Guo Wengui / Miles Guo — bankruptcy case · ECF #1985

METADATA

Defendant: Guo Wengui / Miles Guo / Ho Wan Kwok
Court: CTB
Case No.: 22-50073
ECF #: 1985
Type: UNKNOWN
Filed: 2023-07-07

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, | * * * * | June 29, 2023 | Bridgeport, Connecticut | | | | Debtor. | * * | | | | | | * * * * * * * * * * * * * * * * BEFORE THE HONORABLE JULIE A. MANNING UNITED STATES BANKRUPTCY JUDGE | | TRANSCRIPT OF PROCEEDINGS | | | | #1831 #1851 | INTERIM APPLICATION FOR COMPENSATION FOR PAUL HASTINGS LLP, TRUSTEE'S ATTORNEY FE>EXPENSES \$348,813.54 INTERIM APPLICATION FOR COMPENSATION FOR NEUBERT, | | | | | | | PEPE & MONTEITH, P.C., TRUSTEE'S ATTORNEY FEE: \$561,718.50; EXPENSES \$0 | | | | | | #1870 | APPLICATION PURSUANT TO BANKRUPTCY CODE SECTIONS 327(e), 328(a) and 3,(a), BANKRUPTCY RULES 2014 and 2016 and LOCAL BANKRUPTCY RULES 2014-1 and 2016-1, AUTHORIZING AND APPROVING RETENTION AND EMPLOYMENT OF SAXE DOERNBERGER & VITA, P.C. AS SPECIAL INSURANCE COVERAGE COUNSEL | | | | | | | Proceedings recorded by electronic sound recording, transcript produced by transcription service. | | | | | | | Fiore Reporting and Transcription Service, Inc. 4 Research Drive, Suite 402 Shelton, Connecticut 06484 (203)929-9992 | | | | |

APPEARANCES:

Chapter 11 Trustee: LUC A. DESPINS, ESQ.

200 Park Avenue New York, NY 10166 For the Chapter 11 Trustee: G. ALEXANDER BONGARTZ, ESQ. Paul Hastings LLP 200 Park Avenue

> PATRICK R. LINSEY, ESQ. Neubert Pepe & Monteith, PC 195 Church Street New Haven, CT 06510

New York, NY 10166

Paul Hastings

- For the U.S. Trustee: HOLLEY L. CLAIBORN, ESQ. Office of the U.S. Trustee 150 Court Street New Haven, CT 06510 - For the Creditors Committee: IRVE J. GOLDMAN, ESQ. Pullman & Comley 850 Main Street Bridgeport, CT 06601

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Ho Wan Kwok - June 29, 2023 3 (Proceedings commenced at 10:05 a.m.) THE COURTROOM DEPUTY: Case No. 22-50073, Ho Wan Kwok and Genever Holdings, LLC. THE COURT: Good morning. If we could have appearance for the record starting with the Chapter 11 Trustee please. MR. DESPINS: Good morning, Your Honor. Luc Despins, Chapter 11 Trustee. THE COURT: Good morning. MR. BONGARTZ: Good morning, Your Honor. Alex Bongartz, of Paul Hastings, for the Chapter 11 Trustee. THE COURT: Good morning. MR. LINSEY: Good morning, Your Honor. Patrick Linsey of Neubert Pepe & Monteith, Connecticut counsel for the Trustee. THE COURT: Good morning. MS. CLAIBORN: Good morning. Holley Claiborn for the U.S. Trustee. THE COURT: Good morning. MR. GOLDMAN: Good morning, Your Honor. Irve Goldman, Pullman & Comley, for the Creditors Committee. THE COURT: Good morning. All right. So there are three matters on the calendar this morning, two are fee applications and one is an application to employ counsel.

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| | Ho Wan Kwok - June 29, 2023 4 | |----|------------------------------------------------------------------| | 1 | How would you like to proceed, Trustee Despins? | | 2 | MR. DESPINS: I can start with the application to | | 3 | retain the counsel, if that's okay. | | 4 | THE COURT: Go right ahead. Yes. Thank you. | | 5 | MR. DESPINS: Thank you, Your Honor. And good | | 6 | morning again. Luc Despins, Chapter 11 Trustee. | | 7 | And this is the application to retain the firm of | | 8 | Saxe Doernberger & Vita. They're based in Connecticut. And | | 9 | the fee application is at docket 1870. | | 10 | And they are -- they were retained to handle | | 11 | insurance coverage disputes relating to AIG, as Your Honor | | 12 | is familiar because you've interacted with them already. | | 13 | And we filed the application. And we received no | | 14 | objections. And, therefore, subject to any changes you may | | 15 | have to the order we would ask the Court to enter the order. | | 16 | THE COURT: The only question I have with regard | | 17 | to the engagement of this counsel is, and I apologize, I | | 18 | don't have it in front of me so I don't recall, is are they | | 19 | being paid on an hourly basis? | | 20 | MR. DESPINS: Yes. | | 21 | THE COURT: Okay. | | 22 | MR. DESPINS: Yes, they are, Your Honor. | | 23 | THE COURT: All right. And they're -- and they'll | | 24 | be submitting fee applications? | | 25 | MR. DESPINS: Correct, Your Honor. | | | |

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| | Ho Wan Kwok - June 29, 2023 5 | |----|--------------------------------------------------------------| | 1 | THE COURT: Okay. The only reason I asked is | | 2 | sometimes I miss if there's some other form of compensation | | 3 | requested under 328 at the beginning -- | | 4 | MR. DESPINS: Yeah. | | 5 | THE COURT: -- of a -- of a retention of | | 6 | professional, but I didn't think that was true in this case. | | 7 | But I didn't recall. | | 8 | MR. DESPINS: It's hourly rates, Your Honor. | | 9 | THE COURT: Okay. Thank you. | | 10 | I don't -- I do not have any questions. | | 11 | I understand why you would like to retain special | | 12 | counsel and the documents that I've seen certainly support | | 13 | the application. | | 14 | I'm looking at the proposed order. And the only | | 15 | reason I asked the question was because of the reference to | | 16 | 328. But it's 328(a) which is the Trustee's ability to | | 17 | retain counsel. So I don't have a problem with it. | | 18 | But does anyone else wish to be heard on the | | 19 | application to employ special insurance counsel? | | 20 | MS. CLAIBORN: Just briefly, Your Honor. | | 21 | The U.S. Trustee filed a statement of no objection | | 22 | to the application. That's at ECF 1941. | | 23 | THE COURT: Okay. Thank you. | | 24 | MS. CLAIBORN: And just to be clear the reference | | 25 | to 328 in the application in no way interferes with the | | | |

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Ho Wan Kwok - June 29, 2023 6 ability of the Court or the U.S. Trustee or creditors to opine on the reasonableness of the fees when they're sought. THE COURT: Yeah. Often, and I saw that when I looked back at the retention of Paul Hastings and Neubert and Pepe as well, often 328 isn't mentioned. It's just 327. So I just -- I like to make sure when 328 is mentioned that no one is, and no one is in this case, but insisting that there's some kind of compensation that's set from the beginning. Because as you all know there's a lot of case law that says, you know, you can't touch that once that's done or it's very limited ability. So that's fine. The only thing that I don't see, and maybe I missed it, so let's just -- let me -- oh, it is there -- it's there, I just -- effective May 11. That's what I'm asking. What was the date that they retained as of and it's May 11th. I see it now in paragraph 2 of the ordered paragraphs. So does anyone else wish to be heard? MR. GOLDMAN: Just the committee has no objection, Your Honor. THE COURT: Okay. Thank you. As I stated already, I've reviewed the application. I understand why the Trustee is seeking to retain special counsel. Certainly understand under the

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Ho Wan Kwok - June 29, 2023 7 specific facts and circumstances of the cases in the adversary proceeding involving the insurance the need for special counsel to deal with or help the Trustee deal with the insurance issues. No one has filed any written objection to the application to employ. There is no one participating in this hearing today that is objecting to the application to employ. The United States Trustee's Office has filed a statement of no objection with regard to the application to employ, which is ECF No. 1941. For all those reasons the application is granted and the proposed that was submitted with the application can enter. MR. DESPINS: Thank you, Your Honor. I would just point out that they are not only insurance coverage counsel, but also local Connecticut counsel -- THE COURT: Sure. MR. DESPINS: -- because Mr. Linsey's firm -- actually, we can say that it's Mr. Linsey's firm because he's now a partner at his firm -- that has a conflict and that was my way of mentioning that he made partner. THE COURT: That he did or did not? MR. DESPINS: He did. He did. Just did. THE COURT: Oh, well, congratulations, Mr. Linsey.

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| | Ho Wan Kwok - June 29, 2023 8 | |----|-------------------------------------------------------------| | 1 | MR. LINSEY: Thank you, Your Honor. | | 2 | MR. DESPINS: So they're also local counsel so | | 3 | that, you know, that covers that. | | 4 | Thank you, Your Honor. | | 5 | THE COURT: Okay. Thank you. | | 6 | MR. DESPINS: So the next matter I would move on | | 7 | to would be the interim application for -- to retain -- to | | 8 | pay Paul Hastings. | | 9 | And, Your Honor, so that I'm not going to take a | | 10 | lot of time on this, but I would -- there are two aspects I | | 11 | want to cover. | | 12 | One is I want to describe and reflect the | | 13 | settlements that were agreed to with the U.S. Trustee and | | 14 | the committee. | | 15 | And then I'll have very short, very short | | 16 | editorially comments about some aspects of the fees here. | | 17 | But first, on the settlements, as you can imagine, | | 18 | in the background there are a lot of discussions that were | | 19 | taking place with both the U.S. Trustee and the committee. | | 20 | One of the issues that was being discussed was the issue of | | 21 | holdbacks. | | 22 | And our initial position was that there should be | | 23 | no holdbacks during the case because there's a contingent | | 24 | fee deal and we haven't gotten paid. And on top of that | | 25 | there was a built-in holdback because this application only | | | |

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| | Ho Wan Kwok - June 29, 2023 9 | |----|--------------------------------------------------------------| | 1 | covers through February. So there's March, April, May, | | 2 | June, plenty of money to cover a holdback. | | 3 | But the counter from their point was, which was a | | 4 | good one, which is, well, what stops you from filing an | | 5 | application on Friday that brings all that up and there will | | 6 | be no holdbacks at all? | | 7 | And so we agreed as part of this back and forth | | 8 | that any future application would be subject to a 20 percent | | 9 | holdback provided that we -- that we're getting paid -- and | | 10 | this applies to all professionals in the case -- on a more | | 11 | regular basis which we defined at no more than 60 days. | | 12 | So, for example, we're not going to file an | | 13 | application tomorrow, but if we did, and it is heard and | | 14 | paid, subject to Your Honor's decision to allow or not | | 15 | allow, within 60 days, then there would be 20 percent held | | 16 | back for the rest of the case for that application. | | 17 | And the concept there is if now we're getting -- | | 18 | we have money, we're getting into a more regular mode where | | 19 | -- where fee applications can be heard and can be dealt | | 20 | with. | | 21 | And so that was the agreement that was reached, | | 22 | which is that there will be a 20 percent holdback going | | 23 | forward for all future fee applications provided that we are | | 24 | operating in this normal mode which is defined as, you know, | | 25 | no more than 60 days or so. | | | |

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Ho Wan Kwok - June 29, 2023 10 So that's -- so that's the first part on holdbacks. I wanted to mention that discussion with the U.S. Trustee and with the committee on that. The second part is the U.S. Trustee raised a number of issues with some of the time entries. And to give you some examples, too many lawyers at a hearing or vague entries. And so to be candid with you counsel for the U.S. Trustee was correct on some of the issues regarding too many lawyers at a hearing, although frankly sometimes I was alone at a hearing, but I guess that doesn't -- that doesn't counter that argument, but she was right on that issue. And on a vague entry we -- it's all subject to disagreement. We didn't agree with the bulk of her comments, but at the end of the day we agreed to a \$550,000 reduction, Your Honor, which we think is substantial to address all these issues. And we've -- I would say we took on some comments that the U.S. Trustee had in terms of making it easier for the U.S. Trustee and for parties in interest and for the Court to ascertain the value provided with respect to adversary proceedings. So from no on the next applications that are filed will have every adversary proceeding billed separately so

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Ho Wan Kwok - June 29, 2023 11 that we can look at the adversary proceeding and say, wow, you know, it cost us more than we recovered, which would not be good, or hopefully it will be, no, we recovered more than we spent. But I think that it was a very good suggestion. We're going to implement that going forward so all future fee applications will have separate categories for each adversary proceeding so that the Court can see that. I would say on the reduction I don't think -- I don't want this to be precedent setting in a sense that we now know what issues were raised, we're not going to hopefully repeat these issues, so that -- so that we won't be in the same position, but clearly in order to get this resolved with the U.S. Trustee we agreed to the \$550,000 reduction. And as I said we think it's a material reduction. So before I move on to what I call my short editorial comments, maybe the committee or the U.S. Trustee wants to address this aspect of -- or later -- it's up -- MR. GOLDMAN: Well, I did want to mention it wasn't my understanding that the future 20 percent holdbacks would be subject to any shortening of the time for filing fee applications under Section 331. We have no objection to the Court doing that 60 days or even a shorter period, but it wasn't my understanding that this agreement with the committee was

Ho Wan Kwok - June 29, 2023 12 conditioned on the Court doing that. THE COURT: You can have a conversation. Go ahead. (Pause) MR. DESPINS: We want the Court to reduce the time to hear and decide fee applications to a 30-60 day period. But counsel is right that I'm taking the risk that the Court would refuse to do that and would only hear fee applications on a four-month interval which is in the statute. I'm sorry. He's correct. THE COURT: Okay. MR. DESPINS: And there's no relief pending before the Court on that. THE COURT: Right. MR. DESPINS: We hope that Your Honor will do that, but I'm taking a risk that the Court will refuse to do that. So that covers the committee. MR. GOLDMAN: Yes. MS. CLAIBORN: Your Honor, with respect to the U.S. Trustee's points on the reductions requested, we did reach a consensual number which is memorialized in the statement that I filed on the docket at ECF 1949. If the Court has any questions about that, I'm happy to answer them. THE COURT: I'm not sure I have questions per se. Case 22-50073 Doc 1985 Filed 07/07/23 Entered 07/07/23 13:26:25 Page 12 of 34

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Ho Wan Kwok - June 29, 2023 13 I think that I can understand the discussions that have -- were had and Trustee Despins said about certain entries being vague or having many -- too many lawyers at a hearing or things like that. I will say that I agree with Trustee Despins that this is not some kind of precedent set in this case if and when further fee applications are filed. I think every fee application has to be reviewed separately from any fee application that's been filed previously. I think that in connection with this case and what I have observed in this case that the -- there has been -- this has been a heavily litigated case to put it mildly. And I think that the Trustee has attempted to keep costs and fees in a range that is reasonable under the very specific and detailed circumstances of this -- these cases and the numerous adversary proceedings. And so I completely understand the discussions. I think the discussions are healthy. I think they should happen. I've no issue with that. But I don't think it should be something that everyone expects on a going-forward basis. The Court, as you know, has an independent obligation to review the fees as well. Otherwise why am I here, right? I mean, there's really no point. So there are -- I mean, I think anyone could go

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| | Ho Wan Kwok - June 29, 2023 14 | |----|---------------------------------------------------------------| | 1 | through any fee application of any magnitude, whether it's a | | 2 | thousand dollars or \$12 million, and make a determination or | | 3 | suggestion that time should be reduced. | | 4 | But I don't -- I want to be clear that I don't -- | | 5 | I will not -- someone will not be successful in arguing | | 6 | before me, well, that was done last time so you should do it | | 7 | again. That will not be a successful argument. | | 8 | This is a very -- I mean, I don't have to tell | | 9 | anybody in this room this is a very unusual case that has | | 10 | been heavily, heavily litigated at every step. I can't | | 11 | think of -- I guess today maybe is the only day we haven't | | 12 | had an objection which is fascinating in and of itself. | | 13 | But, you know, every single time something has | | 14 | been filed there's an objection, there's the discovery | | 15 | disputes, often for whatever reason we all come ready to | | 16 | think that there's going to be a controversy and then | | 17 | there's some resolution, but the Trustee had to prepare for | | 18 | that and be ready for that. | | 19 | And so all I want to say is, again, of course you | | 20 | should have these conversations. They're very -- they can | | 21 | be very productive and they should happen. | | 22 | But I just want to be very clear that that does | | 23 | not mean that I expect that every fee application that's | | 24 | filed should have a voluntary reduction, number one. | | 25 | Number two, even if it doesn't have a voluntary | | | |

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Ho Wan Kwok - June 29, 2023 15 reduction, the Court may reduce it. The Court may look at something and say, you know, I don't think that is reasonable under the circumstances of the case. I do think the suggestion of billing separately or accounting separately for the time in the adversary proceedings at this point is a good suggestion given where things stand now and how they've developed. But as we all know things change in this case every day. One minute we're going down one road and the next minute we're going down another. And this is not a case that fits in my opinion into the mold of where you could draft a litigation plan of how you're going to handle this case. And so for those reasons I just wanted to be clear that this does not set any precedent in this case with regard to an expectation that any professional must reduce their fees, with the comment that doesn't mean they won't be reduced. Okay? But there's no -- I'm not -- this case is -- you know -- as you know, I've looked by the way at the fee applications and the time entries that are, you know, what, four or five inches thick and the work appears very reasonable to me under the circumstances of this case. Now, someone could say that's a lot of money, and that's true, but the Trustee did -- from my perspective with

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Ho Wan Kwok - June 29, 2023 16 regard to this fee application and the time frame that is covered by this fee application, the Trustee and Connecticut counsel for the Trustee have not -- I see no evidence in the fee application entries which I looked at -- Now, did I study every single entry, of course not, I can't. But I looked at the time entries. I looked at them. I looked at the categories. I looked at the breakdown of the amounts by category. But I don't -- I did not see an entry that concerned me, that made me think why did they do that? Or that seems unnecessary. Or I didn't see an entry that, you know, which happens some times, where it was mistakenly put in from another case. I mean, that's happened before. You know, somebody makes a mistake. You know, that happens. It's not a -- nobody did it on purpose. I didn't see anything that raised any concern from the Court's perspective. And I think that this is a case that required the staffing that occurred up to this point. Up to the point, you know. What's going to happen from this point forward, who knows, right? Things we don't know. That's the -- that's what happens in this case. We don't know from day to day how it's going to be. So I just -- I just want to be clear about that. I think I have been. I've probably said

Ho Wan Kwok - June 29, 2023 17 it three times now. But I just think that the dollar amount, while high, appears to me to be reasonable under the very specific circumstances of this case. And the expenses as well. I mean, you know, we all know what it costs to do these things especially if you're met every step of the way with opposition. And I have no idea, but I would -- if the Court -- if it was known what was spent by counsel opposing all these things, I think we'd find that would be a high number as well. So I have no problem with the agreement that you've reached. And I think I need a new order though, don't I? MS. CLAIBORN: You do. MR. DESPINS: Yes. And I believe Mr. Bongartz sent a draft to the courtroom deputy this morning. THE COURT: Okay. I haven't seen it yet. But that's not your -- I mean, you know, we've been working so we probably just didn't know that it was there yet. But I would assume that when I look at the original proposed order the differences would say that you've agreed to a reduction. MR. DESPINS: Yes. THE COURT: That is has the dollar amounts in it. Case 22-50073 Doc 1985 Filed 07/07/23 Entered 07/07/23 13:26:25 Page 17 of 34

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Ho Wan Kwok - June 29, 2023 18 That you say that there was a hearing held today that -- I don't know if you said it in the -- if you need to have said it, but we can put in today's date. If that's all we need to put in, we can put it in. MR. DESPINS: But there were other changes, Your Honor, I should point out to Your Honor. They're not material but Mr. Kindseth asked that we incorporate by reference the DIP order. Remember about disgorgement and all that? And we've agreed to do that. That's in the revised order that you have. THE COURT: I was going to say not the DIP order. MR. DESPINS: No, the sale. THE COURT: There is no DIP. That was withdrawn. MS. CLAIBORN: The sale. MR. DESPINS: Okay. THE COURT: Yeah. MR. DESPINS: I'm talking about another case now. THE COURT: That's okay. That's okay. MR. DESPINS: Yeah. The sale order. THE COURT: So what's the reference that he wants in there? MR. DESPINS: Remember that there was a -- the provision that you correctly pointed out that Ms. Guo should not be a party to -- it's that provision that says that if they win in the Supreme Court that they own it --

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Ho Wan Kwok - June 29, 2023 19 THE COURT: Oh, that the monies, they could get monies back from the estate? MR. DESPINS: From the estate. And if there's no money in the estate, from the professionals that got the money. So that's us. THE COURT: Okay. Okay. I understand. MR. DESPINS: So we've added that. We also added other requests of counsel for the U.S. Trustee, some language that -- because Your Honor ordered a number of parties to pay 78 or \$73,000 in fees. We haven't collected on that yet so there's a provision -- THE COURT: In connection with the sanctions orders? MR. DESPINS: Exactly. THE COURT: Yes. MR. DESPINS: That if we ever collect that we need to give a credit in the next fee app, so we added that language. THE COURT: Okay. MR. DESPINS: And I believe that's all that was added. THE COURT: Okay. That's fine. That's fine. And I'm looking at what was the original proposed order and -- MR. DESPINS: And we had put the local rule --

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Ho Wan Kwok - June 29, 2023 20 THE COURT: Right. MR. DESPINS: -- provision -- THE COURT: Right. MR. DESPINS: -- regarding disgorgement. THE COURT: Yeah. And it does say -- and no objection to the application having been filed, and that is accurate. You know what? I might change -- it says and no objection to the application having been filed by the Office of the United States Trustee. And in the absence of any other objection to the application. Well, that's right. So that's fine. I just want to make it clear that no one's filed an objection, which I think it is. Okay. So I -- you know, for the reasons that I've just stated, and for what the Court's obligations are with regard to a fee application, with regard Paul Hastings and the fees and expenses incurred from the period of July 8th, 2022 through February 28th, 2023, I find that the fees and expenses sought are reasonable and that they were necessary under the circumstances of the case. Now, we could argue that it's -- they were unfortunately necessary, but they were necessary. And it wasn't through -- there's been no demonstration in the fee application that I've seen that there were any tasks or time

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Ho Wan Kwok - June 29, 2023 21 incurred that were inappropriate under the -- under what was the charge given to the Trustee to investigate the affairs of the debtor in connection with the appointment of the Chapter 11 Trustee. And I appreciate the conversations between the U.S. Trustee and the Trustee. And I appreciate the statement filed by the Trustee, United States Trustee, regarding that they had no objection to the fee application in connection with an agreement to reduce the fees and no one else having filed any objection to the fees. Does anybody else wish to be heard before I rule? MR. GOLDMAN: Your Honor, just briefly. I didn't want the Court to think the committee was just rolling over on this. We did scrutinize the application, came to pretty much the same conclusion Your Honor came to after getting over the initial sticker shock of the number. But I think from our perspective on calmer reflection it was more of a function of the hourly rates, which were disclosed at the outset, so we really couldn't take issue with that. And recognizing as Your Honor has said the difficult issues that were confronted in this case, the progress that's been achieved thus far, which the committee

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| | Ho Wan Kwok - June 29, 2023 22 | |----|--------------------------------------------------------------| | 1 | is pleased with, and given all of the litigation activity, | | 2 | relatively expeditious time period in which things have | | 3 | flowed in the case, and recognizing really the substantial | | 4 | resources that Paul Hastings brought to bear on this case | | 5 | which started out with no assets and now it's quite a | | 6 | different story, so that's how we came out on it, Your | | 7 | Honor. | | 8 | THE COURT: Thank you. | | 9 | MR. GOLDMAN: Thank you. | | 10 | THE COURT: Does anyone else wish to be heard? | | 11 | (No response) | | 12 | THE COURT: All right. I am looking at the | | 13 | proposed order now that you did submit this morning. The | | 14 | courtroom deputy sent this to me. And just give me a | | 15 | moment, but it looks fine from what I've seen so far. I'm | | 16 | just not -- I just need to finish it. | | 17 | Oh, you know what we could do with the order? | | 18 | Just in the second sentence of the order we'd just say after | | 19 | notice and a hearing held on June 29, 2023, okay? | | 20 | THE COURTROOM DEPUTY: Yeah. | | 21 | (Pause) | | 22 | THE COURT: I'm looking at that additional | | 23 | paragraph regarding the sanctions at the moment. | | 24 | The only thing I might add to that, although I | | 25 | don't remember if the order says this so I'm looking at both | | | |

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| | Ho Wan Kwok - June 29, 2023 23 | |----|--------------------------------------------------------------| | 1 | of you, I can look, it won't take me long, but aren't they | | 2 | jointly and severally liable on those? | | 3 | MR. DESPINS: They are. | | 4 | MR. GOLDMAN: Yes. | | 5 | MR. BONGARTZ: They are. | | 6 | THE COURT: Okay. I don't know that it says that. | | 7 | I wouldn't mind if it did. It says -- I think we can just | | 8 | say -- no, we can do it -- I mean, it can say are jointly | | 9 | and severally obligated to pay. | | 10 | MR. DESPINS: Okay. | | 11 | MS. CLAIBORN: That's fine. | | 12 | MR. DESPINS: Your Honor, we'll do that change. | | 13 | THE COURT: Yeah. We'll do that change. | | 14 | I'd like -- you know, who knows if this is going | | 15 | to be appealed, right? | | 16 | So I'd like the district court to understand as | | 17 | clearly as possible what's happened so that they don't have | | 18 | to do the work if there's an appeal. Okay? | | 19 | So I'm looking -- I'm turning to the courtroom | | 20 | deputy, do you see where I am in paragraph 4? | | 21 | THE COURTROOM DEPUTY: Yes. After the parentheses | | 22 | of HK? | | 23 | THE COURT: Right. So it will say are jointly and | | 24 | severally obligated. Okay? You can have me look at it, | | 25 | whatever, you know, after, but I think that's -- I know the | | | |

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| | Ho Wan Kwok - June 29, 2023 24 | |----|----------------------------------------------------------------| | 1 | order says that, but I'd like it to say -- I would like that | | 2 | same language to be in this order. | | 3 | MR. DESPINS: I would just say, Your Honor, you | | 4 | mentioned the district court, there's a lot of activity in | | 5 | the district court at this point, meaning appeals, state -- | | 6 | THE COURT: I've heard. | | 7 | MR. DESPINS: You know, that was part of my | | 8 | speech, so I'm not going to go through that, but over 36-37 | | 9 | years I thought I'd seen it all, but I've never seen a | | 10 | double stay pending appeal. What I mean is that both courts | | 11 | being asked to stay at the same time. Never seen that. | | 12 | Never seen a mandamus which they filed. | | 13 | I mean, I was telling Ms. Claiborn that I've often | | 14 | dreamt about filing a mandamus before a judge that ruled | | 15 | against me, but I've never seen, ever seen that. | | 16 | So there's a lot of activity in the district court | | 17 | at this point. | | 18 | THE COURT: I understand both of those things that | | 19 | you just said and I guess we'll see what happens. | | 20 | I mean, it's in the district court's hands | | 21 | obviously. Whatever the district court's going to do, the | | 22 | district court is going to do. | | 23 | I do know -- I did appreciate knowing that Judge | | 24 | Dooley did deny the motion for stay pending appeal because | | 25 | then I don't have to rule on that. That helps. | | | |

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Ho Wan Kwok - June 29, 2023 25 And I know I understand that there's a writ of mandamus out there in which the docket indicates that I'm a defendant. Although I think that's not accurate. I think that's just the way the clerk's office has to -- I don't know that though -- but I think it's the way the clerk's office to note it. And then I think it's completely up to the district court to determine what if anything will happen with that writ of mandamus, including whether or not the district court may ask some party in this case to file pleadings. So I have no idea. No, I hadn't seen one of those either actually. MR. DESPINS: As I said, I've dreamt a lot about that in other cases, but I've never actually seen it. THE COURT: Well, I've seen it in a context of a motion where there was other relief sought before the other court, but not in the commencement of an action. I hadn't seen that. But, you know, we should all go back and read *Marbury vs. Madison* so maybe we'll -- MR. DESPINS: Exactly. THE COURT: -- understand what that -- once we read that again. But that wasn't involving a judge, so we'll see. In any event, I'm looking at the proposed order

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| | Ho Wan Kwok - June 29, 2023 26 | |----|---------------------------------------------------------------| | 1 | that was submitted this morning. And with the changes that | | 2 | I noted on the record and that are agreeable to the parties | | 3 | that are here today, the application for compensation of | | 4 | Paul Hastings, LLP for the period of July 8th, 2022 through | | 5 | February 28th, 2023 is granted and the proposed order with | | 6 | the minor changes noted on the record will enter. | | 7 | MR. DESPINS: Thank you, Your Honor. | | 8 | THE COURT: Thank you. | | 9 | MR. LINSEY: Good morning, Your Honor. | | 10 | THE COURT: Good morning. | | 11 | MR. LINSEY: Patrick Linsey, Connecticut counsel | | 12 | for the Trustee and conflicts counsel here for my firm | | 13 | Neubert, Pepe & Monteith. I won't take up a lot of time. | | 14 | I was involved on behalf of my firm in the | | 15 | conversations that the Trustee discussed with the U.S. | | 16 | Trustee and with the committee regarding holdbacks and fee | | 17 | applications going forward and I understand the parameters | | 18 | that we're operating under. | | 19 | I could -- I could talk about what led to the | | 20 | filing of this fee application, but I feel like everyone on | | 21 | this courtroom has pretty much lived it together at this | | 22 | point. | | 23 | There is one thing that I'll briefly touch on, | | 24 | which is I think not always the shiniest and most exciting | | 25 | part of the case, it's sort of the ducks' feet under the | | | |

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| | Ho Wan Kwok - June 29, 2023 27 | |----|---------------------------------------------------------------| | 1 | water if you will, but it's also sort of an apt analogy | | 2 | because it's in some ways what powers the case, which is the | | 3 | investigation that's been going on while we've been doing | | 4 | all this litigation. | | 5 | I think there have been five omnibus 2004 motions | | 6 | that have been granted, that's on top of three initial 2004 | | 7 | motions that have been granted, all of which refer -- all of | | 8 | which dealt with numerous examinees, dozens and dozens, into | | 9 | the hundreds I believe at this point, of examinees, | | 10 | something that my office and I have been very much involved | | 11 | in. | | 12 | And that hasn't necessarily been court work, but | | 13 | particularly in this case where the Trustee has not had | | 14 | financial advisors, forensic accountant professionals, where | | 15 | we've really had to have attorneys doing that work to move | | 16 | this investigation forward, it's taken a lot of time. It's | | 17 | taken a lot of resources. | | 18 | But I think that the results are evident when | | 19 | there are adversary proceedings that are filed with initial | | 20 | requests for injunctive relief that are supported by | | 21 | voluminous evidence, discreet facts showing why that relief | | 22 | is appropriate. Those facts weren't handed to us on a | | 23 | platter. Those facts were really from the sweat of many | | 24 | brows in the form of that investigation. | | 25 | So particularly, I suppose for me, in addition to | | | |

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| | Ho Wan Kwok - June 29, 2023 28 | |----|----------------------------------------------------------------| | 1 | the work you've seen here in court because of the role as | | 2 | conflicts counsel, obviously with a large firm like Paul | | 3 | Hastings there are a number of examinees where we've had to | | 4 | do, you know, grab the oar with respect to some of the | | 5 | investigating, that's been a large part of the case. | | 6 | And I think -- I think there have been positive | | 7 | developments for the estate and I'm optimistic there will be | | 8 | more positive developments for the estate. | | 9 | So with that having been said my firm did have a | | 10 | conversation with Attorney Claiborn for the United States | | 11 | Trustee. Ms. Claiborn raised certain issues. We didn't | | 12 | agree on all the issues, but we did agree that a \$10,000 | | 13 | reduction to the fee application was appropriate. That's | | 14 | been agreed to. Otherwise I'm not aware of any objections | | 15 | to the fee application. | | 16 | So we would ask that the Court enter the order | | 17 | granting the fee application. | | 18 | To the extent the Court would be willing to do | | 19 | that, I would suggest one of two things. | | 20 | One, the only change to our proposed order that | | 21 | I'm aware of is entering the date of the hearing and -- | | 22 | THE COURT: We can take care of that. | | 23 | MR. LINSEY: -- and reducing the number in | | 24 | paragraphs 1 and 2 from 561,718.50 to 551,718.50. So if the | | 25 | Court can -- | | | |

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Ho Wan Kwok - June 29, 2023 29 THE COURT: It's 10,000 even? MR. LINSEY: Correct. Ten thousand even, Your Honor. But beyond that I'm not aware of any other changes that are necessary unless the U.S. Trustee and the committee have any comments with respect to our application. THE COURT: The only thing I am -- I'm sorry. MS. CLAIBORN: Yeah. THE COURT: Why don't I hear from you first, Attorney Claiborn. MS. CLAIBORN: I was just going to state the obvious which is the U.S. Trustee is on board with the \$10,000 reduction as evidenced by the statement that I filed on the docket at ECF 1950. And I concur with Attorney Linsey that there are no other changes that need to be made to the order other than to adjust the math. THE COURT: Okay. Thank you. Just so -- so the record is clear, what I -- what I've commented on the record about the application of Paul Hastings, I agree with the application, those comments are applicable to the application of Neubert, Pepe & Monteith as well. I did review the time entries. As I said did I

Ho Wan Kwok - June 29, 2023 30 review every single time entry? No. But I reviewed a good amount of them. And I reviewed the categories of tasks performed, the amounts, the dollar amounts associated with those categories. It was easy for me in both situations to see where the most fees were incurred, and they were incurred in categories where I would think the most fees should have been incurred. So I, again, think the fees and expenses are reasonable and absolutely necessary under the circumstances of the very specific circumstances of these jointly administered Chapter 11 cases, and the numerous adversary proceedings, and the injunctive relief that's been sought, and the issues with regard to appeals, and all the things we've already talked about. So I have -- again, there was nothing that stood out to me as any area of concern. With regard to the voluntary reduction, again, as I've already said, I think those conversations are very good to have. And I think that, you know, you've come to an agreement. And that's fine. But, again, I don't want there to be a belief that that has to happen every time, with the understanding that I could be the one that decides that there is a need for a reduction. Okay? But I might not. You never know. You Case 22-50073 Doc 1985 Filed 07/07/23 Entered 07/07/23 13:26:25 Page 30 of 34

Ho Wan Kwok - June 29, 2023 31 just don't know. It depends upon the facts and the circumstances of the case. With regard to your proposed order, the only other change I'm going to make, and the courtroom deputy and I can do this, is I just want to cite to the statutes at the beginning of the order, like the Paul Hastings' order does, you know, pursuant to Sections 328, 330 and 331. MR. LINSEY: I'm sorry. THE COURT: That's okay. MR. LINSEY: I wasn't aware that Mr. Kindseth's ask applied to my firm, but I suppose it's fair. We're fine doing that too. THE COURT: You mean the same language that -- MR. LINSEY: The same language. Would you like us to -- THE COURT: That same paragraph 4, essentially? MR. LINSEY: Yeah. Okay. It's fine. Would you like us to submit an order? Your Honor, could -- the Court could copy and paste that language from the -- THE COURT: We can copy and paste it. MR. LINSEY: Okay. THE COURT: We'll keep the fees down for today as much as we can. Okay? MR. LINSEY: Thank you, Your Honor. Case 22-50073 Doc 1985 Filed 07/07/23 Entered 07/07/23 13:26:25 Page 31 of 34

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| | Ho Wan Kwok - June 29, 2023 32 | |----|----------------------------------------------------------------| | 1 | THE COURT: But I -- you know, as I said, nothing | | 2 | stood out or gave me pause in connection with these | | 3 | applications because of the facts and circumstances that | | 4 | we've all encountered in these cases. Okay? | | 5 | So did the committee wish to be heard? | | 6 | MR. GOLDMAN: Your Honor, no objection from the | | 7 | committee for largely the same reasons articulated for Paul | | 8 | Hastings except for the hourly rates. But we have -- we saw | | 9 | it as Your Honor saw it. | | 10 | THE COURT: Well, that's a reality of geography I | | 11 | suppose. Right? As we all know. | | 12 | But in any event we can take care of those | | 13 | changes. | | 14 | The Court finds that, as I said, the fees and | | 15 | expenses are reasonable and necessary. No one has filed any | | 16 | written objection. There's no one participating in this | | 17 | hearing today that's objecting to the fee application. The | | 18 | United States Trustee's Office has filed a statement of no | | 19 | objection in connection with the agreement, further | | 20 | reduction of the fees by \$10,000. | | 21 | For all those reasons the application is granted | | 22 | and the proposed order will enter. | | 23 | MR. LINSEY: Thank you, Your Honor. | | 24 | THE COURT: Okay. Thank you. | | 25 | We'll make those minor changes, Attorney Linsey, | | | |

Ho Wan Kwok - June 29, 2023 33 that we talked about. We can do that. MR. LINSEY: Thank you, Your Honor. THE COURT: So, you know, again, I do think that all that has occurred as far as the fees and expenses have -- are reasonable and necessary and have produced results for this estate which is in a very different place than it was a year ago today. And that was -- You know, the appointment of the Trustee was designed to see if that could happen and to see if -- that was the whole point. All the -- the creditors had come in and said there needs, you know, there needs to be an investigation, there's all kinds of things going on. That was why a trustee was appointed. The investigation has yielded results in a -- in a very -- in less than a year, under very difficult circumstances. So I -- that's very much appreciated by the Court. And we'll have to see where things go from here. I think obviously the point of this is for the benefit of creditors. And so there have to be -- attorneys have to be paid in order to try to reach a result that is for the benefit of creditors. And while the amounts may seem high I -- from July 8th, 2022 to February 28th, 2023, I think they're Case 22-50073 Doc 1985 Filed 07/07/23 Entered 07/07/23 13:26:25 Page 33 of 34

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Ho Wan Kwok - June 29, 2023 34 reasonable. So I don't know if anyone wishes to discuss any other matters today, otherwise I think -- I think we are -- we do not have any further hearings in these cases until July 11th, is that correct? MR. DESPINS: That's my understanding, Your Honor. THE COURT: Okay. All right. Well, have a nice 4th of July. And thank you all very much. MR. DESPINS: You as well. ALL COUNSEL: Thank you, Your Honor. THE COURT: We do not have another matter on the calendar until 12 p.m., so court is in recess until 12 p.m. (Proceedings concluded at 10:51 a.m.) I, CHRISTINE FIORE, court-approved transcriber and certified electronic reporter and transcriber, certify that the foregoing is a correct transcript from the official electronic sound recording of the proceedings in the above- entitled matter. 21 July 7, 2023 22 Christine Fiore, CERT