | 4 | for the record, Nick Bassett from Paul Hastings on behalf of | | 5 | the Chapter 11 Trustee. | | 6 | Your Honor, I think it is critically important | | 7 | that we reorient and start from the baseline proposition | | 8 | that a stay pending appeal from this Court is extraordinary | | 9 | relief for which the appellant seeking the stay bears a | | 10 | heavy burden. I think the case law is clear in that regard. | | 11 | We cite it in our objection. | | 12 | What this means is that the general rule for | | 13 | purposes of establishing finality and certainty in | | 14 | bankruptcy cases is that an order of the Bankruptcy Court is | | 15 | immediately enforceable, and the Court should only deviate | | 16 | from that rule in extraordinary circumstances. | | 17 | Now, I would submit that in this case the stay | | 18 | that the appellants are seeking of the May 18th summary | | 19 | judgment order is especially extraordinary given all the | | 20 | facts and circumstances of this bankruptcy. We talk about | | 21 | this a lot when we're before the Court, and we talk about | | 22 | the history of these cases, where we started, how we got | | 23 | here. | | 24 | But, Your Honor, it really, in my view, cannot be | | 25 | emphasized enough that this is a case involving a debtor who |

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| | Ho Wan Kwok - June 13, 2023 51 | |----|--------------------------------------------------------------| | 1 | filed Chapter 11 before this Court voluntarily, I think a | | 2 | year and a half ago or so now, claiming, as we've been able | | 3 | to demonstrate falsely, that he has zero dollars to his name | | 4 | and essentially no assets or money to put on his schedules. | | 5 | Instead, what you have is the debtor, with the assistance of | | 6 | his associates and his family members such as the HK | | 7 | parties, who have been withholding property that is | | 8 | rightfully property of the estate and always should have | | 9 | been from the moment this case was commenced. | | 10 | So what does that mean? It means effectively that |

the HK parties and the debtor on whose behest they're acting have effectively had a stay pending appeal for the duration of this case, holding its professionals, Paul Hastings and others, hostage, because there are allegedly no assets at all in this estate. Now, despite all the odds and despite having to fight against obstruction in the investigation that we've experienced over and over again, the trustee has made progress. And that progress became tangible when the Court entered its orders on summary judgment in the HK USA adversary proceeding as to the Lady May and as to the escrow funds.

So to allow at this stage, a year and a half into this case, after this case has never had a -- virtually a dollar of funding, for the HK parties to say, you know what, we want a further stay pending appeal, we want to further

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| | Ho Wan Kwok - June 13, 2023 | 52 | |---|--------------------------------------------------------------|----| | 1 | deprive this estate from having any funding whatsoever to do | | | 2 | the types of things that Mr. Despins testified about, I | | | 3 | think, calls for the Court to apply extraordinarily high | | | 4 | scrutiny to the request that's being sought and to make | | | 5 | absolutely sure that before any stay is granted the | | | 6 | appellants have satisfied every element of their burden. | |

And I want to be clear as to the factors that Mr. Moriarty went through. The appellants bear the burden on each one of those factors. I think we often talk about it and kind of reorient ourselves where it may seem like the burden all of a sudden is on the trustee. Yes, we chose to put the trustee on the witness stand to talk about the harm to the estate of a stay pending appeal, because we think that's important and because we think it's important for the Court to hear from the trustee.

But make no mistake. It's still the appellant's burden even as to that element to prove that this estate and the other non-appellant parties will not be harmed by a stay pending appeal. And I submit they have not made their -- they have not met their burden on that factor, and they have not met their burden on any of the other factors.

Now, to start with the likelihood of success on the merits prong. I won't belabor this point. I think the Court obviously knows its decision well. I can't remember exactly when we had the hearing on the second motion for

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| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 53 | | 1 | summary judgment and how long it took for the Court to issue | | 2 | its decision, but it was certainly several weeks. And the | | 3 | result on May 18th was, what I would submit, a very | | 4 | thoroughly reasoned decision supported by the law and an | | 5 | abundant factual record based on undisputed facts, many of | | 6 | which have been admitted by the HK parties. | | 7 | And Mr. Moriarty in his brief remarks on | | 8 | likelihood of success focused on this argument, which is | | 9 | also the focus of their papers, that, you know, this | | 10 | decision is likely to be overturned on appeal, because it | | 11 | all rests on collateral estoppel. Just two quick responses | | 12 | to that. | | 13 | First, that's a mischaracterization of Your | | 14 | Honor's decision. I went back and pulled it as Mr. Moriarty | | 15 | was talking. And on page 21 of the May 18th decision, the | | 16 | Court starts a lengthy, detailed paragraph with the line: | | 17 | "Beyond the application of collateral estoppel, the record | | 18 | of this case supports the conclusion that the individual | | 19 | debtor beneficially owns and controls the Lady May and the | | 20 | Lady May II." And goes on and talks about testimony that | | 21 | the daughter has given, other admitted facts about HK USA | | 22 | and its relationship to the debtor. | | 23 | There is a robust factual record beyond collateral | | 24 | estoppel. But even as to the issue of collateral estoppel, | | 25 | it was more than appropriate for the Court to rely on that |

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| | 100 Ho Wan Kwok - June 13, 2023 54 | |----|--------------------------------------------------------------| | 1 | decision, because it's a critically important decision in | | 2 | that it established that the Lady May is, in fact, owned and | | 3 | controlled by the debtor, which of course is central to the | | 4 | question of the alter ego relationship when HK USA | | 5 | admittedly does nothing else other than own the Lady May. | | 6 | And that decision itself, which is not subject, I | | 7 | would note, to a parallel motion for stay pending appeal, | | 8 | was also itself thoroughly reasoned based on applicable law | | 9 | on collateral estoppel, based on the fact that Mei Guo | | 10 | participated extensively in the proceedings before Justice | | 11 | Ostrager. | | 12 | So I think for all of those reasons, because both | | 13 | decisions were thoroughly reasoned, because they're both | | 14 | consistent with the law, because the factual record is | | 15 | undisputed about the shell company nature of HK USA, the | | 16 | inextricable ties between HK USA and everything it has ever | | 17 | done, which is own the yachts, and Mr. Kwok, I think it is | | 18 | exceedingly unlikely for the Court to be reversed on appeal. | | 19 | And, again, the burden rests on the appellants to prove | | 20 | otherwise. | | 21 | As to the harm factor, Your Honor, and I'll start | | 22 | with the harm to the HK parties, first of all, they need to | | 23 | demonstrate to the Court, and the case law is clear on this | | 24 | if you look at the cases we cite on page 10 of our |

Fiore Reporting and Transcription Service, Inc.

objection, paragraph 21, they need to show that the harm

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| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 55 | | 1 | that they would suffer absent a stay is irreparable and | | 2 | actual and imminent, not merely speculative. You know, the | | 3 | mere prospect, as the case law says, of monetary loss is not | | 4 | sufficient for a stay pending appeal. So I think it's | | 5 | important to put their arguments in the context of the | | 6 | standard that applies and the burden that they need to meet. | | 7 | And before I get to why I think their arguments | | 8 | about not being able to recover the \$33 million is | | 9 | speculative, I want to point something out at the outset | | 10 | which we mentioned in our papers, because I think it's | | 11 | important. | | 12 | And this is that the HK parties -- and I'll direct | | 13 | the Court to a letter that Attorney Vartan, other counsel | | 14 | for the HK parties, had sent to the trustee and which has | | 15 | been previously submitted to the Court at Docket 1613. I | | 16 | believe it's Exhibit A to that filing. | | 17 | The HK parties have taken the position, as made | | 18 | clear in that letter, that the escrow funds are not an asset | | 19 | of HK USA but a liability. The letter states that point | | 20 | blank. The escrow funds are a liability of HK USA, not an | | 21 | asset. | | 22 | And, of course, the background for that is that | | 23 | the HK parties had taken the position that they obtained a | | 24 | loan in the amount of the escrow funds from Uncle William | | 25 | and the Himalaya entity that he allegedly controls. And so, | | | |

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 56 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 56 | | 1 | Your Honor, if it's really a liability, the party who's | | 2 | going to be harmed by any dissipation of the \$33 million | | 3 | that may occur, if anyone, is Uncle William. It's not HK | | 4 | USA. | | 5 | As to the arguments that the HK parties will be | | 6 | harmed by the absence of a stay pending appeal, because the | | 7 | \$33 million and the repairs are maybe spent on compensating | | 8 | counsel and otherwise, again, that is speculative at best. | | 9 | And the requirement is not merely that they allege the | | 10 | possibility of harm. They need to show that it's actual and | | 11 | imminent and not speculative. | | 12 | The reason it's speculative is because you heard | | 13 | the trustee testify about all the other assets that he is | | 14 | presently investigating. | | 15 | In fact, Attorney Moriarty was trying to emphasize | | 16 | that for purposes of making another point in his | | 17 | cross-examination of Mr. Despins. And to the extent that, | | 18 | as the trustee, you know, hopes will be the case, he in the | | 19 | future is able to bring additional assets into these -- this | | 20 | estate, and the appeal finally runs its course, however long | | 21 | it might take -- it could be six months. It could be 18 | | 22 | months. It could be a very long time. But at that point, | | 23 | we don't know if there won't be assets in the estate to | | 24 | repay the \$33 million if that's the decision that the | | 25 | appellate court reaches. And that's why their argument to |

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 57 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 57 | | 1 | the contrary is entirely speculative and not sufficient to | | 2 | satisfy their burden. | | 3 | The next factor, Your Honor, of course is the harm | | 4 | and the injury to other parties in the event that the stay | | 5 | is granted. On that, I will refer the Court back to the | | 6 | testimony of the trustee. I won't repeat everything that he | | 7 | said. But I think the testimony is un-rebutted. And also, | | 8 | frankly, it's pretty obvious that any law firm that has been | | 9 | doing this work for as long as Paul Hastings has without | | 10 | being paid, there are eventually going to be issues with | | 11 | proceeding down that path indefinitely. | | 12 | And the trustee made clear he's concerned about | | 13 | losing talented individuals. And it's not about, you know, | | 14 | if an associate is pulled off onto another case, you know, | | 15 | can we replace that individual with something else. We have | | 16 | people on the team whose institutional knowledge cannot be | | 17 | replaced, people who are absolutely indispensable. And it's | | 18 | critical that we continue to have them as part of the team. | | 19 | And that's at serious jeopardy the longer we go, operating | | 20 | in this world where this estate has no money with which to | | 21 | pay any fees of counsel. | | 22 | He also testified about hiring other |

professionals. That's real. I think this -- it should go without saying that in a case like this where we're investigating the type of conduct that the debtor has been

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Ho Wan Kwok - June 13, 2023 58 accused of engaging in and the types of things that we've already even uncovered and proven to the Court, there's clearly a complex web of shell companies and associates and bank accounts. It's also clear from the criminal indictment. Those are all the kinds of things that we need additional advisors to help us do, that lawyers cannot do alone.

And the trustee said, which should go without saying, you can't expect to hire those advisors without paying them money. And it's not just that they, you know, would be -- are being asked to take a flyer and not be paid right away. They'd also have to sit behind other professionals in the case. So there are real reasons why it is simply not realistic to believe that an AlixPartners or somebody else would do this without getting paid. And that's what the trustee has been told.

I did want to cite to just -- on this -- on the harm to the estate point, I wanted to cite to a couple of cases that I think are helpful. One is the In Re Taub case. It's a Bankruptcy Eastern District of New York case from October 2010. The citation to it is 2010WL3911360.

The reason I'm citing to that case is because it's a case where in the context of analyzing the effect of the stay being sought in that case of retention applications to employ professionals, the court acknowledged that the estate

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| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 59 | | 1 | would suffer harm by not having the access that it would | | 2 | otherwise have to professionals to run the operations of the | | 3 | estate and do the other things that those professionals | | 4 | would be doing. I think that is, while a different context, | | 5 | a concept that is instructive here. | | 6 | MR. MORIARTY: And, Your Honor, I apologize for | | 7 | interrupting Attorney Bassett. Can I just ask the Court to | | 8 | inquire if those cases are cited in the trustee's papers? | | 9 | THE COURT: I think he just said it was, but I | | 10 | could be wrong. | | 11 | MR. BASSETT: The In Re Taub case, I don't know if | | 12 | that case was. But I think it was certainly cited by cases | | 13 | that we had -- that we had cited. And it's also something | | 14 | that I looked -- | | 15 | THE COURT: Well, you'll have to provide it to | | 16 | counsel. | | 17 | MR. BASSETT: Sure. | | 18 | THE COURT: Okay? It's -- | | 19 | MR. BASSETT: I'll provide it to counsel. | | 20 | THE COURT: If it's not in your papers, counsel | | 21 | has to have it. | | 22 | MR. BASSETT: Sure. And we -- obviously, Your | | 23 | Honor, we're -- in preparing for the argument today, after | | 24 | having the benefit of the reply brief and the briefing being | | 25 | concluded, we're doing some additional research. So to the | | | |

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 60 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 60 | | 1 | extent we found that case, I wanted to make sure to bring it | | 2 | to the Court's attention. I will get a copy to | | 3 | Mr. Moriarty. | | 4 | The other -- and this is a general principle that | | 5 | I think is found in a lot of cases, but courts have also | | 6 | held that there is harm to the non-appealing parties, in | | 7 | particular a bankruptcy estate, where as a result of the | | 8 | requested stay creditors will not be paid. I think that's a | | 9 | concept that is very clearly articulated in the cases that | | 10 | we cited in our papers, including, I believe, Tribune, | | 11 | Adelphia, and others. | | 12 | But there's another example of a case, which I'll | | 13 | give to Mr. Moriarty, that talks about -- this is a 2015 | | 14 | decision from the Eastern District of New York, 29 Brooklyn | | 15 | LLC vs. Chesley, 2015WL9255549. And, again, that was a case | | 16 | where the argument was made that there would not be | | 17 | substantial harm to the estate, because there were funds | | 18 | being held in escrow. The response from the court was that | | 19 | that argument disregards the well-settled precedent that | | 20 | delay cause to creditors in receiving their payments is a | | 21 | significant harm warranting the denial of a stay. And, | | 22 | here, Paul Hastings and the other professionals are | | 23 | administrative creditors of this estate. | | 24 | Your Honor, the last factor in the analysis is the | | 25 | public interest. I'd go back to the comments that I made at |

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| | 100 | |----|---------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 61 | | 1 | the outset. I think this case is extraordinary in a lot of | | 2 | ways. And it, to me, is, I think, clear that the public | | 3 | interest does not support a further maintenance of the | | 4 | status quo in this case, which is the debtor being allowed | | 5 | and his associates in the HK parties being allowed to | | 6 | withhold from the estate, from the trustee, from the | | 7 | professionals of the estate that should be compensated by | | 8 | funds, to withhold them from the estate indefinitely when | | 9 | these are assets and property that really should have been | | 10 | listed on the debtor's schedules. | | 11 | And, you know, that's particularly, I think, | | 12 | another -- another reason why this relief is not in the |

public interest is because the HK parties who, as the Court has found in HK USA is the alter ego of the debtor, and then, of course, his daughter, they are, in effect, being allowed to do the bidding of the debtor, which is to prevent the trustee from getting the funding that he needs to continue his investigation into the debtor's affairs.

So when you have a relationship like we have here where the HK USA parties are so inextricably linked to the debtor and have the relationship that they have, it is entirely inequitable to allow them to prevent the trustee from continuing to move forward to investigate the debtor's assets and affairs and find the additional property that he's seeking to locate.

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| 100 | |---------------------------------------------------------------| | Ho Wan Kwok - June 13, 2023 62 | | The last point I would make, Your Honor, is the | | point about the bond which Mr. Moriarty did not address but | | which we addressed in our papers. We actually talked about | | this a little bit at the status conference that I believe | | occurred last week. | | But under Rule 8007 and the accompanying case law | | in the Second Circuit, it is very clear that the ordinary | | requirement for any stay pending appeal is that a bond be | | posted. And to the extent that there's going to be any | | deviation from that requirement, it is the burden of the | | appellant to argue why a bond is not appropriate. | | We cite case law in our papers, including the | | Tribune case and other cases, standing very clearly for the | | proposition that a bond is appropriate to compensate the | | estate for the lost opportunity cost involved in not having | | immediate access to the funds or the immediate ability to | | execute on whatever judgment has been rendered. | | Here, the trustee testified about what he would be | | able to do in terms of investing money from the escrow | | account if he had access to it to earn a much greater rate | | of return. He also talked about using the funds to retain | | professionals who could conduct the type of investigation | | that's necessary to find additional material assets to bring | | into the estate. And what the trustee said was that based | | on his experience to date, which involves already | | |

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| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 63 | | 1 | identifying and pursuing tens of millions of dollars worth | | 2 | of hard assets that he thinks there are substantial other | | 3 | assets that could be located and could be brought in. | | 4 | The issue, however, is that that information that | | 5 | could lead to the recovery of those assets, in the trustee's | | 6 | view, will or may very likely become stale, meaning that if | | 7 | he waits and we're not able to conduct this type of | | 8 | investigation, which we need the funding to conduct, until | | 9 | after the appeal runs its course, all of those assets that | | 10 | we may otherwise have been able to recover may be gone. | | 11 | And we know that during this case, the debtor and | | 12 | his close associates are, in fact, taking steps to continue | | 13 | to make it more difficult for the trustee to recover assets | | 14 | to which he is entitled, including Ms. Yvette Wang, as the | | 15 | Court has been made aware, transferring her ownership in Ace | | 16 | Decade to an individual in Switzerland after this Court | | 17 | entered an order that that interest was property of the | | 18 | estate. It's that type of thing that we are very fearful of | | 19 | continuing the longer we wait to conduct this investigation. | | 20 | And while there's no exact science behind putting | | 21 | a figure on a bond, based on everything that we know to | | 22 | date, based on the optimism that the trustee has in its | | 23 | investigation, in our papers we very, very conservatively | | 24 | set that bond at \$7 million. Obviously, it's in the | | 25 | discretion of the Court as to what level to set that. But, |

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 64 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 64 | | 1 | again, we think that particular bond would be imminently | | 2 | defensible and reasonable. | | 3 | But, again, it's only necessary if the Court were | | 4 | even to grant a stay. And for all the reasons that I've | | 5 | articulated, I think the Court absolutely should not do | | 6 | that, because the HK parties have not met their burden on | | 7 | the four factors. | | 8 | I think that's all I had, Your Honor, but | | 9 | obviously I'm happy to answer any questions. | | 10 | THE COURT: Okay. Thank you. I do not have any | | 11 | questions at this time. | | 12 | MR. BASSETT: Thank you. | | 13 | THE COURT: Thank you. | | 14 | Attorney Moriarty, would you like to respond? | | 15 | MR. MORIARTY: Yes, Your Honor, briefly. | | 16 | Starting, Your Honor, on the issue of the bond, if the Court | | 17 | was going to condition any stay on HK or Ms. Guo posting a | | 18 | bond, the Court would be denying the stay, because HK does | | 19 | not have any assets and could not post a bond. And | | 20 | Ms. Guo's assets have been enjoined, so she cannot post a | | 21 | bond. So if the Court were to condition it on 7 million, 6 | | 22 | million with respect to HK USA \$47.00, the Court would be | | 23 | effectively denying the stay. | | 24 | With respect to the Paul Hastings lawyers and | | 25 | those lawyers -- associates, mid-level associates leaving | | | |

## Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 65 of

| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 65 | | 1 | the team to go do work for other clients, Paul Hastings was | | 2 | retained by the trustee. Paul Hastings accepted that | | 3 | retention. Paul Hastings understood when it accepted that | | 4 | retention that there was no money in the estate. | | 5 | Paul Hastings has a duty to represent its client. | | 6 | If Paul Hastings no longer wants to do that, it can | | 7 | withdraw. But Paul Hastings should not be threatening the | | 8 | trustee with removing attorneys who have all of the | | 9 | institutional knowledge from the case. | | 10 | As far as who the loan is to, its harm to Uncle | | 11 | Willy, first of all, I don't have the letter that Attorney | | 12 | Bassett referred to. To the extent there was a reference to | | 13 | the loan being a liability of HK, obviously a loan is a | | 14 | liability. But on a balance sheet, you have to have a | | 15 | corresponding entry. You can't just have a \$37 million | | 16 | liability. So there would have to be a corresponding entry. | | 17 | But the fact is, is that if this is a legitimate | | 18 | loan -- and until a trier of fact says it is not, it is -- | | 19 | there is harm to HK USA that is irreparable by this money | | 20 | being released and spent, because HK USA still has the | | 21 | obligation to pay this loan. | | 22 | And that is all I have, Your Honor. If you have | | 23 | any questions, I'm happy to answer them. | | 24 | THE COURT: No, thank you, counsel. Thank you. | | 25 | Attorney Bassett, any reply? | | | |

Ho Wan Kwok - June 13, 2023 66 MR. BASSETT: Very briefly, Your Honor. Just very briefly on the point that Attorney Moriarty raised about the HK USA loan. And I -- so, again, this letter was filed on the docket, as I understand it, and I gave the Court the reference earlier. THE COURT: Well, we can pull it up if you'd like to. MR. BASSETT: Sure. MR. MORIARTY: Your Honor, I'm not suggesting that Attorney Bassett was misrepresenting it. All I said was I didn't have it. THE COURT: I understand. But if you'd like to see it, we can see it. MR. MORIARTY: If he believes it's necessary. It's his argument. MR. BASSETT: I don't believe it's necessary to pull it up, Your Honor. I just wanted to -- THE COURT: Okay. MR. BASSETT: I just wanted to quote directly from it, which is the statement: "HK USA maintains that the escrowed funds are not an asset of the company but a liability which is to be repaid." That was the position that they took previously, because it suited their interests at the time. That's been their argument. And, again, that argument is based on the idea that these funds were loaned Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 66 of

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 67 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 67 | | 1 | to HK USA by Uncle William. | | 2 | The Court has now determined that the estate owns | | 3 | HK USA, that HK USA is rather the alter ego of the debtor | | 4 | and, therefore, is property. And, correspondingly, its | | 5 | liabilities are those of the estate. So, presumably, Uncle | | 6 | William, if he so chooses, would assert a claim against the | | 7 | estate for whatever he thinks he is owed. | | 8 | But what that does not establish in any way is how | | 9 | the HK parties themselves would be harmed by the trustee | | 10 | being allowed to expend the escrow funds and by there not | | 11 | being a stay. Mr. Moriarty said that HK USA would remain on | | 12 | the hook. Again, it's the estate who would be sued. But I | | 13 | guess if that order is reversed, then he would say that HK | | 14 | USA would. | | 15 | But he also just said that HK USA has no money. | | 16 | So it's not clear to me how there would be any harm suffered | | 17 | by there being a claim against it. | | 18 | So, Your Honor, I don't have any other remarks to | | 19 | add other than to just close by reminding the Court there's | | 20 | a four-factor test. They have to meet each factor of the | | 21 | test to satisfy their burden. And it's an extraordinary | | 22 | one. We don't think this is a close call, and we think the | | 23 | stay should be denied. Thank you. | | 24 | THE COURT: Thank you. | | 25 | All right. We have -- I've now listened to the | | | |

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| | Ho Wan Kwok - June 13, 2023 68 | |---|---------------------------------------------------------------| | 1 | arguments of counsel. I reviewed the papers briefly, | | 2 | especially the papers that were just filed. And now you've | | 3 | both made some arguments that included cases that I -- at | | 4 | least one case, Attorney Bassett, and possibly two that | | 5 | you'd need to provide to opposing counsel. The evidence | | 6 | that you've submitted, there's no -- no further evidence | | 7 | will be taken by the Court in connection with the motion for | | 8 | stay pending appeal. | | | |

I'd like to go back and review what occurred today and look again at the cases cited in the briefs. So the matter will be taken under advisement, and the Court will rule accordingly. So that addresses the matters on the calendar with regard to the motion for stay pending appeal, which is 227.

Now, the other matters that are on today's calendar relate to the pending motion for an order to show cause why the debtor, Mei Guo, and HK USA should not be held in contempt for failure to comply with the 2004 orders; and the motion of the debtor for a limited stay; and then, of course, the status conference on the adversary proceeding commenced by the escrow agent.

So how are we proceeding, Trustee Despins? MR. BASSETT: Your Honor, I think we would take the contempt motion next.

THE COURT: Okay. Well, we've had argument on

Ho Wan Kwok - June 13, 2023 69 both of these motions previously. Attorney Baldiga, you've argued your position before, correct? And wasn't -- MR. BALDIGA: Yes. THE COURT: Weren't we going to find out today what, if anything, you -- the two parties have discussed since our last hearing with regard to what could possibly be an agreed-upon order with regard to this issue? MR. BASSETT: Approach, Your Honor? May I approach? THE COURT: Yes, please. MR. BASSETT: So just by way of status update, I don't know that there is much else to report from the trustee's perspective other than I can report -- and my recollection is failing me. I'm not sure if this was filed on the docket or not. But we did receive from the debtor the response to the list of questions that was part of the order the Court issued. THE COURT: Okay. I recall that portion. MR. BASSETT: Right. And from the trustee's perspective, that was -- you know, what we received was consistent with the order. It was the debtor asserting his fifth amendment rights in response to those questions. THE COURT: To the specific questions? There were, I thought, maybe a hundred of those or -- MR. BASSETT: Maybe slightly less than that, Your Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 69 of

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Ho Wan Kwok - June 13, 2023 70 Honor. THE COURT: Okay. MR. BASSETT: But, yes. UNIDENTIFIED SPEAKER: 202. THE COURT: 202. MR. BASSETT: 202. Jeez. Okay. THE COURT: Okay. There you go. MR. BASSETT: I apologize. I stand corrected. But, yes, Your Honor. So we did receive that. Otherwise, I think from the trustee's perspective we were awaiting any additional -- THE COURT: All right. MR. BASSETT: -- ruling from the Court. THE COURT: So the issue is still what, if anything, you would like the Court to do -- well, you would like the Court to have the debtor be compelled to file something in the Southern District of New York criminal proceeding to allow the production that's made to the debtor in the criminal proceeding also be made to the trustee, correct? MR. BASSETT: That's correct, Your Honor. THE COURT: Okay. And, Attorney Baldiga, I think at the last hearing you said that you would agree with most of that but not quite all of that. That if I -- if the Court were to enter an order requiring you as counsel to the

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 71 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 71 | | 1 | debtor defendant to ask the Southern District of New York, | | 2 | the United States Trustee's Office to produce that | | 3 | information to the debtor that you would do that. Is that | | 4 | correct? | | 5 | MR. BALDIGA: We would facilitate and make that | | 6 | request. Yes, Your Honor. | | 7 | THE COURT: Okay. And I think that's the same | | 8 | place we are then with regard to this issue. The | | 9 | distinction being -- | | 10 | MR. BALDIGA: Yes. | | 11 | THE COURT: -- the trustee would like me to order | | 12 | that any production made to the debtor shall also be made to | | 13 | the trustee. And you, Attorney Baldiga, would agree to | | 14 | filing a motion. Or, well, maybe you didn't agree to that. | | 15 | Maybe you just said you would facilitate. | | 16 | MR. BALDIGA: No. We went further than that to | | 17 | say that if that is what the Court so orders, we would both | | 18 | facilitate and file a motion -- | | 19 | THE COURT: Okay. | | 20 | MR. BALDIGA: -- with the district court, because | | 21 | we do think the district court would need to weigh in on | | 22 | that. | | 23 | THE COURT: All right. Well, I obviously wanted | | 24 | to hear from both of you today as to where things stood | | 25 | given where we were at the last hearing. And I -- and it | | | |

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| | 100 | |----|--------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 72 | | 1 | sounds -- I mean, more than sounds. You're confirming, | | 2 | Attorney Bassett, that as far as the agreement that we -- | | 3 | that you reached last hearing about the specific questions | | 4 | and the invocation of the fifth amendment, you've taken -- | | 5 | that's been done, and the trustee is satisfied with that, | | 6 | correct? | | 7 | MR. BASSETT: That's correct, Your Honor. | | 8 | THE COURT: Okay. So I think the issue remains as | | 9 | to whether or not the trustee -- I would agree with the | | 10 | trustee that the Government would produce to the debtor and | | 11 | the debtor would then produce to the trustee versus Attorney | | 12 | Baldiga's argument that there be a waiver of the fifth | | 13 | amendment if the debtor produced directly to the trustee, | | 14 | correct? That's still your position, correct? | | 15 | MR. BALDIGA: Yes. | | 16 | THE COURT: All right. So then what I have to | | 17 | decide is that issue. | | 18 | MR. BALDIGA: Yep. | | 19 | THE COURT: I have to decide whether or not I | | 20 | would enter an order that the production of whatever | | 21 | information in discovery the United States Attorney has that | | 22 | would be provided to the debtor would then require the | | 23 | debtor to produce that to the trustee or whether the | | 24 | debtor -- whether I would require the debtor to file some | | 25 | kind of motion asking -- and I know -- understand your |

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| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 73 | | 1 | position, Attorney Bassett, that if I enter an order asking | | 2 | or -- not asking, requiring the debtor to file a motion with | | 3 | regard to this discovery issue, your position is, well, | | 4 | they're just going to say I'm not going to do that. | | 5 | MR. BASSETT: Right. We have very low confidence | | 6 | in getting the information through that process. And in our | | 7 | view, if the debtor has access to the information, because | | 8 | it's been produced to him through the disclosure process by | | 9 | the Government in the criminal case, by far the best way for | | 10 | the trustee to get that information and the way, frankly, | | 11 | that we believe we are entitled to receive the information | | 12 | is simply by the debtor then producing the information to | | 13 | the trustee. | | 14 | And I won't belabor the points we had already | | 15 | made, but -- | | 16 | THE COURT: No. I understand. I understand. | | 17 | MR. BASSETT: Yeah. And -- | | 18 | THE COURT: And Attorney Baldiga's argument is | | 19 | that if he does that, that somehow that'll be a waiver of | | 20 | his fifth amendment privilege. | | 21 | MR. BALDIGA: We have other arguments. I guess -- | | 22 | Attorney Bassett and I were speaking before the hearing as | | 23 | to whether today would end up being a re-argument of all the | | 24 | things -- | | 25 | MR. BASSETT: No. | | | |

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| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 74 | | 1 | MR. BALDIGA: -- we've already argued and -- | | 2 | THE COURT: No. I don't want to reargue it. | | 3 | MR. BALDIGA: Okay. I just -- | | 4 | THE COURT: I think I understand your positions. | | 5 | MR. BASSETT: Yeah. | | 6 | MR. BALDIGA: Yeah. | | 7 | THE COURT: Right? | | 8 | MR. BALDIGA: Yes. | | 9 | THE COURT: And is there anything else you want to | | 10 | tell me? | | 11 | MR. BALDIGA: Yeah. I think also, in terms of -- | | 12 | we don't know what the Government would say to that. We | | 13 | think what the Government would say to the trustee's direct | | 14 | request is functionally the same as to what the Government | | 15 | would say as to our request. So I think they get the same | | 16 | stuff either way. It's just one way it does implicate fifth | | 17 | amendment rights, and we would not be able to do that. The | | 18 | other way it doesn't. But -- | | 19 | THE COURT: Well, what about -- it -- what -- I | | 20 | understand your argument. | | 21 | MR. BALDIGA: Okay. | | 22 | THE COURT: So what -- to try to solve this | | 23 | problem, if the Court were to order -- there's -- obviously, | | 24 | there's a few ways this could happen. But if the Court were | | 25 | to order the debtor to file the motion and then, hopefully, | | | |

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| | 100 Ho Wan Kwok - June 13, 2023 | |----|----------------------------------------------------------------| | | 75 | | 1 | there'd be a response to that one way or another, that if | | 2 | there is a production, Attorney Baldiga, you -- I think one | | 3 | of the things that trustee needs to know is whatever is | | 4 | turned over to the trustee would be the same thing turned | | 5 | over to the debtor. You don't want -- there doesn't want | | 6 | to -- there -- you don't want to have a gap. | | 7 | I mean, there is a situation if -- you -- you're | | 8 | saying I don't want to turn over to the trustee whatever the | | 9 | Government turns over to us, because it's going to be a | | 10 | waiver of the privilege. But you'd agree that the | | 11 | Government can turn it over to the trustee. Well, how do -- | | 12 | how does the trustee know that whatever the Government's | | 13 | turning over to the trustee is everything the Government | | 14 | turned over to you? | | 15 | MR. BALDIGA: I guess the Government could confirm | | 16 | that or not. I mean -- | | 17 | THE COURT: Or you could confirm that or not, | | 18 | right? | | 19 | MR. BALDIGA: I don't know -- well, I guess | | 20 | conceivably. I didn't think that we would be involved in | | 21 | the government's production. | | 22 | THE COURT: No, no. I'm not saying in the | | 23 | production. I'm saying in what you received and what the | | 24 | trustee would receive, right? The way that -- the argument | | 25 | is, the trustee wants it directly. You don't want it -- to | | | |

| Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 76 of 100 | |-----------------------------------------------------------------------------------------------| | Ho Wan Kwok - June 13, 2023 76 | | give it to him directly, because you're worried about | | waiving a fifth amendment privilege. | | MR. BALDIGA: And there are other issues as well. | | We cannot, for example -- some of the materials that the | | Government has we can't even see. | | THE COURT: And no one -- I don't think anybody's | | arguing about that. I haven't heard the trustee -- the | | trustee just wants -- | | MR. BALDIGA: Some the debtor cannot see. | | THE COURT: -- to have whatever you have. | | MR. BALDIGA: Well, but -- | | THE COURT: Isn't that what you want? | | MR. BALDIGA: But, Your Honor -- | | MR. BASSETT: That is -- | | MR. BALDIGA: -- I just want to make it very | | clear. There are some things that the Government will | | deliver to my firm that the debtor cannot see. There's no | | subpoena for those materials. In fact, there's no subpoena | | for anything that we're talking about. And we have this | | issue if we don't do this cooperatively, I just don't see | | how a subpoena gets served. But we can -- we could deal | | with that down the road, because we have a long ways to go. | | That's why we are trying to suggest a consensual way through | | this. | | But the debtor will not see what the Government | | |

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 77 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 77 | | 1 | tells us is a very substantial portion of what the | | 2 | Government will produce to us by way of grand jury | | 3 | materials. The debtor will never see it. So, no, there | | 4 | won't be a complete overlap. I don't even think it would be | | 5 | close. | | 6 | MR. BASSETT: I'm not sure what Attorney Baldiga | | 7 | is suggesting, but I don't know why the debtor having access | | 8 | to the documents or not impacts whether the trustee could | | 9 | have access to the documents. | | 10 | MR. BALDIGA: Well, because your discovery request | | 11 | is of the debtor. | | 12 | MR. BASSETT: But if his counsel has the | | 13 | documents, his agents have the documents. So I don't think | | 14 | that's -- | | 15 | MR. BALDIGA: Well, that's not -- | | 16 | MR. BASSETT: I don't think -- | | 17 | MR. BALDIGA: That's a whole different issue. | | 18 | MR. BASSETT: I don't think that is a real issue, | | 19 | Your Honor. But what I do think is the -- what really kind | | 20 | of highlights the issue is that it has never and continues | | 21 | to not make any sense to the trustee that he has this | | 22 | concern about the fifth amendment that applies if the debtor | | 23 | physically gives us the documents or his counsel physically | | 24 | gives us the documents, but that same concern is nonexistent | | 25 | if they are just consenting sight unseen for the Government |

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 78 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 78 | | 1 | to provide us the exact same documents. That's -- | | 2 | THE COURT: Well, they're not going to do that, | | 3 | obviously. | | 4 | MR. BALDIGA: That's the height of form over | | 5 | substance. | | 6 | THE COURT: They're not going to consent, though. | | 7 | I mean, that's clear. | | 8 | MR. BASSETT: Well, no. I think he's saying they | | 9 | do consent to the Government giving us the documents, which | | 10 | then -- | | 11 | MR. BALDIGA: We're saying -- | | 12 | MR. BASSETT: -- which makes no sense in my mind | | 13 | as to the fifth amendment concern, Your Honor. | | 14 | MR. BALDIGA: No. We are satisfied that the fifth | | 15 | amendment is not implicated if the Government were to | | 16 | provide things directly to the trustee. There could be | | 17 | other issues the Government has, but we would not stand in | | 18 | that way. And we would ask the Government to do that just | | 19 | as this Court suggested two months ago. | | 20 | MR. BASSETT: In which case I don't understand the | | 21 | argument. Because if they're allowing it to happen, it's | | 22 | form over substance. How could it be any different? The | | 23 | fact that it's physical -- | | 24 | THE COURT: Well, now we are rearguing what -- | | 25 | MR. BALDIGA: Yeah. | | | |

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Ho Wan Kwok - June 13, 2023 79 MR. BASSETT: Yes. THE COURT: -- we've already argued. MR. BALDIGA: That's right. MR. BASSETT: Agreed, Your Honor. THE COURT: Okay? So I understand where you stand. There's no real -- there has been some progress in that the questions -- the specific questions have been presented to the debtor, and he's specifically invoked his fifth amendment privilege with regard to every one of those questions, correct? MR. BALDIGA: Yes. THE COURT: Okay. So that's some progress. I'll have to take the matter under advisement and rule on what I'm going to do. There is no further progress on that -- on the issues and the positions that you've taken. So I'll have to rule on it. MR. BALDIGA: I think so, Your Honor. I think that's where we are. MR. BASSETT: Thank you, Your Honor. MR. BALDIGA: And I think we've had good-faith discussions about this. It's not for lack of trying. But I think it is before the Court. THE COURT: Okay. Thank you. MR. BALDIGA: Thank you, Your Honor. THE COURT: Thank you both.

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| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 80 | | 1 | MR. BASSETT: Thank you. | | 2 | THE COURT: All right. The only -- | | 3 | MR. BALDIGA: Your Honor, may I be excused? | | 4 | THE COURT: Yes, you may. | | 5 | MR. BALDIGA: Thank you. | | 6 | THE COURT: Thank you. | | 7 | So the final matter on the calendar today then is | | 8 | the status conference in the adversary proceeding, the | | 9 | interpleader action that's been brought by the escrow agent. | | 10 | Attorney -- Trustee Despins, do you wish to be heard? | | 11 | MR. DESPINS: Yes, Your Honor. And basically -- | | 12 | let me very transparent about this. I don't want that | | 13 | proceeding to become a de facto stay that the HK parties | | 14 | get. | | 15 | So I know that Shipman & Goodwin just filed before | | 16 | the hearing a motion regarding what we call the first stage | | 17 | of the interpleader, as Your Honor knows, which is, is the | | 18 | interpleader appropriate or not. And we -- I've looked at | | 19 | that order, and we're fine with it. We may have some | | 20 | tweaks. But, conceptually, we're fine with it. | | 21 | It basically says that they've incurred \$45,000 or | | 22 | so in fees. They want to keep that. You know, that's the | | 23 | standard language. And they're out of the case after this. | | 24 | So, basically, it's the first stage of any interpleader. | | 25 | We're okay with that. We've told that to the | | | |

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 81 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 81 | | 1 | Shipman & Goodwin firm from the beginning. | | 2 | So what I do want, though, is the next stage -- | | 3 | and I -- and, by the way, I would hope that the debtor is | | 4 | not going to oppose -- or not the debtor or -- the HK | | 5 | parties will not oppose that first stage, the entry of that | | 6 | order discharging U.S. Bank from the case and having the | | 7 | money come into the Court funds. | | 8 | So the next stage is really the -- what do we need | | 9 | to progress towards? And that's where my argument about I | | 10 | don't want that case to become a de facto stay. I want -- I | | 11 | would like that to move very quickly. We're going to -- | | 12 | we're ready -- we're going to be ready tomorrow to file a | | 13 | motion for summary judgment on the merits. | | 14 | And they're not -- you know, just to telegraph it | | 15 | to the Court, it's not very complicated, which is Your Honor | | 16 | has already found that this is property of the estate and | | 17 | also directed the HK parties to do everything to transfer | | 18 | the asset. And it's very simple. There are two parties to | | 19 | that agreement other than U.S. Bank: the creditors' | | 20 | committee -- and Mr. Goldman is here, and he will tell you | | 21 | that he's prepared to send directions to anyone to give the | | 22 | money to the trustee. And the other party is HK USA, and | | 23 | they were directed by Your Honor to do whatever is in their | | 24 | power to transfer the money. | | 25 | So they will say, oh, no, no, we have to wait for |

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| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 82 | | 1 | a final order under Article 4 and all that. But the point | | 2 | is, the two parties to the agreement can agree together | | 3 | and -- to say we don't want the escrow agreement anymore | | 4 | and, by the way, there's no escrow agreement anymore, | | 5 | because the funds are being put -- placed with the Court. | | 6 | And so, therefore, we want to file a motion for | | 7 | summary judgment to get access to the funds, and we would | | 8 | like -- and we want to discuss the scheduling of that, Your | | 9 | Honor, today. | | 10 | THE COURT: Well, what about the motion of the -- | | 11 | of the -- of U.S. Bank -- | | 12 | MR. DESPINS: U.S. Bank. | | 13 | THE COURT: -- by Shipman & Goodwin? I mean, | | 14 | can't that just be set for a hearing with objection deadline | | 15 | as well? | | 16 | MR. DESPINS: Well, I would hope that we wouldn't | | 17 | have -- even have to do that, because the -- it's really -- | | 18 | the issue is only is the interpleader appropriate. The | | 19 | trustee agrees with that. I'm sure the creditors' committee | | 20 | agrees that the interpleader is appropriate. The only other | | 21 | parties are Mei Guo and the -- | | 22 | THE COURT: Right. But if the -- if I set a | | 23 | scheduling order that they have to respond to the motion, | | 24 | and then we have a hearing, and I decide one way or | | 25 | another -- | | | |

Ho Wan Kwok - June 13, 2023 83 MR. DESPINS: Yes. THE COURT: -- that may or may not happen more quickly than a motion for summary judgment process. MR. DESPINS: Well, the motion for summary judgment would not be on that point. It would be on the ultimate -- THE COURT: Well, right. You're going to have to do that anyway. MR. DESPINS: Yeah. THE COURT: But right now, we're talking about the money being in escrow, correct? MR. DESPINS: Correct. And so I would think that first phase should not be complicated. Again, it's not opposed by the trustee. It's not opposed by the creditors' committee. I would hope that the HK parties don't oppose it. But if not, there should be a very short scheduling for -- THE COURT: Well, I'm going to require a response from the HK parties. I mean, I'm going to -- to the motion that was filed by -- everyone on -- everyone other than the -- unless the HK parties are going to stand up right now and tell me they have no opposition to the monies being deposited into the registry of the Court and to discharge the plaintiff from the interpleader action, then I'm going to require a written response. Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 83 of

Ho Wan Kwok - June 13, 2023 84 MR. MORIARTY: So I will stand up, Your Honor, on behalf of the HK parties, and I will tell you that I cannot make that representation right now, because I do not have authority to do so. THE COURT: Okay. Well, that's fine. Then the -- there's going to be a short time frame for a response. This is an adversary proceeding. The Court can set deadlines in an adversary proceeding with or without a hearing for -- under our local rules with regard to motions. And there's a motion right now that's been filed to deposit the funds into the registry of the Court. And so that's how we'll proceed. With regard to your summary judgment, go right ahead. Do you have suggested dates? MR. DESPINS: Other than as soon as possible, Your Honor. Because, again, it becomes a de facto stay -- THE COURT: Well, you need to tell me when you're going to file the motion. MR. DESPINS: Tomorrow. We'll be ready to file it tomorrow, Your Honor. By close -- by midnight tomorrow, we'll file our summary judgment motion. THE COURT: All right. I need to look at the calendar. MR. DESPINS: Any chance we could squeeze that in for the 29th? I know we're already squeezing -- THE COURT: Well, I think I have to give Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 84 of

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 85 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 85 | | 1 | appropriate time frames for a response to summary judgment | | 2 | under the local district court rules and our local rules. | | 3 | MR. DESPINS: But I thought we could shorten that, | | 4 | Your Honor. | | 5 | THE COURT: Well, you'd have to file a motion to | | 6 | shorten it, and you'd have to establish why it should be | | 7 | shortened. And then opposing counsel will have a right to | | 8 | object to your motion for shortening time. Okay? | | 9 | MR. DESPINS: We'll do that with our motion for | | 10 | summary judgment then. | | 11 | THE COURT: All right. Counsel, so you've heard | | 12 | how they're going to proceed. You'll be able to file | | 13 | whatever you think is appropriate in response to it. | | 14 | MR. MORIARTY: Yes, Your Honor. And just a couple | | 15 | things. There was some communications between Attorney | | 16 | Despins and Attorney Kindseth in my office this morning | | 17 | regarding this issue and potentially working out a | | 18 | consented-to order that would get us past phase one of this. | | 19 | And, you know, hopefully those discussions will continue. | | 20 | We understand this is an interpleader action, and | | 21 | phase one is really perfunctory. So we are not going to | | 22 | stand in the way of phase one, assuming the papers are in | | 23 | order. But if we can get a consented order, it would make | | 24 | this move more quickly. | | 25 | The one thing that I do want to say is I | | | |

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| | 100 | |----|---------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 86 | | 1 | understand Attorney Despins wants to move this, but I | | 2 | believe that the motion to approve the sale of the Lady May | | 3 | is on the 29th. | | 4 | MR. DESPINS: No. It's the 26th. | | 5 | MR. MORIARTY: The 26th? | | 6 | THE COURT: That's the 26th, I believe. | | 7 | MR. MORIARTY: Okay. So between -- | | 8 | THE COURT: I'll check for you. Hold on. | | 9 | MR. DESPINS: It's on the 26th, Your Honor. And | | 10 | on the 29th is the fee application hearing. | | 11 | THE COURT: Actually, the motion to sell the Lady | | 12 | May is on the 27th. | | 13 | MR. DESPINS: 27th and 28th. Yeah. | | 14 | THE COURT: The 26th is the motion to compel a -- | | 15 | one of the many motions to compel. And then the 29th is | | 16 | compensation hearings. | | 17 | MR. MORIARTY: Yeah. So I believe today is the | | 18 | 13th, but I could be mistaken. So we're talking about a | | 19 | motion for summary judgment that the HK parties will then | | 20 | have to respond to at the same time that their counsel is | | 21 | addressing motions to compel the sale of HK's asset, the | | 22 | Lady May and the Lady May II, and the fee application are | | 23 | all in the same week. And now we're going to add a summary | | 24 | judgment motion to the mix. | | 25 | I get that he wants to do this quickly, but -- | | | |

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| | 100 | |----|---------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 87 | | 1 | THE COURT: Well, you don't -- | | 2 | MR. MORIARTY: -- it's just too quick. | | 3 | THE COURT: I understand what you're saying. And | | 4 | we haven't seen any motions yet. So until I see some | | 5 | motions, no dates are going to be set yet. | | 6 | MR. MORIARTY: Thank you. | | 7 | THE COURT: Okay? Thank you. | | 8 | So with regard -- | | 9 | MS. WILLIAMS: Your Honor, may I be heard? | | 10 | THE COURT: Yes. Attorney Williams, I was going | | 11 | to ask you to be heard in one second. | | 12 | I just wanted to say that in the courtroom when | | 13 | we're discussing this adversary proceeding, there is a | | 14 | motion for payment, Attorney Moriarty, of -- by the | | 15 | interpleader of the -- and I know you said you don't have | | 16 | authority. But when you said you were talking about a | | 17 | consensual -- I think you said -- now I apologize. Who did | | 18 | you say was -- at your office was discussing this? | | 19 | MR. MORIARTY: It was Attorney Kindseth. | | 20 | THE COURT: Attorney Kindseth is discussing this | | 21 | with somebody at Paul Hastings? Is that -- | | 22 | MR. MORIARTY: The trustee. | | 23 | THE COURT: Okay. And so there may be some form | | 24 | of a consensual order with regard to the motion that | | 25 | Attorney Williams has filed? | | | |

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| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 88 | | 1 | MR. MORIARTY: I will say that there have been | | 2 | discussions around parameters of a consensual motion. And I | | 3 | expect that those discussions will continue. I can't -- you | | 4 | know, I don't want to represent to the Court that it's going | | 5 | to happen. As I did say, to the extent that the | | 6 | interpleader is in order, this is phase one, it's | | 7 | perfunctory, we're not going to stand in the way of it. If | | 8 | we can agree to a stipulated order, it may move it more | | 9 | quickly. | | 10 | THE COURT: Well, it certainly would move it more | | 11 | quickly if we had a stipulated order. | | 12 | So let me hear -- may I hear, please, from | | 13 | Attorney Williams? | | 14 | MS. WILLIAMS: Thank you, Your Honor. And I | | 15 | apologize for interrupting. My comment actually directly | | 16 | went to the question regarding phase one. So as the parties | | 17 | are aware, U.S. Bank as escrow agent has filed a motion to | | 18 | deposit the funds. My understanding is that there are -- | | 19 | there may be discussions regarding a stipulated motion, | | 20 | which it is unclear whether that is a motion to deposit, and | | 21 | a potential consensual order regarding phase one. | | 22 | Statutorily and procedurally, the process would | | 23 | happen through this motion to deposit. U.S. Bank, as the | | 24 | escrow agent, filed the interpleader action. We're the | | 25 | interpleader plaintiff. And, here, what we've essentially | | | |

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 89 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 89 | | 1 | done is filed the motion to deposit. | | 2 | And so to the extent that there are any | | 3 | discussions happening in the context of what the proposed | | 4 | order would be as it ties to phase one, our understanding | | 5 | would be that that order would tie directly to our motion to | | 6 | deposit. And so I didn't know if that was something that we | | 7 | could clarify at this time during the status conference or | | 8 | whether it was something that would be appropriate for the | | 9 | parties to discuss otherwise. But I just wanted to make | | 10 | sure that this wasn't something that was happening apart | | 11 | from our motion to deposit. | | 12 | THE COURT: Well, I completely agree. And I think | | 13 | I've already said that it has to be related to the motion | | 14 | for deposit, which his why I asked Attorney Moriarty what | | 15 | his client's position was. And he says he doesn't have | | 16 | authority right now but that there are some discussions | | 17 | happening. | | 18 | But I completely agree that U.S. Bank has to be | | 19 | part of these discussions. And whatever order, if there is | | 20 | a stipulated order, has to be shown to and negotiated with | | 21 | U.S. Bank. So I -- if I didn't make that clear at the | | 22 | beginning of the status conference, then that is my fault. | | 23 | Because the escrow agent and the interpleader plaintiff is | | 24 | ready, willing, and able to pay the monies over to the Court | | 25 | registry. |

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Ho Wan Kwok - June 13, 2023 90 Now, you all -- do you all understand how the Court registry works? I mean, just like anything else, there's -- it's a deposit of funds into a registry where, you know, there's some component of interest. But I don't -- MR. DESPINS: Yes. THE COURT: But I believe that the Government retains some of that interest. I mean, I think that's what happens when you deposit funds into the registry, so -- which is another reason why if there's some agreement along the line, Attorney Moriarty, after the escrow agent -- assuming the escrow agent is out of the picture, that if there's some agreement that there -- that -- where these funds can be placed, even in the short term, that earns money differently, you need to think about that. I have no idea how you're all going to come out with your discussions. But I don't -- I would be -- it would be hard for me to understand why there wouldn't be an agreement with regard to the motion to deposit funds in the registry in the very near future. And I mean in the very near future. And then where things go from there would be between the HK parties and the trustee and not -- and the escrow agent would be removed from these issues. But I absolutely agree with Attorney Williams that whatever you're

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 91 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 91 | | 1 | doing right now has got to be keyed to the motion to deposit | | 2 | funds into the registry of the Court. Does anyone have any | | 3 | questions or concerns about that? | | 4 | All right. So, Trustee Despins, what else is | | 5 | there to address this afternoon? I think we've addressed | | 6 | everything that's on the calendar. | | 7 | MR. BASSETT: Your Honor, I had one more item to | | 8 | raise kind of by way of a status update, I -- so to speak. | | 9 | As the Court will recall, when we were before Your Honor | | 10 | last Tuesday, I believe it was, one of the motions that we | | 11 | addressed at that time was the trustee's motion to compel | | 12 | 2004 discovery from certain parties. Two of the parties who | | 13 | were subject to that motion were Hudson Diamond entities: | | 14 | Hudson Diamond New York, LLC, and then another entity, | | 15 | Hudson Diamond Holdings, I believe it was. | | 16 | THE COURT: Yes. I saw the motion to withdraw the | | 17 | appearance. | | 18 | MR. BASSETT: Yes. So -- | | 19 | THE COURT: Is that what you're -- why you're | | 20 | raising the issue? | | 21 | MR. BASSETT: That's why I'm raising it, Your | | 22 | Honor. Because I believe the Court entered the order which | | 23 | we had negotiated with Attorney Romney on behalf of both of | | 24 | those parties, and then we learned earlier this week from | | 25 | Attorney Romney that apparently there was a mistake or a |

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| | 100 | |----|--------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 92 | | 1 | miscommunication. And Ms. Guo, they understand now, is | | 2 | actually not the member of -- the sole member of Hudson | | 3 | Diamond New York, LLC. And, therefore, they're not her | | 4 | counsel or should not have appeared on her behalf and did | | 5 | not have the authority to enter into that stipulation. | | 6 | I don't know if Attorney Moriarty has more he can | | 7 | add to that, but that's what we understand to be the current | | 8 | state of things. And based on that, I think we need to | | 9 | address what to do about the motion to compel. | | 10 | THE COURT: Well, it supposed to be compliance by | | 11 | the 26th, right, or at least some -- or a continuation of | | 12 | the hearing? | | 13 | MR. BASSETT: Yes. It was continuation of the | | 14 | hearing with an agreement based on conversations between | | 15 | Mr. Luft and Mr. Vartan that both of these entities would, | | 16 | in fact, fully comply -- | | 17 | THE COURT: Right. | | 18 | MR. BASSETT: -- with the subpoenas in the | | 19 | interim. | | 20 | THE COURT: I understand. | | 21 | MR. BASSETT: And now we've lost one of the | | 22 | entities. | | 23 | THE COURT: I understand. | | 24 | Attorney Henzy, I saw you stand up. | | 25 | MR. HENZY: Yeah. Your Honor, my -- I guess what | | | |

Ho Wan Kwok - June 13, 2023 93 I'd ask or my suggestion would be that the motion to withdraw that Attorney Romney filed be scheduled and that that be -- that whatever the issues are that they be addressed at that hearing. But I am aware that motion was filed. THE COURT: I think it was filed today. MR. HENZY: Yeah. I'm aware the motion was filed, and I'm aware that -- of the facts recited in the motion, Your Honor. But I don't think either Mr. Moriarty or I are familiar with -- THE COURT: I'm not suggesting you would. MR. HENZY: Yeah. THE COURT: Okay? I'm -- MR. HENZY: But I think I would just ask that it be -- that this be addressed when Mr. Romney is here. THE COURT: Yeah. I -- we're -- MR. HENZY: Because -- THE COURT: I think we're going to have to set it for a hearing. MR. HENZY: Okay. THE COURT: I'm not going to grant it without understanding -- MR. HENZY: Yeah. THE COURT: -- what's going on and how it's impacting what was an agreed-upon order with regard to Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 93 of

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Ho Wan Kwok - June 13, 2023 94 compliance with outstanding discovery and subpoenas. MR. BASSETT: And, Your Honor, from -- and that's -- obviously, we'll proceed in that manner if the Court would like to do so. The one thing I would just observe is that I believe the current state of affairs is that no one has appeared in response to our motion to compel on behalf of Hudson Diamond New York, LLC. THE COURT: Well -- MR. BASSETT: So there -- THE COURT: -- I'm not sure you can say that yet until his appearance is withdrawn. I mean, court ordered withdrawn. He's moved to withdraw his appearance. MR. BASSETT: Understood. THE COURT: I suppose I could deny that motion. MR. BASSETT: Understood, Your Honor. So we'll address it -- MR. HENZY: Yeah. And I would ask -- just ask that it be sorted out when Mr. Romney is here. Because -- THE COURT: I have to -- I -- but I understand your point. I saw the motion filed today. And I have to do something about it, obviously. MR. BASSETT: Okay. Thank you, Your Honor. THE COURT: Okay? All right. Thank you. MR. HENZY: Thank you, Your Honor. MR. MORIARTY: The only thing, if I may, that I'll

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| | 100 | |----|----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 95 | | 1 | add, Your Honor, is that the motion wasn't filed blindly. I | | 2 | know I spoke with Attorney Romney this morning. And he | | 3 | spoke with Attorney Luft yesterday, and he explained to | | 4 | Attorney Luft what had happened and that this motion was | | 5 | going to be filed. | | 6 | THE COURT: Okay. I understand that. The problem | | 7 | is, though, Attorney Romney entered into an agreement when | | 8 | we already had a hearing on a motion for contempt or a | | 9 | motion to -- I can't even keep it straight right now whether | | 10 | we were compelling production or trying to hold him in | | 11 | contempt at that point in time. But in any event, he | | 12 | entered into an agreement that Hudson -- the Hudson entities | | 13 | were going to produce documents and comply with the subpoena | | 14 | by the continued hearing date. | | 15 | Well, it doesn't seem like that's going to happen | | 16 | now. And this isn't the first time that -- and I'm not | | 17 | suggesting it's the same, but it's not the first time the | | 18 | Court has been told that there's going to be a rolling | | 19 | production or there's some agreement on production and then | | 20 | there's no agreement on production, and we're set back | | 21 | three, four, five weeks or months. | | 22 | That's not how things are going to work. And | | 23 | that's -- unfortunately, it sounds like here we go again. | | 24 | MR. HENZY: Well, I don't -- Your Honor, again, | | 25 | I'd ask that this be sorted out when Mr. Romney is here. | | | |

Ho Wan Kwok - June 13, 2023 96 THE COURT: I understand your request. MR. HENZY: Because I don't know that it -- THE COURT: But I've read the motion. MR. HENZY: Yeah. I don't know that it is here we go again. THE COURT: Well, the motion says -- MR. HENZY: And Mr. -- THE COURT: -- I made a mistake; I didn't really represent the person that I told you, Your Honor -- MR. HENZY: Right. THE COURT: -- and all the other counsel that I swore to as a member of the bar that I represented. MR. HENZY: Yeah. And, Your Honor, I'd ask that this be addressed when Mr. Romney is here. THE COURT: It is going to be addressed when Mr. Romney is here. I'm just making -- MR. HENZY: But, Your Honor, you're -- THE COURT: -- my comments clear. MR. HENZY: -- you're making comments when Mr. Romney is not here to defend himself, frankly. THE COURT: Well, he could be here, Attorney Henzy. MR. HENZY: His -- THE COURT: He's right across the street. MR. HENZY: His motion is not on the calendar. Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 96 of

Ho Wan Kwok - June 13, 2023 97 THE COURT: So if he chose not to be here, that's not my problem. MR. HENZY: That's not true. That's not correct. He -- THE COURT: You can't file a motion to withdraw an appearance after you've already made an agreement that's binding in the case and then say I'm not going to show up and explain to the Court what happened. MR. HENZY: It's not on the calendar today, Your Honor. THE COURT: It doesn't have to be on the calendar. MR. HENZY: It's -- okay. THE COURT: Where does it say it has to be on the calendar in our local rules, Attorney Henzy? MR. HENZY: Your Honor, you schedule motions to withdraw sometimes at least. Sometimes you grant them without hearing. THE COURT: And sometimes I do. MR. HENZY: And sometimes you -- THE COURT: And sometimes I don't. MR. HENZY: Sometimes you don't. THE COURT: Right. MR. HENZY: But I don't know how Mr. Romney could have known that you would take this up -- THE COURT: I'm -- Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 97 of

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| | 100 | |----|-----------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 98 | | 1 | MR. HENZY: -- today. | | 2 | THE COURT: I didn't take it up. I made a | | 3 | comment. I'm not taking anything up. I'm not ruling. I | | 4 | made a comment. | | 5 | MR. HENZY: Thank you, Your Honor. | | 6 | THE COURT: Okay? Thank you. | | 7 | All right. Is there anything further we need to | | 8 | address this afternoon? | | 9 | MR. DESPINS: Not from our point of view, Your | | 10 | Honor. Thank you. | | 11 | THE COURT: Anything from your point of view? | | 12 | UNIDENTIFIED SPEAKER: No, Your Honor. | | 13 | UNIDENTIFIED SPEAKER: No, Your Honor. | | 14 | THE COURT: Okay. | | 15 | UNIDENTIFIED SPEAKER: Thank you. | | 16 | THE COURT: Then the matters in the Kwok case are | | 17 | resolved for today, and we'll turn to the 3:00 matters on | | 18 | the calendar. | | 19 | (Proceedings concluded at 3:05 p.m.) | | 20 | | | 21 | | | 22 | | | 23 | | | 24 | | | | | | | |

| | Case 22-50073 Doc 1929 Filed 06/22/23 Entered 06/22/23 16:11:59 Page 99 of 100 | |----|-----------------------------------------------------------------------------------------------| | | Ho Wan Kwok - June 13, 2023 99 | | 1 | | | 2 | | | 3 | I, CHRISTINE FIORE, court-approved transcriber and | | 4 | certified electronic reporter and transcriber, certify that | | 5 | the foregoing is a correct transcript from the official | | 6 | electronic sound recording of the proceedings in the | | 7 | above-entitled matter. | | 8 | | | 9 | | | 10 | June 21, 2023 | | 11 | Christine Fiore, CERT | | 12 | | | 13 | | | 14 | | | 15 | | | 16 | | | 17 | | | 18 | | | 19 | | | 20 | | | 21 | | | 22 | | | 23 | | | | | | | | | | |

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