Guo Wengui / Miles Guo — bankruptcy case · ECF #3055

METADATA

Defendant: Guo Wengui / Miles Guo / Ho Wan Kwok
Court: CTB
Case No.: 22-50073
ECF #: 3055
Type: UNKNOWN
Filed: 2024-03-28

FULL TEXT

1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT BRIDGEPORT DIVISION IN RE: . Chapter 11 . Case No. 22-50073 (JAM) HO WAN KWOK, et al., . . (Jointly Administered) Debtors. . . . . . . . . . . . . . . . . . . LUC A. DESPINS, CHAPTER 11 . Adversary Proceeding TRUSTEE, . No. 23-05018 (JAM) . Plaintiff, . . v. . . GOLDEN SPRING (NEW YORK) . LTD., and CHINA GOLDEN . SPRING GROUP (HONG KONG) . LIMITED, . . Defendants. . . . . . . . . . . . . . . . . . . LUC A. DESPINS, et al., . Adversary Proceeding . No. 23-05028 (JAM) Plaintiffs, . . v. . . Courtroom 123 ACE DECADE HOLDINGS . Brien McMahon Federal Building LIMITED, et al., . 915 Lafayette Boulevard . Bridgeport, Connecticut 06604 Defendants. . . Tuesday, March 26, 2024 . . . . . . . . . . . . . . . 1:04 p.m. TRANSCRIPT OF HEARING BEFORE THE HONORABLE JULIE A. MANNING UNITED STATES BANKRUPTCY JUDGE Case 22-50073 Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 1 of 57

| | Case 22-50073 |--------|--------------------------------| | | | | 1 | | | | | 2 | For the Chapter 11 Trustee: | | 3 | | | 4 5 | | 6 | | | 7 | | | 8 | | | 9 | | | 10 | | | 11 | | 12 | Wang: | | 13 | | | 14 | | | 15 | | | 16 | | | 17 | | | 18 | | | 19 | | | 20 | | 21 | | 22 | | | 23 | | | 24 | | | 25 | | | | | | | | | | | | Doc 3055 | Filed 03/28/24 | | Entered 03/28/24 09:22:13 | Page 2 of 57 | | ------------------------|--------------------------------------------------------|----------------------------------------------------------|------------------------------------------------------------------------------------------------------|--------------|--| | | | | 2 | | | APPEARANCES: | | | | | | | | | | | | | | Patrick R. Linsey, Esquire | | | | | | | NEUBERT PEPE & MONTEITH, P.C. 195 Church Street | | | | | | | 13th Floor New Haven, Connecticut 06510 | | | | | | -and- | | | | | | Luc A. Despins, Esquire PAUL HASTINGS, LLP | | | | | | 200 Park Avenue New York, New York 10166 | | | | | | Nicholas A. Bassett, Esquire 2050 M Street, NW | | | | | | Washington, DC 20036 | | | | For Yanping "Yvette" | | | | | | | | | Carl Gulliver, Esquire CARL GULLIVER LAW, LLC 470 James Street | | | | | | Suite 007 | | | | | | New Haven, Connecticut 06513 | | | | | | -and- | | | | | | Cooper J. Macco, Esquire MACCO & COREY, P.C. | | | | | | 2950 Express Drive South Suite 109 | | | | | Islandia, New York 11749 | | | | | | | | | | | Audio Operator: | | | Electronically recorded | | | | Transcription Company: | | | Reliable | | | | | The Nemours Building 1007 N. Orange Street, Suite 110 | | | | | Wilmington, Delaware 19801 Telephone: (302)654-8080 | | | | | | | | Email: gmatthews@reliable-co.com | | | | | | Proceedings recorded by electronic sound recording, transcript produced by transcription service. | | | | | | | | | | | | | | | | | | | | |

INDEX MOTIONS: PAGE Matter No. 1: (Re: 40) Motion of Chapter 11 Trustee for Order Enforcing Judgment and Requiring Turnover of Storage Unit Contents to Chapter 11 Estate filed by Plaintiff Despins, Luc A., Chapter 11 Trustee Court's Ruling: 11 Matter No. 2: (Re: 16) Motion to Dismiss Adversary Proceeding Filed by Cooper J. Macco on behalf of Yanping "Yvette" Wang, Defendant Court's Ruling: 45 Transcriptionist's Certificate 57 Case 22-50073 Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 3 of 57

Case 22-50073 Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 4 of 57

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (Proceedings commenced at 1:03 p.m.) THE CLERK: Case Number 22-50073, Ho Wan Kwok. Adversary 23-05018, Despins v -- I'm sorry, I lost my screen -- Despins v Golden Spring, et al.; Adversary 23- 05028, Despins v Ace Decade Holdings Ltd., et al. THE COURT: Okay. Good afternoon. If we could have appearances for the record, starting with the Chapter 11 Trustee, please. MR. DESPINS: Good afternoon, Your Honor. Luc Despins, Chapter 11 Trustee. 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, Neubert Pepe & Monteith, Connecticut counsel for the trustee. THE COURT: Good afternoon. MR. MACCO: Good afternoon, Your Honor. Cooper Macco, Macco & Corey, in the Ace Decade adversary proceeding, on behalf of Defendant Yvette Wang, admitted pro hac vice. THE COURT: Good afternoon. MR. GULLIVER: Good afternoon, Your Honor. Carl Gulliver. I have local counsel to Mr. Macco.

| Case 22-50073 | Doc 3055 | Filed 03/28/24 | Entered 03/28/24 09:22:13 | Page 5 of 57 | |---------------|----------|----------------|---------------------------|--------------| | | | | | |

THE COURT: Good afternoon.

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 All right. We have some matters in the main case and in the Adversary 5018 regarding the turnover of the storage unit contents. And I haven't studied, but I think I saw a revised -- that there was a revised proposed order. Attorney Bassett, you look like you're going to talk about this matter; is that right? MR. BASSETT: Yes, Your Honor. THE COURT: Go right ahead. MR. BASSETT: Thank you, Your Honor. So I am pleased to report that I believe we have resolved this matter and this is the motion that we filed on February 23rd in the Golden Spring Adversary Proceeding 23- 5018, ECF 40, a motion seeking to turn over to the estate of certain contents of storage units that are the subject of a subpoena that the trustee had executed. We filed that motion. See, there are four storage units located at a place called Westy Storage, which is not far from the Mahwah mansion in Mahwah, New Jersey. We filed that motion on the 23rd. The Court issued a notice of hearing setting an objection deadline of March 19th. In accordance with that order, we then served that notice of hearing on Westy Storage, and then on both, the entity HGA, which we understand to be the current tenant of those units, and then on the Taurus Fund entities, which was the prior

1 tenant of the units.

2 3 The objection deadline of March 19th, 2024, came and went.

4 5 6 7 8 9 10 11 12 13 14 There was one objection filed on the evening of March 19th by Taurus Fund and it was really a limited objection which basically stated that Taurus -- that Taurus Fund was objecting to the motion insofar that it applied to the contents of two of the storage units, which Taurus Fund alleges contain property that is theirs. We dispute that. But for purposes, we were able to resolve that, which I'll get to in a second. And then they said that the other two storage units at issue were ones that they took no position with respect to. They weren't asserting any ownership interests over the contents.

15 16 17 18 19 20 21 22 23 24 So after receiving that objection, we reached out to counsel for Taurus Fund and we were able to resolve their objection through the revised proposed order, which we submitted at ECF 44, I believe, yesterday, which the Court referred to. And, basically, what that order says is that all the property in the two storage units with respect to which Taurus Fund took no position, those are storage units 1A32 and CF09, the order states that all the contents of those units are property of the estate and shall be immediately turned over to the estate.

The order says that the other two units, the ones

1 2 3 4 5 6 7 8 with respect to which Taurus Fund is asserting an ownership interests, and those are units CA14 and CB14, those -- the contents of those units will, at the trustee's direction and supervision, be transferred to the Mahwah Mansion for safekeeping, pending the resolution of that Mahwah adversary proceeding involving the Taurus Funds or further order of the Court; the idea being that all rights are reserved, with respect to the contents of those units.

9 10 11 12 13 14 15 To be clear, you know, this order and the agreement by the trustee to this order is not any sort of concession that the contents of those units do, in fact, belong to Taurus Fund. And we think, for the reasons we set out in our motion, that they are actually property of the estate, but we also are fine with not litigating that issue right now.

16 17 18 19 20 21 22 23 24 25 The most important thing for the trustee is that the contents be preserved, so we're going to have them transferred to the mansion. They will, at all times, be subject to the existing preliminary injunction order that governs the mansion, its contents, and all property of Taurus Fund, including the provisions, with respect to the oversight of the security firm that's there. So the idea is that those contents will remain there until such time as that adversary proceeding is concluded or until such time that it's viewed as otherwise teed up to determine if those contents are

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 property of the estate now, irrespective of the adversary proceeding. So, that's the sum and substance of the order, Your Honor. It gives us the contents of two of the units now and sort of preserves the issue of the other two for another day while also making sure that they are kept and stored safely in the meantime. THE COURT: Okay. I, again, am holding a revised proposed order that I see changes, but I haven't really read it, although, I'm somewhat reading it. In the two units where everything is going to be turned over to the trustee, I presume, which I shouldn't, I suppose, that you have some process for that to happen? MR. BASSETT: Yes, Your Honor. I mean, we don't have -- we have not ironed out the specific logistics of how and where we are going to transfer the contents. Some of the contents are, you know, relatively small things, boxes, et cetera, that I think can easily, with the assistance of Kroll, be taken from there to another secure location. Another option, if we deem it necessary, would be to get permission to continue paying for the lease of that storage unit and just keep the property there. We still need to figure out the logistics of that -- THE COURT: Okay.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BASSETT: -- but the important thing for purposes of this motion was just to get the relief that allows us to dictate what happens to those contents going forward. THE COURT: I understand. I'm just asking questions so that if something occurs, then I have some idea of whether or not there was some process in place, right. And then I think I have a recollection that the motion stated somewhere, and maybe more than one place, that there's been a detailed inventory of all these units done by the trustee or by the trustee's professionals; is that correct? MR. BASSETT: That's correct, Your Honor. THE COURT: So you know what's supposed to be in the two units that are where the contents are being turned over to the trustee in accordance with this order and the two units where the contents are going to be transferred to the Mahwah Mansion? MR. BASSETT: That's correct, Your Honor. Based on the site visits that have occurred at the direction, and with the attendance of the trustee's professionals, we do have an inventory. We also were assured by talking to the owner of the storage facility and its counsel, that all of the locks and passwords have been changed, such that only the trustee could access those units. So we're relatively

1 2 3 confident that, you know, there's not going to be any issue between now and getting the contents out of, you know, anything being removed.

4 5 THE COURT: The people that operate the Westy changed all the locks? Is that --

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 MR. BASSETT: When we -- we had filed a motion related to the subpoena that we served, which the Court granted that gave the trustee the authority to go in and conduct inspections of the units. Pursuant to the authority granted by that subpoena, Westy Storage and its counsel have been very, very cooperative. They understand that pursuant to the subpoena, the trustee was given the ability to not only initiate, but also complete his investigation during a period in which there would be no risk of any contents being, you know, removed, modified, et cetera. And to facilitate that, they made sure that only the trustee had access to the units. THE COURT: And I'm making a -- I'm ordering that the estate contents are property of the debtors' Chapter 11 estate and counsel agreed to that? MR. BASSETT: Yes, Your Honor. THE COURT: I assume -- I mean, you're saying he did, but I hope he read that. In any event, he should have if he's agreeing to it, right?

MR. BASSETT: That's correct, Your Honor.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I think it's clear from their objection, and I've had multiple conversations with Attorney Conway, and he stated very clearly that Taurus Fund is not taking a position whatsoever as to those two units and, therefore, is not contesting the finding that they are property of the estate. THE COURT: Okay. All right. Does anyone else wish to be heard on the trustee's motion for order enforcing judgment and requiring turnover of storage unit contents to the Chapter 11 estate? (No verbal response) THE COURT: Okay. Hearing nothing, I, as I said, Attorney Bassett, I'm holding the order. I haven't read it thoroughly without you and I talking while I'm reading it, but I mean, it looks fine to me. I asked the questions that I had regarding the order. I don't have any other questions, so I assume that this order will enter. The motion is granted, insofar as it's agreed to that this agreed-upon order resolves the motion and the objection and I don't see any reason why, as I'm sitting here right now, that I would make any change to this order. So the motion is granted and the revised proposed order will enter. MR. BASSETT: Thank you, Your Honor. THE COURT: Okay. Thank you. And that was filed in both, the adversary and the

12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 main case, so that takes care of the first two matters on the calendar. So then, we're turning -- just give me one moment, please. (Pause) THE COURT: So in the Despins v Ace Decade Holdings case, we have a pretrial conference that was scheduled routinely by the Clerk's Office in connection with the issuance of the summons in the adversary and then we have the motion to dismiss on behalf of Yvette Wang. I don't know that we really need to have a pretrial conference, per se, since we're addressing the motion to dismiss, but Attorney Bassett or Attorney Linsey or Trustee Despins, do you have a different view of that? MR. BASSETT: No, Your Honor. Other than that after we have the argument on the motion to dismiss, the trustee may want to update the Court -- THE COURT: That's fine. MR. BASSETT: -- as to certain ongoing proceedings in the United Kingdom that relate to this adversary proceeding. THE COURT: Okay. Then let's turn to the motion to dismiss. Attorney Macco, would you -- it's your motion. Please proceed. Case 22-50073 Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 12 of 57

| 1 | MR. MACCO: Good afternoon, Your Honor. | |----|-----------------------------------------------------------------| | 2 | We're here on the Defendant Yvette Wang's motion | | 3 | to dismiss the adversary proceeding, particularly the fifth | | 4 | and sixth claims of reef as they are against Defendant Wang. | | 5 | My motion, I'm confident on the papers. I'm happy to go into | | 6 | further detail, but, specifically, as to the findings that | | 7 | the property in question was property of the estate, the | | 8 | complaint is devoid of any details related to whether that | | 9 | motion, the order itself, was ever served upon Ms. Wang or | | 10 | competent counsel at the time entitled to receive notice. | | 11 | Further, to the extent that that order may be | | 12 | binding that that there was a finding that this was property | | 13 | of the estate, the transfer of the stocks was not willful in | | 14 | as much that Defendant Wang was not aware of the order, | | 15 | because, again, it was never served or provided to the | | 16 | Defendant or her counsel at that time. | | 17 | Counseling referenced in the complaint, Alex | | 18 | Lipman did not appear in this matter. He had not appeared in | | 19 | the criminal matters that had not started at that time. He | | 20 | represented Ms. Wang in a separate criminal matter, which was | | 21 | not part of the Ho Wan Kwok Enterprise, as it's been | | 22 | referenced in the other matters. So I believe that the | | 23 | complaint, on its face, devoid of factual allegations in | | 24 | order to find a holding that Ms. Wang should be sanctions or | | 25 | damages related to this transfer. |

14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 As specifically set forth in the motion, and I'll go into as much detail as the Court likes, but -- THE COURT: Well, it's your motion, so you go into as much detail as you like. MR. MACCO: Understood, Your Honor. The motion itself was a motion for contempt of Court as against the debtor. The debtor is not the Defendant and the Defendant was not served with that motion. The finding in there, as it relates to the Defendant's interest in property would violate the Constitution if it took her property without proper notice and an opportunity to be heard on that. So -- THE COURT: What property? MR. MACCO: Property being a share of stock that was subsequently transferred, which is the basis of this adversary proceeding. THE COURT: So she's claiming it's her property? MR. MACCO: The property that's referenced, it was certainly her property. It was titled in her name in the British Virgin Islands, as I'm sure the trustee is aware based on his discovery from Trident, the agent for Ace Decade, as he has referenced in that matter. That is a titled asset; it is not a bearer asset. For a finding that this was actually property of another entity, the debtor in this matter, there would have Case 22-50073 Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 14 of 57

| 1 | to be some notice to the actual owner of that property, the | |----|-------------------------------------------------------------------| | 2 | Defendant, Ms. Wang. There was no notice to Ms. Wang and, | | 3 | therefore, there could be no determination that it was not | | 4 | her property, as to her. | | 5 | For the findings as to contempt, that finding | | 6 | should -- is fine. It's valid. It has no issues here, but | | 7 | that was against the debtor and the debtor defended that | | 8 | motion. He appeared in that motion. He was served with that | | 9 | motion for contempt. | | 10 | The Defendant Ms. Wang was not, was not granted | | 11 | due process related to it, and, therefore, was not bound by | | 12 | the findings in that order. | | 13 | THE COURT: Well, you just said it wasn't contempt | | 14 | as against her, so why would she need due process? | | 15 | MR. MACCO: Because the trustee is using the | | 16 | findings of that order, specifically, the findings that the | | 17 | share -- that Ace Decade was an entity that belonged to the | | 18 | debtor, as a finding against Ms. Wang in this adversary | | 19 | proceeding. | | 20 | THE COURT: Isn't there evidence that the British | | 21 | Virgin Islands company was served? Wasn't she the director | | 22 | of it? | | 23 | MR. MACCO: Ms. Wang was a director of the British | | 24 | Virgin Islands company. | | 25 | THE COURT: Isn't there evidence that the British | | | |

16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Virgin Islands companies were served? MR. MACCO: Your Honor, I'm not aware of that evidence. THE COURT: Shouldn't you know that? I mean, you're coming in and saying that her due process rights have been violated. She didn't know. But she was acting in her capacity. She didn't personally own the share, right? She didn't own the share personally as Yvette Wang; she owned it as -- the company entity owned it and she was the director of it. MR. MACCO: She owned the share personally, Your Honor. THE COURT: Personally, when? MR. MACCO: She did own it. THE COURT: When did she own the share personally? MR. MACCO: I believe it was in early 2022, into '23 and then the transfer occurred. THE COURT: So post-petition? MR. MACCO: She owned the share of stock prepetition and post-petition. THE COURT: Okay. MR. MACCO: She was always the owner of the share of stock personally. THE COURT: She was listed on the debtors' schedules as a creditor and served with things in this case Case 22-50073 Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 16 of 57

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in the main case; isn't that correct? MR. MACCO: She may have been. There was some question at that time as to the debtors' address -- sorry - to the Defendant's address as related to the Defendant's security concerns. It's my understanding that at the time of this motion, the trustee -- THE COURT: At the time of which motion? MR. MACCO: The motion -- the contempt motion - sorry -- the contempt motion against the debtor, the trustee was not aware of Defendant Wang's address and could not serve her. Part of the finding in that contempt motion was that the debtor was obligated to find Ms. Wang and provide her with a copy of that motion, a finding which the Court later said was insufficient because the debtor had not provided sufficient evidence that that order had actually been turned over to Ms. Wang. That was on the subsequent, the final contempt motion, not the partial resolution order. So, although Ms. Wang was listed as a creditor, it is not evident that Ms. Wang was ever served with matters going forward and that's why there was a derivative in the partial resolution order for the debtor to serve Ms. Wang -- THE COURT: The partial resolution had to do with the corporate -- I'm not sure you're mixing up two things here.

18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. MACCO: I apologize, Your Honor. THE COURT: Wasn't one of them about -- well, anyway, keep going. I'm not sure you're accurate on that. There was a corporate governance order -- MR. MACCO: Corporate governance order, correct. THE COURT: -- that's what, which there was a partial resolution. MR. MACCO: There was a corporate governance order entered on -- I apologize for the delay, Your Honor -- the corporate governance order was entered in August of 2022. In October of 2022, the trustee brought a contempt motion for the debtors' alleged failure to comply with the corporate governance order. Subsequently, in of -- November 17th, 2022, a partial resolution order resolving the contempt motion was entered by the Court. That order included a finding that Ace Decade was property of the debtor. That was a contempt motion filed against the debtor, not against the Defendant. The language of that order directed the debtor to find and deliver a copy of that order to the Defendant, Ms. Wang. That was later found in the contempt order resolving the remainder of the motion entered in January 24th, 2023, to have not been complied with. So the Court, by its own terms, in the language of the contempt order from early 2023, found that Ms. Wang had Case 22-50073 Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 18 of 57

19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 not been served with the partial resolution order or that insufficient evidence -- THE COURT: I don't think that's accurate, but that's okay. You can make the argument. MR. MACCO: I apologize, Your Honor. I thought that the language of the contempt order, specifically, paragraphs 5 through 8, said the debtor did not officially establish that -- THE COURT: Tell me the order -- give me the -- if you would, it would be helpful for me to -- tell me what ECF number is at the top of the order that you're reading it from. MR. MACCO: I apologize, I do not have the ECF orders in front of me. I have the dates listed. THE COURT: All right. What's the date? MR. MACCO: The date for the contempt -- MR. BASSETT: Your Honor, the partial resolution order is at ECF 1110 in the main case. The order I'm reading from is the contempt order, which was entered January 24th, 2023. THE COURT: All right. Well, let's take them in order. MR. MACCO: Okay. THE COURT: Let's take the orders in order. So, what's the first one, Mr. Bassett? 1101? Case 22-50073 Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 19 of 57

| Case 22-50073 | Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 20 of 57 | |---------------|--------------------------------------------------------------------------| | | 20 | | 1 | MR. BASSETT: 1110. | | 2 | THE COURT: 1110. All right. Order regarding | | 3 | partial resolution of trustee's contempt motion, November 17, | | 4 | 2022, ECF Number 1110. | | 5 | Holding Ho Wan Kwok, the debtor, in civil contempt | | 6 | for failure to comply with the corporate governance rights | | 7 | order and imposing appropriate sanctions. And upon evidence | | 8 | presented, including a transcript of the April 6th, 2022, | | 9 | meeting of creditors under Section 341, the particular of | | 10 | claims -- oh, yes, now, this is bringing back some memories. | | 11 | So, isn't the particular of claims in the U.K. | | 12 | filed where Mr. Kwok says he owns Ace Decade; isn't that what | | 13 | that was? | | 14 | MR. DESPINS: Yes. | | 15 | THE COURT: Yeah, I think that's where -- you | | 16 | might want to look at that, counsel. | | 17 | And it's ordered that the Court finds that the | | 18 | debtor exclusively beneficially owned and controlled Ace | | 19 | Decade Holdings, Ltd. on February 15, 2022, petition date, | | 20 | and maintained such exclusive beneficial ownership and | | 21 | control, up to and immediately prior to the date of the | | 22 | trustee's appointment. And that Dawn State, together with | | 23 | Ace Decade, the Ace Decade's entities is -- the Ace Decade | | 24 | wholly-owned subsidiary and is exclusively owned and | | 25 | controlled by Ace Decade. | | | |

| 1 | For the avoidance of doubt, Yvette Yanping Wang, | |----|-----------------------------------------------------------------| | 2 | is not, and has never been a beneficial owner of the shares | | 3 | in Dawn State. The debtor does not contest these findings in | | 4 | this paragraph and will not appeal such. | | 5 | While I have an absolute visual recollection of | | 6 | this hearing right now, of Mr. Henzy (phonetic), standing | | 7 | right where you are and saying that he would not contest the | | 8 | findings and would not appeal the findings. So, it says | | 9 | that -- that's what it says, okay. The debtor has -- | | 10 | represents he's never transferred or purported to transfer | | 11 | ownership of Ace Decade to any other person or entity since | | 12 | the petition date. | | 13 | And remember, I think, actually, and Mr. Bassett, | | 14 | I'm sure, will confirm or correct me if I'm wrong, but the | | 15 | reason the 341 meeting testimony is mentioned in this order | | 16 | is because Mr. Kwok testified he owned Ace Decade at the 341 | | 17 | meeting; isn't that correct, Mr. Bassett? | | 18 | MR. BASSETT: That's correct, Your Honor. | | 19 | THE COURT: Okay. So that's where you have to | | 20 | start, okay. That's where you have to start. | | 21 | So it goes on and it says -- and what was going on | | 22 | at the time was the trustee was trying to get the Ace Decade | | 23 | shares into his name as the representative of the debtors' | | 24 | estate, who the debtor had already testified he owned, and |

that his lawyers in this bankruptcy case said, they're not

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 going to contest the findings that he never transferred or purported to transfer any ownership or control of Ace Decade to any other person or entity since the petition date. So, I think that's part of your problem, right, is this order. And it says: The debtor stipulates to the admissibility of Trustee Exhibit 13 on the issue between -- of the relationship between the debtor and Yvette Wang. MR. MACCO: But, Your Honor, the debtor is stipulating to these matters, not the defendant in this matter, Yvette Wang. THE COURT: I understand all that, counsel. MR. MACCO: I apologize for interrupting you, Your Honor. THE COURT: No, I understand what you're saying, but she testified in this case. She was deposed before the shares of the stock were transferred to whomever they're transferred to now. She knew what was going on in this case. She was working for the debtor. MR. MACCO: Your Honor, regardless of her knowledge of what was going on -- whether she had knowledge or did not have knowledge of the specifics of (indiscernible) this case, the language of the partial resolution order, specifically, the findings that the debtor stipulates to, can't be binding on Ms. Wang as a third party.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Where does it say anywhere that this had to be served on Yvette Wang? I don't see that. MR. MACCO: I believe -- well, that order, the debtor was directed to serve a letter, I believe -- THE COURT: No, not this order. That doesn't say that. This order doesn't say that. You're talking about a letter that the trustee had asked counsel to sign and file and he wouldn't do it. But then he sent -- Mr. Kwok sent some letter that said the trustee thinks I have an interest in this and, you know - anyway, I recall what happened. There's nothing in this order here. I don't see where it says that this order had to be served on Yvette Wang. So, with regard to the November 17th order, that argument about it, you know, not being served on her, okay, I'm not finding that persuasive. So what's the next order? MR. MACCO: Just one more quick matter on that. Whether it directed her to be served, it did have an effect on her interest in property and in order for her to have due process under the law -- THE COURT: What interest did she have in the property at the time of the filing? MR. MACCO: She had an ownership interest in Ace Decade, a personal ownership in the (indiscernible).

24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Well, that's not what Mr. Kwok said. MR. MACCO: I understand that, but I -- you know, Mr. Kwok -- THE COURT: So, why isn't she challenging, then, what Mr. Kwok said? MR. MACCO: Your Honor -- THE COURT: She -- he testified at a 341 meeting and he wrote -- he put in a -- she was the -- an officer or director of Ace Decade, right? MR. MACCO: Correct, Your Honor. THE COURT: So she's saying he's lying? MR. MACCO: Your Honor, without going into - without testifying on behalf of my client, because it would be inappropriate in this matter, Ms. Kwok -- Ms. Wang believes that there was some confusion about the ownership interests in Ace Decade at the time of the testimony. THE COURT: Well, what would be the confusion? She was an officer and director so if there was confusion, why didn't she fix it? MR. MACCO: Ms. Wang asserts, or I believe she will assert, that this ownership interest in Ace Decade was never actually held in the name of Mr. Kwok. I think there was some confusion on the testimony, which will certainly be flushed out later in the adversary proceeding. THE COURT: Well, this doesn't say it was in his Case 22-50073 Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 24 of 57

25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 name. That's not what this order says. MR. MACCO: It says he's the beneficial owner. THE COURT: It says he exclusively and beneficially owned and controlled Ace Decade. They never said it was in his name. There's a difference. MR. MACCO: Understood, Your Honor. Moving on then to the -- THE COURT: What's the next order you want me to look at? MR. MACCO: The contempt order, which is January 24th, 2023. THE COURT: Okay. Hold on a minute. I'll find it. MR. MACCO: And, specifically, paragraphs 5 through 8. THE COURT: You've got to give me a minute to get to the docket number. What? UNIDENTIFIED SPEAKER: Right there. THE COURT: Okay. Thank you. 1572. An order granting motion to hold debtor in contempt of corporate governance order, January 24, 2023. So you want me to go to -- well, let me read it, the introduction and background first before we get to the paragraphs that you're talking about. Case 22-50073 Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 25 of 57

(Pause)

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 THE COURT: So, it says, starting on page 3 of the order, findings of fact. The Court has already made the findings of fact contained in the paragraphs 1 and 2 below, as set forth in the partial resolution order, the first being, the debtor exclusively beneficially owned and controlled Ace Decade on February 15, 2022, petition date, and maintained exclusive beneficial ownership and control up to, and including, and mainly prior to the date of the trustee's appointment. All what I've already read, okay. For the avoidance of doubt, Yvette Wang, here and after, Ms. Wang, is not, and never had been a beneficial owner of shares in Ace Decade or Dawn State. And then that references Trustee Exhibits 6 and 7, 10 and 15 that were introduced in the November evidentiary hearing that included excerpts from depositions.

17 18 19 20 21 MR. MACCO: So, Your Honor, assuming that the partial resolution order found that Ms. Wang was the owner of this property, there is no evidence that Ms. Wang would then be on subsequent notice of the automatic stay without being provided some sort of notice. The findings --

22 23 THE COURT: What do you mean being provided some sort of notice?

24 25 MR. MACCO: There's a finding that property that was titled in her name, the share of stock, was property of

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the debtors' bankruptcy estate; that was made in the partial resolution order. Assuming that's adopted for the purposes of this adversary proceeding against Ms. Wang, there must also be a showing that Ms. Wang made a willful violation of the bankruptcy stay before she can be held liable for sanctions or damages. THE COURT: Well, that's damages. That's not necessarily sanctions. There's two different steps in that provision of the Code. MR. MACCO: I apologize, Your Honor. THE COURT: You might be right about damages and you might be right about certain damages, but just because she -- I don't have to find somebody acted willfully to say that they violated the automatic stay. MR. MACCO: Absolutely not. The willful definition really indicates that there was knowledge of the automatic stay. That's the case law. THE COURT: Well, I'm not sure that's exactly true, but that's fine. MR. MACCO: I apologize, that's my understanding. THE COURT: So, what's your point? So you're saying, at least, what sounds to me what you're saying is, I can't -- I might not be able to have her pay damages, if I can't find that she acted willfully. Is that our point?

| Case 22-50073 | Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 28 of 57 | |---------------|--------------------------------------------------------------------------| | | 28 | | 1 | MR. MACCO: Correct. And she -- | | 2 | THE COURT: But that doesn't mean that I can't | | 3 | find that she's not -- I could still find she's in violation | | 4 | of the automatic stay. People can be violation of the | | 5 | automatic stay even if they don't know about a bankruptcy | | 6 | case. | | 7 | MR. MACCO: Certainly understood, Your Honor. | | 8 | And whether or not this transfer is avoidable is | | 9 | not the issue in the adversary proceeding as against | | 10 | Ms. Wang. It's whether they -- the trustee is entitled to | | 11 | sanctions and damages against Ms. Wang as the transferor and, | | 12 | therefore, knowledge of the bankruptcy automatic stay must | | 13 | come into play to a certain extent. | | 14 | The finding in the contempt order -- | | 15 | THE COURT: Yeah, but not to a full extent. | | 16 | MR. MACCO: The finding in the contempt order | | 17 | finds that there was not sufficient evidence that Mr. Kwok | | 18 | ever delivered the letter advising Ms. Wang of the partial | | 19 | resolution order or did not do anything with the stocks to | | 20 | Ms. Wang. | | 21 | THE COURT: I don't think the letter had nothing | | 22 | to do with the partial resolution order at all. That's my | | 23 | recollection. My recollection is that Mr. Despins was trying | | 24 | to come up with a solution and I think there was a discussion | | 25 | on the record with Mr. Kwok's counsel about a letter being | | | |

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 sent United Kingdom to address this issue. The letter -- where I'm having a little difficulty is I don't think the two are connected at all. Partial resolution was with regard to the corporate governance order. With regard to what was going on in -- in the United Kingdom in an action that Mr. Kwok commenced with Ace Decade and Dawn State as the Plaintiffs is my recollection, or whatever -- and maybe they're not called "Plaintiffs" -- Petitioners, he said under oath, that he owned Ace Decade. So, I don't think you're -- I don't think that's correct that they're connected, okay. MR. MACCO: Understood, Your Honor. THE COURT: So what's your point? MR. MACCO: Just for clarification, Ms. Wang is in the United Kingdom. There's litigation ongoing in the United Kingdom regarding Ace Decade, but Ms. Wang currently sits at MDC in Brooklyn. She was located in New York, I believe, at all relevant times before this. So the letter sent to the United Kingdom, I'm not sure, is the letter referenced by the contempt order, but that was my understanding and I apologize if that's incorrect. Your Honor, just to wrap this up, and I apologize for taking too much of the Court's time. THE COURT: No, that's what we're here for; we're here for this hearing.

| 1 | MR. MACCO: I think there must be some finding | |----|---------------------------------------------------------------| | 2 | that Ms. Wang was, A, on notice of the automatic stay in | | 3 | order to find damages in this matter and potentially | | 4 | sanctions. Secondly, I don't believe that the partial | | 5 | resolution order, to the extent it attempts to bind Ms. Wang | | 6 | for the purposes that Ace Decade, the share of Ace Decade was | | 7 | property of the debtors' estate, was properly served on | | 8 | Ms. Wang in order for her to appear, defend, or otherwise be | | 9 | heard on this. So I think the partial resolution order, to | | 10 | the extent it attempts to take property of Ms. Wang without | | 11 | giving her due process, violates the Constitution. | | 12 | And then to the extent that the other matters, the | | 13 | contempt order or the partial resolution order provided to | | 14 | Ms. Wang, I don't think she had sufficient knowledge in order | | 15 | to take a willful violation of the bankruptcy stay, whether | | 16 | the transfer of such -- whether if the transfer of the share | | 17 | of Ace Decade is determined to be a violation of the | | 18 | bankruptcy stay. | | 19 | I have nothing further, Your Honor. | | 20 | THE COURT: Okay. Thank you. | | 21 | Attorney Bassett? | | 22 | MR. BASSETT: Your Honor, may I use the podium? | | 23 | THE COURT: Certainly. | | 24 | MR. BASSETT: Thank you. | | 25 | Again, for the record, Nick Bassett from Paul |

1 Hastings on behalf of the Chapter 11 Trustee.

2 3 4 5 6 7 8 9 10 Your Honor, we often jump into arguments in the middle of substance and I think in this case, it's helpful to take one step back and just give the Court the kind of lay of the land or history as far as what this complaint seeks. And, frankly, you know, as you look at this complaint at issue in this adversary proceeding, as far as this Chapter 11 case is concerned, this complaint is about as simple as you're going to find compared to the complexity of many of the other complaints that the trustee has brought.

11 12 13 14 15 16 It's really this simple. On November 17th, 2022, this Court entered the partial resolution order, which we just went through, very clearly finding that Ace Decade, the ownership of Ace Decade is property of the estate and, also, that it was never, and is not property of Defendant Yvette Wang.

17 18 19 20 21 22 Then, less than two months later, on January 3rd, 2023, the Defendants, both Defendant Wang and the other Defendant who was the transferee, violated the automatic stay by causing Yvette Wang's ownership, purported nominal ownership of Ace Decade to be transferred to Defendant Hao (phonetic) in Switzerland.

23 24 25 Based on those simple facts, the trustee seeks in the complaint -- he has three causes of action. The first seeks a declaration that the transfer of the share is void ab

1 2 3 4 5 6 initio as a violation of the automatic stay. The second seeks damages against both Defendants for violation of the automatic stay under Section 362(k) of the Bankruptcy Code. And the third cause of action seeks sanctions, including punitive damages from the Defendants for that same violation of the automatic stay.

7 8 9 10 11 12 13 14 15 16 17 Now, an adversary proceeding based on these simple facts should be able to be resolved quickly in this court. It seems apparent to us that Defendant Wang does not want that to happen, hence the filing of the motion to dismiss before the Court today, which as I see it, can really only be viewed as a delay tactic. Because I think it's very clear that none of the arguments have any merit and it's very clear that none of the arguments being made are really proper arguments to raise on a motion to dismiss where the only issue is whether the trustee has melt his minimal pleading burden, and he has easily done so.

18 19 20 21 22 23 24 25 Now, I want first want to point out that the motion to dismiss, and I think the Court sort of acknowledged this, but the motion to dismiss does not even take issue with the first cause of action in the complaint. So Defendant Wang is not arguing that there was no violation of the automatic stay here and therefore, she's not seeking dismissal of the cause of action that seeks a declaration that the transfer is void ab initio. She's only seeking

1 2 3 4 5 dismissal of the other two counts, which seek damages or sanctions against her. So regardless of the outcome of this motion to dismiss, that count, which is sort of the principal claim at issue, making sure that there's a finding that the transfer is void, that goes forward.

6 7 8 9 10 11 12 13 14 15 Defendant Wang only seeks dismissal of Counts 2 and 3 of the complaint, as I said, and these are -- all the arguments they make do not actually identify any claim deficiencies and, at best, could raise issues of fact charitably, that could be considered as the litigation moves forward. The issue that the Court has heard about, and really, which is at the heart of the Defendant's argument, is whether or not Defendant Wang had notice of the finding of the Court that the Ace Decade share is property of the estate.

16 17 18 19 20 21 22 And what she argues is that there is no allegations in the complaint that the share is property of the estate. That's obviously contradicted by the plain allegations in the complaint, which refer to and discuss in detail, the partial resolution order and its findings that, as I said before, the Ace Decade is property of the estate and is not property of Defendant Wang.

23 24 25 She then argues, though, that that order is somehow not valid because she was not on notice of it prior to its entry. That's both legally irrelevant and factually

1 2 3 4 5 6 7 false. It's legally irrelevant because as we argue in our papers, there is no requirement that everyone in the world be on notice of a finding of the Court that property is property of the estate for them to be bound by that order. And were that the law, it would be completely unworkable and would lead to absurd results and a Chapter 11 process that simply would not function correctly.

8 9 10 11 12 13 One of the cases that we cite in our opposition to the motion to dismiss is the, In re Motors Liquidation Company case. It's an SDNY case from 2018, affirmed by the Second Circuit which talks about how the law of the case doctrine applies in bankruptcy cases across adversary proceedings and contested matters. There, the Court said:

14 15 16 17 18 "The law of the case doctrine does not turn on whether all parties to a proceeding participated in the earlier resolution of a legal issue. And the Bankruptcy Court was not required to revisit anew, the same question each time a new party joined the bankruptcy proceedings."

19 20 21 22 That's the law and it makes good sense because, otherwise, it would be unworkable to retry issues every time a new party tried to come in and revisit a past order of the Court.

23 24 25 But as I said, Your Honor, it's also a factually erroneous argument when you look at the allegations of the complaint and the history of this case. First of all, just

1 2 3 4 5 6 7 to sort of point out the elephant in the room, what you don't hear counsel saying is that Defendant Wang did not, in fact, have notice of the partial resolution order and the automatic stay. I would submit that, of course, she did and the complaint and the circumstances surrounding and of which the Court can take judicial notice in this case, make that abundantly clear.

8 9 10 11 12 13 14 First of all, paragraph 38 of the complaint - and, by the way, when we're talking about a motion to dismiss, Your Honor, you obviously have to take a step back and remember the standard that we're dealing with. Under Iqbal, the standard is, has the trustee sufficiently alleged allegations to render it plausible that he's entitled to relief on his claims in the complaint?

15 16 17 18 19 20 21 22 23 24 And all that's necessary for that to be the case is for the allegations of the complaint to allow the Court to infer the existence of the facts necessary to prove - necessary for the Plaintiff to prove. And here, we have readily met that standard for numerous reasons. First of all, paragraph 38 of the complaint expressly alleges, pointblank, that Defendant Wang's conduct in causing the Ace Decade transfer was intentional and that she had prior knowledge of the automatic stay at the time. That alone is enough.

Defendant Wang complains that we haven't alleged

1 2 3 4 5 6 7 details surrounding her notice. Not necessary to do so to satisfy our pleading burden, but we have done so anyway. Specifically, we have alleged that on November 15th, 2023, counsel to the trustee emailed a copy of the proposed form of partial resolution order to Mr. Alex Lipman, who the trustee understands acted as counsel for Wang at a prior point in time or at that time, even.

8 9 10 11 12 13 14 Now, counsel has said that Mr. Lipman was counsel for Ms. Wang in an unrelated criminal matter. Even if that's the case, I would submit that under that basis of the allegation alone, it is at the very least, plausible that Ms. Wang came to have notice of the partial resolution order through somebody who either, at the time or previously, had acted as her counsel.

15 16 17 18 19 20 21 22 But in addition to that, and this is what the Court mentioned, and which Defendant Wang does not even mention in her motion to dismiss or her reply brief, in which counsel was not familiar with, we specifically allege in the complaint that on November 16th, 2022, counsel to the trustee served a copy of the partial resolution order on Ace Decade, care of Trident Trust Company, its registered agent in the BVI.

23 24 25 Now, Defendant Wang claims to be the both, nominal and beneficial owner of Ace Decade. If she is, in fact, the owner of Ace Decade, she absolutely would have gotten notice

1 2 3 4 by virtue of the fact that we served the registered agent for that company in the BVI. At the very least, it have well more than plausible that she had notice as a result of that service.

5 6 7 8 9 10 11 12 In addition to those allegations, Your Honor, we have, of course, the factual backdrop of this case. As the Court acknowledged earlier, Ms. Wang is certainly no stranger to the Chapter 11 case. She was deposed in connection with the DIP financing motion back, I believe, in April of 2022, where she served as a representative for Golden Spring. Obviously, anybody who sits for a deposition in a bankruptcy case is aware of the bankruptcy case's existence.

13 14 15 16 17 18 19 20 21 The last thing I want to note, Your Honor, is that now there's both, in the comments counsel made today and the motion to dismiss, there are statements made to the effect of, well, Ms. Wang was not served with the motion for contempt, which ultimately led to the partial resolution order. And she should have been served with that is the implication. But that sort of belies and ignores the history surrounding the filing of the contempt motion and what had been told to the trustee at that time.

22 23 24 25 Prior to the trustee's filing of the motion, and, in fact, up until I think days before the hearing on the motion, the debtor, as the Court acknowledged, based on his filings in the United Kingdom, had stated under oath that he

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 was the owner of Ace Decade. But more than that, and which counsel didn't knowledge, Defendant Yvette Wang signed the particulars of claim form filed in the United Kingdom, which contained that statement. It was not until the eve of the hearing on the contempt motion that all of a sudden the debtor in an obvious attempt to avoid the trustee getting control over the Ace Decade share, said that, Oh, no, my employee/assistant, now criminal co-defendant, Yvette Wang, is the actual owner of the share. So, we could not have, and had no reason to serve her with a contempt motion, or as counsel suggests in their brief, file an adversary proceeding to get ownership of the share. That was completely unnecessary, because it had been represented to us by both, the debtor and Defendant Yvette Wang that the Debtor owned the share. So, Your Honor, for all these reasons, we think it's very clear that none of the arguments raised in the motion to dismiss have merit. They don't actually identify any legitimate pleading deficiency in the trustee's complaint and therefore, we would ask that the motion to dismiss be denied. Thank you. THE COURT: Thank you. Counsel, any response? MR. MACCO: Briefly, Your Honor. There was some question as to when that email to

| Case 22-50073 | Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 39 of 57 | |---------------|--------------------------------------------------------------------------| | | 39 | | 1 | Alex Lipman was sent. Counsel to the trustee just indicated | | 2 | that it was sent in November of 2023, as of the pleading. | | 3 | This is well after -- | | 4 | MR. BASSETT: I meant November '22, Your Honor. | | 5 | That was my mistake. | | 6 | MR. MACCO: Your Honor, but the pleading does say | | 7 | November '23, which raises separate issues, other and apart | | 8 | from that. | | 9 | As to the indication that we don't need to | | 10 | relitigate matters as parties become aware of proceedings, | | 11 | while that's certainly true, the only party that should be on | | 12 | notice, and not every party on notice, the party that may | | 13 | hold an ownership interest, which may be determined by the | | 14 | Court. | | 15 | Further, and finally, whether or not -- not | | 16 | finally -- furthermore, in response to the trustee's | | 17 | allegations that the Defendant should have made some | | 18 | allegation that she wasn't on notice, specifically, that's | | 19 | inappropriate for this type of motion and couldn't be | | 20 | considered because it would be outside the record anyway. | | 21 | THE COURT: Well, let's step back and see what is | | 22 | appropriate. | | 23 | This is a motion to dismiss for failure to state a | | 24 | claim upon which relief can be granted, correct? | | 25 | MR. MACCO: Correct. | | | |

40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: So the standard is I have to accept all the allegations as true, right? MR. MACCO: Correct, Your Honor. THE COURT: So how -- I'd like you to tell me, and first, I did review your motion and you don't contest -- you say a few things. You don't move to dismiss Count 1, but you move to dismiss Counts 2 and 3, and then you're proposed order -- and there's more than counts -- there's more than three counts in the complaint is my recollection, as well. And then you ask the Court to grant the motion as to 2 and 3 and then dismiss the complaint in its entirety. I don't know how I could possibly do that. MR. MACCO: Your Honor, I believe it says dismiss -- and if not, that's addressing our dismiss the complaint in its entirety as against Ms. Wang. The complaints to avoid the transfer against the recipient of the transfer, Mr. Hao or Hao. THE COURT: Well, that's not what your proposed order says. But in any event -- MR. MACCO: Well, I apologize. That's a typographical error. THE COURT: What you haven't answered -- you keep saying the trustee hasn't established. The trustee doesn't have to establish anything. He just has to plead. So, how is the pleading not plausible? Now is the Case 22-50073 Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 40 of 57

| 1 | pleading, on its face, deficient when it asserts in Count 1 | |----|-------------------------------------------------------------------| | 2 | that the transfer is in violation of the automatic stay? It | | 3 | isn't just a recitation of the statute, which is one of the | | 4 | reasons that motions to dismiss are granted, is because | | 5 | somebody, you know, the pleader just puts forth a statute. | | 6 | But he doesn't do that. That's not what the | | 7 | complaint does. So how is it insufficiently pled? And if | | 8 | it's insufficiently pled, then why didn't you file a motion | | 9 | for a more definite statement? I mean, how is it | | 10 | insufficiently pled? I'm having difficulty seeing why your | | 11 | motion should be granted. | | 12 | You may be right at trial. I don't know. But | | 13 | that's not where we are. We're at the motion to dismiss | | 14 | stage and I'm bound to find that all the allegations, as | | 15 | pled, are true. And you're saying he hasn't established. He | | 16 | doesn't have to establish anything. | | 17 | So how is it deficient? Tell me how it's | | 18 | deficient, because I'm having troubles being persuaded by | | 19 | your argument. | | 20 | MR. MACCO: Your Honor, without re-hashing it -- | | 21 | THE COURT: Well, you have to re-hash it, because | | 22 | I'm asking you to. | | 23 | MR. MACCO: When I say "establish," I meant "pled | | 24 | with particularity," and I apologize for -- | | 25 | THE COURT: Well, it doesn't have to be pled with | | | |

1 2 3 4 5 6 particularity. It's not a Rule 9 issue. If she had a share of stock and she transferred it knowing there was a case and an automatic stay, that -- if it's a violation of the automatic stay, that transfer is void. That's what the law says and that's what the complaint says.

7 8 9 10 So how is it -- your job, your burden is to tell me that the complaint does not state a claim upon which relief can be granted, so how does it state a claim -- how does it not state a claim upon which relief can be granted?

11 12 I'm not saying I'm going to grant it. We haven't gotten there.

13 14 MR. MACCO: Your Honor, just -- it indicates that she was on notice because of the emails to Alex Lipman.

15 16 17 18 19 20 21 22 23 24 25 THE COURT: Well, it indicates she was on notice because of a lot of reasons, not just because of the emails to Alex Lipman. She was -- Ace Decade was served with the order that you keep talking about as the basis for her rights not being properly protected, with regard to that share, even though the company was served through its agent of service of process in the BVI. I recall all of that. I mean, I don't have it -- I can't tell you -- I can go through and find the certificate of service, because we've looked at those things already in this case, right. There are -- those are issues that have come up in this main case -- not in this adversary

43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 proceeding -- but in this main case more than once. There's 3,000-some-odd docket entries in the main case, counsel. There's been a lot going on. So what I'm saying to you is, it's not just about an email to Alex Lipman, and even if it is, so what? That's a -- he's stating a claim upon which relief could be granted. You might prove something different, but where does it say anywhere under Rule 12(b)(6) where you say, well, he wasn't her lawyer at the time. Well, I don't have any evidence in front of me either way on that. This isn't evidentiary. This is, does it state a claim upon -- does this complaint -- and you don't -- and you're not moving to dismiss Count 1. Well, Count 1 is the whole -- is that there's a violation of a stay. And if I have to accept the allegations as pled as true in 2 and 3, then I don't know how you win. I don't know how you succeed on a motion to dismiss because Count 1 stays, even if you were to win on 2 and 3. Count 1 stays. It's a violation of the stay. But on Counts 2 and 3, those are factual issues; they're not legal issues. You're raising issues of fact. You're saying, Well, you can't find contempt because she wasn't served with the motion. You can't find this because she didn't know about the automatic stay.

1 2 3 4 5 6 In order for me to agree with you, I'd have to make findings of fact. I don't have to make findings of fact on a motion to dismiss. That's the nice thing about it, right? I don't have to do that. All I have to find is that the complaint, as pled, states a claim upon which relief can be granted. And I find

7 8 9 10 that it does. And I'm not going to write some big decision on it because there's no need. I mean, there's no need for me to write a long-winded decision on whether or not the complaint states a claim upon which relief can be granted.

11 12 13 14 15 16 17 When you have a 12(b)(6) motion, you know, there are things that you have to be able to argue on the law, that there's nothing here. Your law is she didn't have notice. She wasn't bound by the -- Mr. Bassett has got law that says, It doesn't matter whether she didn't have notice, because if you're in violation of the stay, you're in violation of the stay. That's all there is to it.

18 19 20 21 22 Whether you get to the damages part, that might be, but that's a factual inquiry. You can't -- I can't make that determination on a motion to dismiss. I don't have any facts, other than the facts as pled, and if I accept them all as true, then your client could be responsible for damages.

23 24 25 So, that's why I asked you. If there's something else you want to tell me, please tell me, but I just don't see it. I don't see how this motion to dismiss should be

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 granted; in fact, I feel it should be denied. But I'm giving you your opportunity to make whatever remaining arguments you want to make. But it's very clear you haven't moved to dismiss the first count on which the other counts are predicated. So I just -- I don't understand that. MR. MACCO: I have nothing further, Your Honor. THE COURT: Okay. Thank you. Anything further, Mr. Bassett? MR. BASSETT: Not from me, Your Honor. THE COURT: Okay. MR. BASSETT: But the trustee, I believe -- THE COURT: Yeah, I'll -- I just want to make it clear for the record. I've reviewed the motion to dismiss. I reviewed the response of the trustee and objection to the motion to dismiss. I've reviewed the reply from the Plaintiff -- excuse me -- from the Defendant to the trustee's opposition to the motion to dismiss. Under Federal Rule of Civil Procedure 12(b), that is applicable in adversary proceedings under Rule 7012, the standard that the Court must apply in determining a motion to dismiss under 12(b) is whether or not the complaint states a plausible cause of action upon which relief can be granted. For the reasons set forth in the trustee's opposition and for what I've reviewed in this case as a whole -- not just this adversary proceeding -- and case law

1 2 3 4 that applies to motions to dismiss, the claims in Counts 2 and 3, which are the only counts that are the subject of the motion to dismiss, state a claim upon which relief can be granted.

5 6 7 8 9 10 11 12 As I've stated to counsel for the Defendant, the moving party, that doesn't mean we've had a trial. We haven't. This is whether or not these causes of the complaint survive and I find that they do. And it's too late under the Rules to file a motion for a more definite statement, because you would have had to file that before you filed a motion to dismiss and you didn't do that, so now you're going to have to file an answer.

13 14 15 16 So the motion to dismiss is denied for the reasons stated on the record and under the general rules of pleading, I think you only have 14 days to answer. I mean, I'll look again, but I think that's how things progress.

17 18 Oh, I'm looking at the wrong thing. So give me a second and I'll look.

19 (Pause)

20 21 22 23 24 THE COURT: If the Court denies the motion -- this is 7000(12)(a) -- if the Court denies the motion or postpones its disposition until the trial, the responsive pleadings shall be served within 14 days after notice of the Court's action. So, there, yes.

So I'm going to enter some form of an order;

| 1 | probably, counsel, a virtual order, saying something like, | |----|-----------------------------------------------------------------| | 2 | "Order denying motion to dismiss" and say there was a hearing | | 3 | held today. I've reviewed your papers, which I did. I | | 4 | reviewed trustee's counsel's paper, which I did. I listened | | 5 | to your arguments. I looked at the main Chapter 11 cases as | | 6 | a whole and this adversary proceeding and I find that the | | 7 | Counts 2 and 3 state a claim upon which relief could be | | 8 | granted and, therefore, the motion to dismiss is denied. And | | 9 | then you have 14 days, okay. | | 10 | Whether that gets entered this afternoon or | | 11 | tomorrow morning, I don't know. I can't say for sure, but | | 12 | that's what will happen. | | 13 | All right. Do you have any questions? | | 14 | MR. MACCO: No, Your Honor. | | 15 | THE COURT: Okay. Thank you. | | 16 | All right. Trustee Despins, Attorney Bassett | | 17 | indicated you want to talk about matters relating to the case | | 18 | as a whole and matters in the United Kingdom; is that right? | | 19 | MR. DESPINS: Yeah, it's related to this, but it's | | 20 | not on the merits of the motion, itself. But I just wanted | | 21 | to give the Court -- because I'm not sure we've given you the | | 22 | full picture. I think we may have, but Ace Decade, as far as | | 23 | we know at this stage, is just an entity that has -- that | | 24 | owns another entity called Dawn State and these entities may | | 25 | have claims against UBS. This is what has been alleged in |

1 the U.K. proceedings.

| 2 | And we are in that position because Mr. Kwok also | |----|-----------------------------------------------------------------| | 3 | asserted claims against UBS. We basically have to get | | 4 | involved in that litigation. And the situation that we're | | 5 | in, in the U.K. is that we filed a motion seeking a stay of | | 6 | that proceeding on the basis that we need to get a -- we | | 7 | believe that the Court here has already found that we own | | 8 | those shares and we control that company, but there's | | 9 | somebody in the U.K. appearing on behalf of Ace Decade | | 10 | saying, No, somebody else controls Ace Decade and, therefore, | | 11 | trustee, you don't speak on behalf of Ace Decade or Dawn | | 12 | State. | | 13 | So we've told the U.K. Court, please stay the UBS | | 14 | proceeding until we have a final resolution of this issue, | | 15 | and this is why we're -- this is why this adversary | | 16 | proceeding was brought. The reason I raise this is there are | | 17 | timing issues here. We obtained the six-month stay, which | | 18 | expires on July 1st. Now, we can seek extensions of that, | | 19 | but, obviously, for us, you know, it's important to show | | 20 | progress in the case and that's why we've been pushing this | | 21 | as aggressively as we could, but I wanted to make sure Your | | 22 | Honor was aware of the six-month stay that was granted -- | | 23 | THE COURT: I don't think I was aware of that, | | 24 | actually. | | 25 | MR. DESPINS: Okay. So it -- | | | |

49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: If I was, I don't recall it, so sorry. MR. DESPINS: So it expires on July 1st and, obviously, we can seek an extension of that. In the meantime, there are attempts to serve the Swiss resident, you know, that's the recipient of the transfer. THE COURT: Uh-huh. MR. DESPINS: Not so successful at this point. It's a complicated process and we'll follow-up on that, but that -- so that's ongoing, as well. But I wanted to make sure Your Honor knew because this puts us in a kind of impossible position where UBS is saying, We're going to seek costs against the Plaintiffs, because we believe this action against UBS is without merit. Okay. We hear that, but we have no ability to settle that claim because UBS will say, Oh, you want to settle? Okay. Do you have the power to settle? As well, I'm sure my Court would tell -- or our Bankruptcy Court would tell you we have the power. Yes, but we have these people showing up in the U.K. saying, You don't have to power to do this. That's why we need a resolution so that we can fish or cut bait in that proceeding and move on. And, unfortunately, it's more complicated than it has to be because the -- and, by the way, it's no accident that this Case 22-50073 Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 49 of 57

| 1 | was transferred to somebody in Switzerland, because serving | |----|------------------------------------------------------------------| | 2 | people in Switzerland is the most complicated -- one of the | | 3 | most complex jurisdictions to do that in -- and so that's | | 4 | going to cause a delay, probably, et cetera, et cetera. | | 5 | But I wanted to make sure Your Honor knew that in | | 6 | the U.K., the posture is to tell the Court, There's no point | | 7 | in proceeding with that litigation because there's a dispute | | 8 | as to who owns the claim. We think it's very clear who owns | | 9 | the claim, but we need a final determination of that. | | 10 | Thank you, Your Honor. | | 11 | THE COURT: Okay. I understand. Thank you. | | 12 | So if the stay is in place until July, but it may | | 13 | be extended, but you'd have to have UBS' agreement, | | 14 | apparently; is that right? | | 15 | MR. DESPINS: Probably, Your Honor. | | 16 | And if not, we would -- frankly, sitting here | | 17 | today, I don't know why they wouldn't consent, because | | 18 | they're a Defendant. Why would they say no? But, you know, | | 19 | believe it or not, in the past, it is Ace Decade and Dawn | | 20 | State that has opposed the stay. Eventually, they consented | | 21 | to it, but for three or four months, they were arguing that | | 22 | no stay should be granted. | | 23 | THE COURT: Well, this matter is on for pretrial | | 24 | conference, as well, today, as I said at the beginning of the | | 25 | day, I think, because the summons was issued and so there's a | | | |

Case 22-50073 Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 51 of 57

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 pretrial conference. So now Ms. Wang has to file an answer within 14 days of the entry of the order. I don't see any reason why that time frame shouldn't be complied with. This adversary proceeding was commenced in December. It's almost April. I just want to take a look at it. Just hold on a second. (Pause) THE COURT: Summonses were served on January 3rd. (Pause) THE COURT: So, what are you doing? What's everybody doing? Don't you have an obligation to exchange initial disclosures at this point and get things done or what are we doing? Are we moving for any kind of dispositive motion, besides the motion to dismiss, which has now been denied? I mean, if we need -- you know, I need to understand what the thought process is, and maybe you both need to talk about that. Maybe you're not prepared to talk about that right now, and that's fine, but it's -- you have 14 days to file an answer, so -- Go ahead. MR. MACCO: Your Honor, Cooper Macco, on behalf of Defendant Wang. I represent Ms. Wang only. There are other Defendants in this matter, which I believe the trustee --

52 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: I understand. MR. MACCO: -- indicated haven't been served. While I'm prepared to file an answer within 14 days, I'm not sure if this matter can go forward until summonses have been effected on all parties. Additionally, as the Court is aware -- THE COURT: Well, I think they've effected on all parties. Is there a summons that hasn't been effected on a party in this case? MR. MACCO: It's my understanding the trustee just said he was having trouble serving a Swiss individual. THE COURT: That's not in this case. MR. MACCO: It is. THE COURT: Oh, it is? It's in this, as well? MR. BASSETT: The other Defendant is the transferee. THE COURT: Oh, I see. I'm sorry, I'm confusing it with what you were just talking about. Okay. MR. MACCO: So while Ms. Wang is prepared to file an answer, I think there are some issues if we move forward without all necessary parties. THE COURT: I'm sure that the Federal Rules of Civil Procedure will figure that out for us, but you still need to file an answer within 14 days. Case 22-50073 Doc 3055 Filed 03/28/24 Entered 03/28/24 09:22:13 Page 52 of 57

| 1 | MR. MACCO: The answer will be filed, Your Honor. | | | | | | | |----|---------------------------------------------------------------|--|--|--|--|--|--| | 2 | And then that brings us back to another issue, | | | | | | | | 3 | which the trustee has already raised in separate adversary | | | | | | | | 4 | proceedings, which is that there's a criminal trial starting | | | | | | | | 5 | in the middle of May in which my -- | | | | | | | | 6 | THE COURT: It has no impact on this. | | | | | | | | 7 | MR. MACCO: Your Honor, my client is a Defendant | | | | | | | | 8 | in that criminal trial. | | | | | | | | 9 | THE COURT: I understand that. | | | | | | | | 10 | It has no impact. Did you read the decisions of | | | | | | | | 11 | the United States District Court for the Southern District of | | | | | | | | 12 | New York trial judge, who said that there's no reason for the | | | | | | | | 13 | bankruptcy case to be stayed and that the issues are | | | | | | | | 14 | separate, so | | | | | | | | 15 | MR. MACCO: I have, Your Honor, but I've also read | | | | | | | | 16 | the motion of the trustee seeking to stay the other adversary | | | | | | | | 17 | proceeding for the same reason, though. | | | | | | | | 18 | THE COURT: It's not for the same reason, so I | | | | | | | | 19 | disagree with that. | | | | | | | | 20 | MR. MACCO: Understood, Your Honor. | | | | | | | | 21 | THE COURT: Okay. Mr. Bassett, was there | | | | | | | | 22 | something you wanted to add? | | | | | | | | 23 | MR. BASSETT: Nothing further, Your Honor. I was | | | | | | | | 24 | just going to say that I think it would make sense for us to | | | | | | | | 25 | receive and review the answer and also assess for ourselves, | | | | | | | | | | | | | | | |

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 possible pathways forward in light of the fact that we have multiple Defendants, and then also confer with counsel, as necessary. We'll certainly do that. THE COURT: What I mistakenly said is, I was confusing what Trustee Despins just said, but it's true that in this adversary proceeding, the transferee hasn't been served -- that's the problem -- because the transferee is in Switzerland. MR. BASSETT: That's correct, Your Honor. And I would have to -- to be clear, I'll just add the caveat that I would have to talk to my colleague, who is kind of more up to speed on the Hague Convention service process that we are undergoing there. MR. DESPINS: I'm familiar with it, Your Honor. The first phase of service was attempted and failed. Now, we're going through the Swiss authorities that need to actually execute the service themselves and that takes time. THE COURT: Understood. But when I look at the docket, I think everyone else has been -- every other Defendant, excuse me, I believe has been served. That's what I see anyway. MR. BASSETT: That's correct, Your Honor. THE COURT: Okay. All right. Well, then, what I'm going to note for the record

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is that the pretrial conference was held. No further pretrial conferences will be scheduled at this time; however, as everyone should know, and I'm sure does know, a party can ask for a status conference or a pretrial conference at any time. Whether the Court will grant that request, who knows, but I do think we -- I think that there should be some form of a conference set today -- what is today, March 26th? - sometime in May if we don't, or before. If something occurs, you know, anybody can ask for a conference. So if something occurs, we'll see what happens. Now, the other Defendants haven't filed any answers either, have they? They haven't filed anything. MR. DESPINS: That's correct, Your Honor. THE COURT: Well, I'll let you do whatever you think is appropriate under the Federal Rules of Civil Procedure; obviously, you're entitled to do that. I certainly don't need to say that. So, I'm not sure there's anything else we can address this afternoon. Is there anything else we can address? MR. DESPINS: No, Your Honor. THE COURT: Okay. All right. Then, as I noted, there'll be an order entered on the motion to dismiss denying the motion to dismiss.

| 1 | The order with regard to the storage units, I just | | | | | | | | |----|---------------------------------------------------------------|--|--|--|--|--|--|--| | 2 | need to look at it again, but from my review sitting here, it | | | | | | | | | 3 | looked fine, and I think that will enter. | | | | | | | | | 4 | So I thank you all. That's our last hearing | | | | | | | | | 5 | today, so court is adjourned. | | | | | | | | | 6 | THE CLERK: All rise. Court is adjourned. | | | | | | | | | 7 | (Proceedings concluded at 2:19 p.m.) | | | | | | | | | 8 | | | | | | | | | | 9 | | | | | | | | | | 10 | | | | | | | | | | 11 | | | | | | | | | | 12 | | | | | | | | | | 13 | | | | | | | | | | 14 | | | | | | | | | | 15 | | | | | | | | | | 16 | | | | | | | | | | 17 | | | | | | | | | | 18 | | | | | | | | | | 19 | | | | | | | | | | 20 | | | | | | | | | | 21 | | | | | | | | | | 22 | | | | | | | | | | 23 | | | | | | | | | | 24 | | | | | | | | | | 25 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Case 22-50073 | | Doc 3055 | Filed 03/28/24 | Entered 03/28/24 09:22:13 | Page 57 of 57 | | | | | |---------------|------------------------------------------------------------|------------------------|----------------------------------|---------------------------|----------------|--|--|--|--| | | | | | | 57 | | | | | | 1 | CERTIFICATION | | | | | | | | | | 2 | I certify that the foregoing is a correct | | | | | | | | | | 3 | transcript from the electronic sound recording of the | | | | | | | | | | 4 | proceedings in the above-entitled matter to the best of my | | | | | | | | | | 5 | knowledge and ability. | | | | | | | | | | 6 | | | | | | | | | | | 7 | | /s/ William J. Garling | | | March 27, 2024 | | | | | | 8 | | | William J. Garling, CET-543 | | | | | | | | 9 | | | Certified Court Transcriptionist | | | | | | | | 10 | | For Reliable | | | | | | | | | 11 | | | | | | | | | | | 12 | | | | | | | | | | | 13 | | | | | | | | | | | 14 | | | | | | | | | | | 15 | | | | | | | | | | | 16 | | | | | | | | | | | 17 | | | | | | | | | | | 18 | | | | | | | | | | | 19 | | | | | | | | | | | 20 | | | | | | | | | | | 21 | | | | | | | | | | | 22 23 | | | | | | | | | | | 24 | | | | | | | | | | | 25 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |