Guo Wengui / Miles Guo — bankruptcy case · MOTION · ECF #328-1

UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT BRIDGEPORT DIVISION

In re:

Chapter 11 Case No.

Debtor.

DECLARATION OF PETER FRIEDMAN IN SUPPORT OF PACIFIC ALLIANCE ASIA OPPORTUNITY FUND L.P.'S MOTION TO UNSEAL COURT EXHIBIT 1

I, Peter Friedman, declare:

1. I am an attorney admitted to practice law in the State of New York and

Washington, D.C. and am a partner at the law firm of O'Melveny & Myers, 7 Times Square,

New York, NY 10036, counsel for Pacific Alliance Asia Opportunity Fund L.P. ("PAX"). I

respectfully submit this Declaration in support of PAX's Motion to Unseal Court Exhibit 1.

2. Attached as Exhibit 1 is a true and correct copy of the transcript of the April 27, 2022 hearing before the Honorable Julie A. Manning.

3. Attached as Exhibit 2 is a true and correct copy of the transcript of the April 8,

2022 deposition of the 30(b)(6) deposition of Verdolino & Lowey ("V&L"), in which Craig

Jalbert represented V&L.

4. Attached as Exhibit 3 is a true and correct copy of the transcript of the March 21, 2022 341 Meeting of Creditors.

5. Attached as Exhibit 4 is a true and correct copy of Melissa Francis' LinkedIn profile, available at http

1 The last four digits of the Debtor's taxpayer identification number are 9595.

6. Attached as Exhibit 5 is a true and correct copy of the transcript of the April 13,

2022 hearing before the Honorable Julie A. Manning.

I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct.

Dated: May 4, 2022 New York, New York /s/ Peter Friedman

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Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 5 of

In Re \* Case No. 22-50073 (JAM) \* HO WAN KWOK, \* Bridgeport, Connecticut \* April 27, 2022 Debtor. \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* TRANSCRIPT OF PROCEEDINGS BEFORE THE HONORABLE JULIE A. MANNING UNITED STATES BANKRUPTCY JUDGE

UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT BRIDGEPORT DIVISION APPEARANCES:

For the Creditor, Pacific PETER FRIEDMAN, ESQ. Alliance Asia Opportunity LAURA S. ARONSSON, ESQ.

For the Debtor: WILLIAM R. BALDIGA, ESQ. BENNETT S. SILVERBERG, ESQ. KENNETH AULET, ESQ. JEFFREY L. JONAS, ESQ. Brown Rudnick, LLP Seven Times Square New York, NY 10036

Fund L.P.: DAVID V. HARBACH, II, ESQ. O'Melveny & Myers LLP Times Square Tower 7 Times Square New York, NY 10036

> PATRICK M. BIRNEY, ESQ. Robinson & Cole LLP 280 Trumbull Street Hartford, CT 06103

Proceedings recorded by electronic sound recording, transcript produced by transcription service.

> Fiore Reporting and Transcription Service, Inc. 4 Research Drive, Suite 402 Shelton, Connecticut 06484 (203)929-9992

APPEARANCES Cont'd: For the U.S. Trustee: HOLLEY L. CLAIBORN, ESQ. Office of the United States Trustee The Giaimo Federal Building 150 Court Street, Room 302 New Haven, CT 06510 For Golden Spring TIMOTHY MILTENBERGER, ESQ. (New York), Interested Cohn Birnbaum & Shea, P.C. Party: 100 Pearl Street Hartford, CT 06103 For HK International Funds STEPHEN M. KINDSETH, ESQ. Investments (USA) Limited, AARON A. ROMNEY, ESQ. LLC, Interested Party: Zeisler & Zeisler 10 Middle Street Bridgeport, CT 06604 Proposed counsel for the IRVE GOLDMAN, ESQ. Creditors Committee: JOHN KAPLAN, ESQ. Pullman & Comley 850 Main Street Bridgeport, CT 06601

For Rui Ma, Zheng Wu and KRISTEN MAYHEW, ESQ. Weican Meng, Creditors: McElroy, Deutsch, Mulvaney & Carpenter 30 Jeliff Lane Southport, CT 06890

2 THE CLERK: Case No. 22-50073, Ho Wan Kwok. 3 THE COURT: Good morning.

4 appearances for the record, starting with the debtor's 5 counsel, please. 6 MR. BALDIGA: Good morning, Your Honor.

7 Baldiga, Brown Rudnick, for the debtor.

8 colleagues, Ben Silverberg, Ken Aulet, and Jeff Jonas. 9 Thank you. 10 THE COURT: Good morning. 11 MR. JONAS: Good morning. 12 THE CLERK: I'm sorry.

13 Silverberg, but there was someone else I didn't -- 14 MR. BALDIGA: Ben Silverberg, Kenneth Aulet. 15 THE CLERK: Thank you. 16 MR. BALDIGA:

17 allowed a week or two ago. 18 MR. AULET: Yesterday. 19 THE COURT: I think just the other day. 20 MR. BALDIGA: Yesterday. I'm sorry. 21 THE COURT: Just the other day, yes. 22 MR. BALDIGA: And Jeffrey Jonas. 23 THE COURT: Good morning. 24 MR. BALDIGA: Thank you. 25 MR. KINDSETH: Good morning, Your Honor.

1 Kindseth, Zeisler & Zeisler.

2 Aaron Romney, representing HK International Funds 3 Investments (USA) Limited, LLC. 4 MR. ROMNEY: Good morning, Your Honor. 5 THE COURT: Good morning. 6 MR. MILTENBERGER: Good morning, Your Honor. 7 Timothy Miltenberger for Golden Spring (New York). 8 THE COURT: Good morning. 9 MR. FRIEDMAN: Good morning, Your Honor.

10 Friedman of O'Melveny & Myers on behalf of Pacific Alliance 11 Group. I'm here with my colleagues Laura Aronsson, who's 12 had a pro hac entered, and David Harbach, who is back there, 13 but will be joining us at the bar. 14 THE COURT: Good morning. 15 MR. FRIEDMAN:

16 the Robinson & Cole firm. 17 MR. BIRNEY: Good morning, Your Honor. 18 THE COURT: Good morning. 19 MR. GOLDMAN: Good morning, Your Honor.

20 Goldman, Pullman & Comley, with my colleague, Jonathan 21 Kaplan. Our application is pending to represent the 22 Official Committee of Unsecured Creditors. 23 THE COURT: Good morning. 24 MR. KAPLAN: Good morning. 25 MS. CLAIBORN: Good morning, Your Honor.

1 Claiborn for the U.S. Trustee. 2 THE COURT: Good morning. 3 MS. MAYHEW: Good morning, Your Honor.

4 Mayhew, McElroy, Deutsche, Mulvaney & Carpenter, on behalf 5 of creditors Rui Ma and Zheng Wu. 6 THE COURT: Good morning. 7 MS. MAYHEW: Good morning. 8 THE COURT:

9 appearance for today's hearings?

11 THE COURT: Okay.

12 the hearings today.

13 but the two matters that are scheduled for an evidentiary 14 hearing today are the application to employ Verdolino & 15 Lowey, ECF No. 90, and the motion for DIP financing -- I've 16 shortened the titled, but that's what it essentially is -- 17 ECF 117. 18 I know there are many other matters on the 19 calendar. I know you all took a few minutes before we 20 started this morning.

21 anyone wants to report to the Court before we begin. 22 MR. BALDIGA: Yes, Your Honor. Thank you.

23 William Baldiga for the debtor. 24 Your Honor, we're delighted to have made great 25 progress not only this morning, but over the course of the Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 10 of 1 last two weeks.

2 argue, but just report as to where we are as to each matter? 3 THE COURT: Sure. Please, go right ahead. 4 MR. BALDIGA:

5 involving the boat, there is a resolution.

6 that the owner of the boat, AK International -- HK 7 International, filed a proposed order some time ago.

8 order has been negotiated. 9 As you would expect, it's somewhat longer than 10 first submitted, but those -- that's what happens with this 11 things, and the parties need some time to finalize some 12 language over the course of the next -- well, it's being 13 done now, but it's not ready to be handed up -- but they 14 believe that sometime this morning that language will have 15 been reviewed by everyone and that there will be a consent, 16 fully-consented-to order resolving the lift stay motion with 17 the boat being returned and fully resolving it. 18 The \$37 million is already at the Zeisler Client 19 Trust Fund Account, so that is no longer a concern, if it 20 ever was. So great progress in that regard. 21 In no particular order, the Brown Rudnick 22 retention, all objections have been resolved.

23 that PAX wants to put on the record a reservation of rights,

With Verdolino & Lowey, all objections have been

Fiore Reporting and Transcription Service, Inc.

but we'll hear them say whatever they want in that regard.

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1 resolved other than that of PAX and I guess PAX will decide 2 whether they want to go forward with that.

3 objections have been resolved. 4 With the fee procedures, interim fee procedures 5 motion, all objections have been resolved.

7 THE COURT: Hold on.

8 MR. BALDIGA: I'm sorry, Your Honor. 9 THE COURT: No, that's okay.

10 make sure I'm following you. 11 MR. BALDIGA:

12 numbers. 13 THE COURT: No. That's okay. I'm fine with that. 14 I just -- I can figure that out. Okay. Go ahead.

16 MR. BALDIGA:

17 THE COURT:

18 procedures has been resolved, is that what you're saying? 19 MR. BALDIGA: Yes, Your Honor.

21 MR. BALDIGA:

22 part of the resolution.

23 but no objections outstanding, just clean up the order. 24 Thank you. 25 With respect to the DIP loan, there is still an

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1 objection, but I believe only of PAX I believe. I'm sorry. 2 The U.S. Trustee also continues to have an objection.

3 that appears that we will go forward on -- 4 THE COURT: With evidence on that? 5 MR. BALDIGA:

6 THE COURT: Okay. 7 MR. BALDIGA:

8 wish. 9 And then we have the motion to dismiss.

10 we'll need some time with you today to work out the 11 scheduling on that with the Court's calendar and the 12 calendars of other parties, but there's been a lot of 13 discussion around that. 14 There's an open issue as to whether we're going to 15 have the 341 continue during that time, and we'll argue if 16 that is necessary as to how that affects the scheduling and 17 complicates the proceeding, but we may be able to resolve 18 that as well. 19 So I think that's the full agenda, Your Honor, 20 I've addressed briefly. 21 Mr. Kindseth may want to give further detail as to 22 where we are with the boat, but obviously all parties can 23 correct any part of that or make additional comment, but -- 24 THE COURT:

25 MR. BALDIGA: Of course.

THE COURT: -- before you go. You all go ahead, and then I'll -- maybe you'll answer my questions. MR. BALDIGA: Okay. I'll turn it over to others. THE COURT: Mr. Friedman, what were you going -- MR. BALDIGA: But I'm delighted with the progress, Your Honor. I reported at the last hearing that there's been an inability to engage with the parties and that has changed dramatically. We've had really good engagement with the committee, with the Office of the United States Trustee, with committee members, and it's good to see the case now proceeding in a good direction with most things that were filed fully resolved and a few things still remaining. So we feel good that we're heading in the right direction. Now I'll turn it over to other people for whatever questions the Court may have. THE COURT: Mr. Friedman, go right ahead. You still have an objection to the DIP motion, but what other objection does your client have? MR. FRIEDMAN: We also have an objection to the -- the retention of a financial advisor in this case, Your Honor, which we will examine the proposed financial advisor who would -- in connection. THE COURT: Okay.

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MR. FRIEDMAN: I want to make a couple of comments. You know, the stay motion is obviously our motion, so I thought I should address the status. THE COURT: Yes. MR. FRIEDMAN: We have had extensive discussions with HK. We've had extensive discussions with the committee. I do think we are in a place where we have agreed to, in principle, an order. It is an order that has a lot of belts and suspenders because we obviously, you know, came in to this case with concerns and still have them. It should be -- we should be getting a final draft from counsel for HK shortly I think because we have ironed out the relevant points. I would -- what I would say is once the -- once the order is in your hands -- we obviously have tremendous respect for the Court's time. The date of the stay runs out on Monday, that will be the day ordinarily the Court would have to enter an order. Out of respect for the Court, if the Court needs more time once it's in the Court's hands, we would agree that there's an extenuating circumstance. We would not have agreed to that without an agreement. But I'm obviously very sensitive to overloading the Court or trying to jam the Court, which is nobody's

intention, so we will provide it to the -- it will be provided to the Court. And when the Court -- if the Court has follow-up questions after that and needs to schedule something, I just want to make it clear to the Court that we will accommodate whatever the Court needs and not try to rush the schedule in any ways to make your life more difficult. THE COURT: Well, I appreciate that. And I appreciate the efforts of the parties. And obviously once I see the order, I will take a look at it -- MR. FRIEDMAN: Okay. THE COURT: -- and then see if there's any concerns that I have. MR. FRIEDMAN: Thank you, Your Honor. And then, what I would say, Your Honor, is that's progress. It's a discrete form of progress. We still have, you know, a lot of concerns about the case and those have not receded. Mr. Baldiga is correct. We will just reserve some rights with respect to the Brown Rudnick retention. We actually think it's important that Mr. Kwok have competent counsel, and Brown Rudnick certainly is competent counsel. And not having them retained would -- A) we heard what you said at the last hearing that they will be retained, and B) whatever form this case takes, they're necessary.

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We do have two other objections. We will be prosecuting them today. THE COURT: Okay. Thank you. Mr. Goldman? MR. GOLDMAN: Yes, Your Honor. Thank you. I'd like to put some finer points on the resolution of the committee's objections to the DIP loan and the Verdolino loan, their retention rather. I think it's important that we put the terms of the settlement on the record and advise the Court that we do have it documented. We had been working on it late into last night and we're finally able to reach final agreement this morning. So if I can report those terms to the Court, I think it would be helpful to the Court and the parties. THE COURT: Go right ahead. MR. GOLDMAN: As to the DIP motion, we have agreed that the debtor and Golden Spring will remove as termination events the filing by the debtor of a motion to dismiss or a motion for the appointment of a Chapter 11 trustee or a motion to convert. They will also remove as termination events the termination of exclusivity for the debtor provided that the committee agrees not to seek to terminate exclusivity before the initial 120-day period expires which would be on or

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1 about June 15th.

2 terminate that exclusivity before then. 3 THE COURT:

4 be noted? Are there going to be -- is there going to be an 5 amended DIP loan agreement, or is this going to be part of 6 the order, or both? 7 MR. GOLDMAN: Both. 8 THE COURT: Okay. Go ahead. 9 MR. GOLDMAN: Yeah. They're revisions to both. 10 The termination events reside in the DIP 11 agreement, not the order.

12 THE COURT: Okay. 13 MR. GOLDMAN: -- the credit agreement. 14 The initial \$2 million loan that is -- we would 15 ask the Court to approve on an interim basis -- is going to 16 be paid into our firm's trust account.

17 segregated deposit account that bears interest for that. 18 And I didn't expressly discuss this with the 19 debtor's counsel, but we are going to need a W-9 form filled 20 out by the debtor because the estate will be entitled to the 21 -- whatever interest is on that money.

22 requirement, not our firm's requirement.

23 to be filled out if the Court does approve this resolution. 24 And that \$2 million will be used to pay the 25 committee's professionals and any examiner that might be Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 18 of

appointed or the examiner's professionals. And of course that's without prejudice to the additional loans that are being requested on a final basis. And I expect we'll be able to work those out as well.

The other provision we negotiated and which was of great concern to the committee relates to the termination event that would be based on the appointment of a Chapter 11 trustee. We were highly concerned -- and that was a point of -- one of the points of our objection -- that that tilted the process.

And so what we were able to work out is a commitment from the debtor and Golden Spring that the -- of the \$500,000 that Golden Spring agreed to make available upon a termination event -- and that would include the appointment of a Chapter 11 trustee -- they would agree to make an addition to all fees of professionals that had been approved up to that date, the date of the appointment of a trustee, an additional \$500,000. Of that, 400 would be dedicated to a -- the fees of a Chapter 11 trustee, his or her professionals, as well as the committee's professionals to the extent they would continue to have a role post-trustee.

So the committee was satisfied that if a Chapter 11 trustee had to take over, there would be a fund for the trustee to continue on with the investigation and recovery

of assets. THE COURT: Is that 500,000 or 400,000 of which you're talking about part of the two million or in addition to the two million? MR. GOLDMAN: Well, that would be in -- actually in addition to any fees that were accrued up to the date of the appointment of a trustee, so my conception of it was that it would be in addition to the loan. UNIDENTIFIED: In addition to? MR. GOLDMAN: In addition to the two million if the trustee appointment occurred during the interim period. Or if it incurred -- if it occurred in the final period, it would be an addition. That's my understanding. THE COURT: Okay. I'm not sure everybody agrees on that side, but we'll see. That's why I asked the question. (Pause.) MR. BALDIGA: On that point, if you still have un- incurred amounts in the two million, it wouldn't double count that. MR. GOLDMAN: I agree with that. MR. BALDIGA: Okay. Thank you. MR. GOLDMAN: Yeah. THE COURT: Okay. MR. GOLDMAN: The debtor had requested a finding Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 20 of

of good faith in the interim order.

And we had no problem with that as long as it was subject to a very strict caveat, and that would be that it would be strictly limited to the extension of the DIP loan and it would not be construed in any way or used to defend against claims that the committee or another estate representative or a creditor might assert against Golden Spring based on theories such as alter ego, veil piercing, fraudulent transfer.

In other words, that they couldn't use the good- faith finding to say, here, Your Honor, you've already held that we were a separate entity and we proceeded in good faith with the DIP, so how could you pierce the corporate veil.

So that is being accepted out of the good-faith finding and the good-faith finding will only relate to the extension of the interim DIP fees -- DIP funds rather.

And there's a similar caveat for the no-waiver provision that is in the current order. It's in paragraph 15. We'll just make that more explicit to match the caveat I just gave Your Honor about the good-faith finding, that the entry of the order doesn't impair or prejudice in any way the claims that might exist against Golden Spring. And I think that that sums it up. I think there's -- there's one point we agree with Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 21 of 1 the debtor on and that's the point that was made in the 2 declaration, that this proceeding should serve as a ground 3 for giving creditors a fair opportunity to investigate what 4 assets the debtor has, to conclusively determine what those 5 assets are, and to use the DIP financing as a means to do 6 that. That's all in his declaration and that's all being 7 served, we think, if this resolution is approved. 8 THE COURT: Okay. Thank you. 9 Mr. Kindseth, did you want to say something? 10 MR. KINDSETH: Yes.

11 issues, timing issues, that we have, and so revising the 12 order and having it circulated as soon as possible is very 13 important, so I'd like to be excused to go back to my office 14 to finish the draft order.

16 THE COURT: Of the DIP order? 17 MR. KINDSETH: Sorry? 18 THE COURT: Of the DIP order? 19 MR. KINDSETH: No.

21 THE COURT: Oh, you're -- okay. 22 MR. KINDSETH: Correct.

23 THE COURT:

24 isn't really a motion underlying that then, right?

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2 THE COURT:

3 of the relief from stay order? 4 MR. KINDSETH: Correct. 5 THE COURT: Okay. Okay. 6 MR. KINDSETH:

8 THE COURT: No, that's fine. 9 MR. KINDSETH: Great. 10 THE COURT: I don't need to see it. 11 MR. KINDSETH: Perfect. 12 THE COURT:

13 MR. KINDSETH: Yes. 14 THE COURT: -- when I see it, right? 15 MR. KINDSETH: Okay. Very good. 16 THE COURT: And so I think that's fine. 17 MR. KINDSETH: So may I be excused? 18 THE COURT: Yes. Yes. You certainly may.

19 you. 20 MR. KINDSETH: Thank you very much, Your Honor. 21 THE COURT: Okay.

22 I was going to ask questions about was the -- 23 The only thing, Mr. Baldiga, you didn't speak 24 about that's on the calendar today, other than the examiner 25 and the dismissal motion which you did speak about in some

1 ways, was the proof of claim bar date motion. 2 What's the status of that motion? 3 MR. BALDIGA: I'm sorry. I did forget that. 4 That's also fully resolved I believe.

5 the requests of the U.S. Trustee in that regard to basically 6 pare down what creditors must do to comply with the bar 7 date. 8 THE COURT:

9 be? 10 MR. BALDIGA:

11 to 52 days after service of the bar date. 12 THE COURT: Okay.

13 because I'm not sure 52 days is enough time. 14 MR. BALDIGA: Okay. 15 THE COURT:

16 code, you know, has changed a few times over the last few 17 years, but the least amount of time I think there is after a 18 341 meeting is 70 days, and it's 7 or something, but this is

20 MR. BALDIGA: Right. 21 THE COURT:

22 bar date set, right? 23 But if there is, if you ask for one, that's fine,

but I don't know if 52 days -- I'll have to look at whatever you propose, but I'm --

1 MR. BALDIGA: Okay.

2 Honor. 3 THE COURT:

4 sure if 52 days will be ample time in this case or any 5 Chapter 11 case quite frankly because of many reasons, 6 including the impact of the ability to object or receive a 7 distribution under a plan. 8 MR. BALDIGA: I hear that. 9 THE COURT: So that would be my only concern.

10 mean, I don't know what other concerns I might have, but I'm 11 just saying to you 52 days to me seems short.

12 saying I'm going to 180 or anything like that, but I think 13 that, you know, I would expect the bar date to be, you know, 14 somewhere at least in the 75-day range. 15 Is that a problem from the management of this 16 case's perspective? 17 MR. BALDIGA: Well, it depends.

18 it's helpful to know what claims there are as we go through 19 a plan process. 20 THE COURT: I understand that. 21 MR. BALDIGA:

22 process. We're two months into the case.

23 creditors another essentially two months to file claims, it 24 doesn't seem like a big burden, but let's put a date in and 25 get it served, whatever date the Court feels is appropriate, 1 it will -- but it will help the plan process along -- 2 THE COURT:

3 MR. BALDIGA: -- to know what claims there are. 4 THE COURT:

5 your disclosure statement and plan based on different 6 eventualities, right? 7 MR. BALDIGA:

8 much as the financial transactions that underpin the plan. 9 This is a -- we -- claims, the amount of claims matter.

11 THE COURT:

12 point, right? 13 MR. BALDIGA: Right. 14 THE COURT:

15 prepackaged Chapter 11, so you have to have time for 16 solicitation and voting, and you have to have people give 17 people an opportunity, meaningful opportunity, to file 18 proofs of claim. 19 MR. BALDIGA: Yes.

20 there's a presumption that 45 days is sufficient, and we

22 THE COURT: What rule? 23 MR. BALDIGA: Local Rule 3003-1. 24 THE COURT:

25 proof of claim bar date? Maybe it does.

MR. BALDIGA: Let me take a look at it again. (Pause.) MR. BALDIGA: But, again, we're not -- we're not even suggesting 45 days, but that's a point of reference I guess. But if the Court feels that it shouldn't be 45, it should be 52 or 60, then -- THE COURT: I just don't see 45 days as -- or any time frame Local Rule 3001-1. MR. BALDIGA: I'm sorry. I misspoke, 3003-1. THE COURT: Those are creditors whose claims are listed as disputed contingent on liquidating. That rule applies to creditors with claims that are disputed contingent on liquidated with a notice of a deadline for filing proofs of claims. The purpose of that rule is so that a debtor who files a case and lists in their statements and schedules of affairs all the claims as -- or any claim, it doesn't have to be all -- as disputed or contingent on liquidated. We have a process here in Connecticut where the debtor is required to provide notice to that claimant that their claim is listed as disputed contingent on liquidated, and that if they don't file a proof of claim, that they will not be able to object and they will not receive any distribution under the plan. MR. BALDIGA: I understand. I didn't -- I didn't Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 26 of

567 Entered 05/04/22 20:28:55 Page 27 of

1 say that that rule dictates what we're doing here. 2 THE COURT: Yeah.

MR. BALDIGA: It provides a reference point as to what -- it's a deadline for certain creditors to get their claims in. I'm not saying that that dictates what we do. I am saying that as in pretty much every other Chapter 11 case involving tens of millions of dollars conceivably getting claims, having a deadline on which claims are filed helps to push the case --

THE COURT: I completely agree. I'm not suggesting there isn't going to be a --

MR. BALDIGA: Okay. So that's all I'm saying. So we'll -- THE COURT: I'm not suggesting there isn't going

to be a deadline. I'm just not sure it's going to be 52 days.

MR. BALDIGA: And as I said, let's put a day in that you're comfortable with and keep the show moving forward, and we'll do that.

THE COURT: Okay. Thank you.

MR. BALDIGA: Thank you.

THE COURT: All right. So, Mr. Friedman, this is your objections to the application to employ Verdolino & Lowey and the -- your clients' -- and the DIP financing order. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 28 of

Now, I did see everyone's list of witnesses and exhibits. And I saw that last night there was a joint exhibit grid with regard to different exhibits. How do you plan on proceeding this morning? Are you -- are you going -- are we going to start with your objection or is Mr. Baldiga going to start with his -- or his motions? MR. BALDIGA: I was going to put -- to establish the evidentiary foundation that -- I was going to put Mr. Craig Jalbert on the stand. That's the witness that PAX intends to cross-examine. Direct would be very short, but -- THE COURT: That's fine with me if it's fine with Mr. Friedman. MR. BALDIGA: Okay. THE COURT: I mean, you two I'm sure have spoken about this, right? MR. FRIEDMAN: Your Honor, my colleague, Ms. Aronsson, will handle any objections to direct and the cross-examination and we'll make argument after the witness is -- has been relieved. THE COURT: Okay. All right. So, Mr. Baldiga, you may call your first witness. And this -- to be clear on the record, we are now -- is this evidence going to be applicable to both Verdolino Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 29 of 1 & Lowey and the DIP motion or are we just starting with the 2 Verdolino & Lowey application? 3 MR. BALDIGA: With Verdolino & Lowey. 4 THE COURT: Okay. Thank you. 5 MR. BALDIGA: Mr. Jalbert. 6 THE COURT:

7 down, just let me know what you can see, okay?

8 a screen in front of you, you know. 9 I'm just going to say my screen is showing 10 nothing. Should it be showing at least the calendar? 11 THE CLERK: No. 12 THE COURT: Okay.

13 anything. Okay. 14 MR. JALBERT: It is blank, Your Honor. 15 THE COURT: Can you see anything? 16 MR. JALBERT: It is blank. 17 THE COURT: Okay. Good. Mine is too.

18 we're on the same page.

19 different page soon. 20 MR. JALBERT: Good morning. 21 THE COURT: Good morning. 22 CRAIG JALBERT, WITNESS FOR THE DEBTOR, SWORN 23 THE CLERK:

24 for the record, please. 25 THE WITNESS:

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2 Verdolino & Lowey.

3 Street, Foxboro, Massachusetts 02035. 4 THE CLERK: Thank you. 5 THE COURT: Good morning, Mr. Jalbert. 6 THE WITNESS: Good morning, Your Honor. 7 THE COURT: You okay in there?

8 you need? 9 THE WITNESS:

10 THE COURT: Okay. Thank you.

11 even have any water, but if you do get to a point where you 12 need some, let us know. Okay? 13 THE WITNESS: Thank you. I appreciate it.

15 BY MR. BALDIGA:

Good morning, Mr. Jalbert.

Good morning.

You said in your introduction that you were affiliated 19 with the firm of Verdolino & Lowey?

Yes.

Could you tell the Court what that firm does.

It's styled as an accounting firm.

23 specialty work.

24 that we do not provide is the test type services, audits, 25 reviews, compilations, but we do a lot of litigation support

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1 work in insolvency.

2 federal senators and congressmen and presidential 3 candidates, and we do what we call high-net-worth 4 babysitting and tax preparation.

And what is your position in the firm?

I'm a principal.

And were you a co-founder of the firm?

Well, the firm was started back in 1979.

9 or Verdolino & Lowey bought half the firm in 1986.

10 the other half in 1987.

11 Verdolino & Lowey over the years.

So you've been with that firm now for?

Thirty-five years.

Thirty-five 35 years. 15 And within Verdolino and -- and what is your title 16 at the firm?

Principal.

And does that mean that you're in charge of at least -- 19 co-charge of the firm with someone else?

Yes. So I'm not an owner because a CPA can't be an 21 owner, but I am treated as an equal 50 percent partner.

22 100 percent of my time not spent running the firm -- and I'm 23 the "managing partner" -- is spent in this insolvency and 24 related issues.

So you have experience in insolvency cases?

Jalbert - Direct 28 A I do. Q For how many years? A Started somewhere in 1988 or 1989. Q Okay. And before you joined Verdolino & Lowey, did -- what was your schooling, starting with college? A I graduated in 1983 with a bachelor of science and degree in accountancy from Boston College. And since then, I've done 35 -- 38 or 39 years of continuing professional education in the accounting and related areas. Q Okay. And as you -- I think as you said Verdolino & Lowey is not an auditor, correct? A Correct. Q Describe what you have done in bankruptcy cases and in about how many bankruptcy cases over the years? A I last did my count five or ten years ago, and at that time, I had been in 7,000 Chapter 7's and 500 Chapter 11's. I've been appointed as a Chapter 11 trustee three times. I've been a federal -- state -- federal receiver, a state court receiver, an assignee for the assignment of benefitted creditors in four states. I've done -- I've been a post-confirmation fiduciary -- pick a title -- liquidating supervisor, liquidating manager, whatever, numerous times. I work with trustees, debtors in possessions, creditors committees, equity committees, secured creditors, unsecured creditors, Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 32 of

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1 pretty much any constituency to a bankruptcy case over the 2 years we've represented in all of these cases. 3 I think that's all I have off the top of my head.

And do yo provide assistance to debtors in connection 5 with plan formulation and negotiation?

Yes.

Do you provide assistance with financial reporting?

Yes.

Here, you know that the debtor obviously is an 10 individual?

Yes.

In fact, Mr. Kwok is in the courtroom, and you've met 13 him on several occasions now?

Yes.

He has lawyers obviously that help him, correct?

Yes.

Other than Brown Rudnick, are they bankruptcy lawyers?

Not to my knowledge.

Okay. Does he have a financial staff individually that 20 is well versed in bankruptcy reporting?

No.

How do you know that?

I've been told.

24 -- 45 or so days, there's been lots of interaction and all 25 of the information necessary for us to do our work has come

1 through the legal team.

Okay. But you and your staff have more than a little 3 experience with financial reporting in bankruptcy cases, 4 correct?

Yes.

What type of reporting is required in this case?

Well, there's two pieces of reporting that come to mind 8 initially. Aide from the schedules and the SOFAs, putting 9 those aside, that's the start of the case, on an ongoing 10 basis, there's the monthly operative reports that are filed 11 nowadays on the docket with additional information supplied 12 to the United States Trustee. 13 It's the United States Trustee's form and rules. 14 And there's also a Form 426 which is related to Rule 2015.3 15 for reporting related to entities -- I think the term is -- 16 that are substantially controlled by the debtor.

Okay. And were you involved in the preparation of the 18 first MORs filed in this case?

Yes.

What did you do?

21 staff, please.

We, at Verdolino & Lowey, were -- initiated the 23 preparation.

24 United States Trustee. It's a PDF that you fill out.

25 has lots of instructions.

1 attorneys in order to obtain the information necessary to 2 prepare the form.

3 March. 4 We needed assistance in getting input from Golden 5 Spring and that was arranged for through counsel.

6 did have initial few emails with Golden Spring to obtain 7 information and most everything has come through counsel.

Okay. With respect to the schedules and statements, 9 were you involved in that process?

Yes.

What did you and your staff do in that regard?

So in order to file the SOFAs and the schedules, 13 there's an awful lot of historical information necessary, so 14 we participated on numerous telephone calls and emails with 15 the legal team in order to obtain the information. 16 We populated initially the draft forms of both the 17 -- all of the schedules -- and as we all know, there's a 18 number of them -- and the statement of financial affairs. 19 We were -- initially crafted the first draft of 20 what I'll call the specific notes, there were global notes, 21 that were filed as part and parcel to the SOFAs and the 22 schedules. And the general notes were I believe created and 23 drafted by the attorneys. 24 I did the first pass at trying to file the 25 specific notes that responded to the various particular

1 questions in the SOFAs and the schedules after receiving and 2 obtaining and organizing the information received from the 3 legal team.

Were you involved in the establishment by this debtor 5 in possession of the so-called DIP deposit account?

Yes.

What did you do?

There were only a number of institutions that the 9 United States Trustee's Office has -- permits to be -- to 10 hold funds in a bankruptcy case so we identified that group 11 of banks and we tried to see who would participate.

12 a relationship with three of the banks that frequently do 13 work in bankruptcy. 14 Initially, and no longer, I was going to be the 15 actual signatory, so we went and presented it that way. 16 When that became clear that that was not going to happen, we 17 made arrangements to be able to get debtor in possession to 18 be the sole signatory on the account and to have a bank 19 account that would meet the requirements of the United 20 States Trustee's Office. 21 It's a bank that's done it in other cases in this 22 jurisdiction and others.

23 worked for -- with -- in a number of matters over the last 24 couple of years.

What bank is that?

Well, we went with both People's and M&T.

2 middle of our discussions, they merged.

3 both sides, but eventually it will be in the -- it will be 4 an account in M&T.

Okay. All right.

6 and relationships to help establish that account?

Yes.

And, again, you are, yourself, your firm and you, will 9 not be a fiduciary, but you're just providing advisory 10 assistance in that regard, correct?

Correct.

And you're not going to act as a fiduciary in this 13 case, correct?

Correct.

So all work is advisory?

Yes. I don't know what the term would be, but there 19 will be accounting and reporting.

20 out of the bank account will have to be reported in the MLR. 21 the debtor doesn't have an accounting staff.

22 we will have some role in making sure that checks are 23 written, checks are signed by the debtor. 24 And then the reporting, the committee and others 25 might have. And the U.S. Trustee might want weekly or

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1 monthly reporting or bi-weekly reporting.

2 they'll want. Different cases, people do different things. 3 And of course there will be the monthly reporting through 4 the MLR, so I'm assuming we will assist and facilitate that.

And have you had direct -- you and your staff had 6 direct communications with the Office of the United States 7 Trustee regarding reporting in this case?

Yes.

And how has that gone?

Well, it started out with -- everyone probably knows in 11 June of 2021 the United States Trustee started a requirement 12 with the monthly -- the MLRs are much different beasts than 13 they used to be.

14 you would prepare it and it was fairly simple. 15 It's now done on a -- on a PDF that is -- you can 16 keypunch directly into the PDF.

17 and populated with all the information that is required and 18 appropriate for that particular case, you actually hit a 19 button and it uploads the data to the cloud in the United 20 States Trustee's Office. 21 And it sends back a form that is no longer 22 watermarked as draft or whatever the watermark was.

23 then signed by the debtor and filed on the docket.

24 supplemental information goes to the U.S. Trustee separately 25 by email either by my firm or the -- or attorneys.

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1 Well, when -- since January -- and I have a number 2 of cases undergoing Chapter 11s where this reporting is 3 required -- without any word that came down, the form 4 changed dramatically.

5 pages. All of a sudden it had a whole bunch of other pages 6 and some markings, you know, like when you go to a 7 restaurant and you do the menu button to see what the menu 8 is, this form had those -- those kind of symbols and 9 markings. 10 I didn't know what it was.

11 out. And I talked to someone in the accounting side of the 12 U.S. Trustee's Office who happened to be in New York 13 handling this case and he explained to me that that's the 14 way the form is supposed to be which allowed us to then 15 quickly wrap up the form.

16 made a request for additional information on the monthly 17 operating report which we've been providing since then.

Did you feel that your 35 years of experience with you 19 and your staff helped to get that done efficiently?

Of course.

Do you think this debtor alone without your office's 22 assistance would have been able to get that done?

No.

How about the instructions and definitions in the 25 schedules and statements, how did your experience affect how

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Jalbert - Direct 36 that work was done? A Well, obviously it was very helpful. This is a unique case in a number of areas. One of the uniquenesses -- and at least Your Honor probably knows -- is not a large amount of individual Chapter 11 cases by comparison to corporate or Chapter 7 cases it's a relatively minor amount. We have done a number of them in the past. We had -- we've had different types of cases. This one is very unique. And so as we were going through this, well, we had a lot of historical knowledge and history and basis to understand what the SOFAs and the schedules are looking for, we had to make sure we educated everybody to what the rules were, what the definitions were. Frankly, some times what is on the SOFA or a schedule, the actual question, doesn't entirely and completely relate to what the instructions say. The definitions can differ a bit. So we assisted everybody in those -- in those areas. And the attorneys, as well as us, haven't had lots of individual Chapter 11s, so we all made sure that we reviewed those instructions to make sure that we filed and did everything we possibly could, and to be abundantly clear that the attorneys drafted general and specific global notes to accompany the schedules and the SOFAs where there was any issues that needed additional addressing and describing.

Q Was your experience helpful in that regard? A Yes. Q Do you think this debtor could have done that without your assistance? A No. Q You mentioned earlier that your firm does not provide auditing services, correct? A Yes. Q And while your firm does serve, and while you have served as a fiduciary, you're not serving as a fiduciary here, correct? A Correct. Q Do you remember being deposed by PAX -- A Yes. Q -- a few weeks ago, I guess? A Yes. Q Okay. Did you try to make clear during your testimony that you were not doing auditing or forensic work or verification work here? A I think -- I think -- I thought I did.

word that they used was investigate. Q Okay. A I didn't investigate anything, and the answer to that question is no. Q Okay. So are you being asked to be an examiner in this

Jalbert - Direct 38 case? A No. Q Are you being asked to be a trustee? A No. Q Are you being asked to do an investigation? A No. Q But you are being asked to work with the debtor and the debtor's team to provide financial information in a manner required by the bankruptcy code and the rules and the Office of the United States Trustee? A Among other services, yes. Q Okay. But you feel capable to do that? A Yes. Q And you feel -- and, again, can the debtor do that without your help? A No. Q Okay. MR. BALDIGA: No other questions, Your Honor. Thank you. THE COURT: Thank you. Cross-examination, Counsel? (Pause.) MS. ARONSSON: Good morning. THE WITNESS: Good morning. MS. ARONSSON: Laura Aronsson from O'Melveny & Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 42 of

Jalbert - Cross 39 Myers. THE COURT: Good morning. You may proceed. CROSS-EXAMINATION BY MS. ARONSSON: Q Good morning, Mr. Jalbert. I'd like to discuss the work that V&L has done in this matter to date. V&L was contacted sometime in February, is that right? A Late February, early March. Q After retention, you turned to the SOFAs and the schedules, working on them simultaneously? A Well, I'm not retained yet, so. Q After you were contacted? Thank you. A After we were contacted, yes. I think -- aside from drafting an engagement letter and providing background information on the firm, I think our first tasks were to begin working on the SOFAs and the schedules. Q Did you finish that work? A So far, yes. Q Then V&L started preparing the first monthly operating report? A Yes. Q This was the report for the second half of February? A Well, it was a report for the month of February. But it just so happens the debtor filed on February 15th, so. Q Since then, the debtor has filed one additional Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 43 of

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1 operating report? 2 A The month of March, yes. 3 Q This was filed on April 20th? 4 A If you say so. I know it's around that date. 5 Q Turning to the work you've performed so far in 6 connection with these categories, I'm going to start with 7 the SOFAs and schedules, you prepared these filings based on 8 the information you received from others? 9 A Yes. 10 Q These people included Brown Rudnick, right? 11 A Yes. 12 Q Aaron Mitchell? 13 A Yes. 14 Q Is that Kwok's personal attorney? 15 A He's debtor's counsel.

16 personal attorney. 17 Q And Melissa Francis? 18 A Yes. I did receive information from her. 19 Q Is that Kwok's personal attorney? 20 A My understanding is she's -- well, she's part of the 21 bankruptcy team.

22 personal attention attorney. 23 Q Anyone else? 24 A Yes. We received a spreadsheet which was I think 25 amended or changed a couple of times from someone from

Jalbert - Cross 41 Golden Spring. Q Was this in connection with the SOFAs and the schedules or the monthly operating report work? A With the operating report. Q Okay. We can turn to that. Did you communicate with anyone else regarding the SOFAs and the schedules besides Brown Rudnick, Aaron Mitchell and Melissa Francis? A No. Q I think I heard you testify on direct Verdolino & Lowey got all of the relevant information from the people we just talked about. I note -- you didn't do any other independent work or to verify the facts? A Correct. Q You didn't do any investigating -- investigation into the ownership interests, if any, of Mr. Kwok in the assets listed in the SOFAs and the schedules? A Correct. Q For example, no investigation of Kwok's interest in the Lady May? A Correct. Q You did no work to value the items listed in the SOFAs and the schedules, right? A If you're asking if we did valuation work, no. But there was questions. That the answers to those questions was checks issued by the State of New York and I think the Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 45 of

Jalbert - Cross 42 federal government that on the face of those checks had a number. I don't know if you call that valuing, but we read the check and we determined what that number was and put it in the schedules. Q Verdolino & Lowey has no experience valuing luxury items like the Lady May? A Correct. Q You did no investigation into the debtor's income information? A Correct. Q You have not spoken to the debtor about any of the filings Verdolino & Lowey has prepared in this matter? A Correct. Q Verdolino & Lowey used best case to help prepare the SOFAs and the schedules, right? A Yes. Q That's industry software? A Well, it is. I don't know what else to do besides bankruptcy, but best case is a -- and I don't know what the real name of the company is, but they manufacture, prepare a software, that provides pretty much every bankruptcy form that I'm aware of that has to be filed in a bankruptcy. Q V&L simply plugged that information that you received into the software to create the filings? A Well, first we got the information, understood the Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 46 of

1 information, and then, yes, we did keypunch it. 2 Q You did not review any of the debtor's books and 3 records in connection with the engagement? 4 A Correct. 5 Q You do not know where those books and records are kept? 6 A Correct. 7 Q You did not ask to review them? 8 A Correct. 9 Q Turning to the work in connection with the monthly 10 operating report, again, like with the SOFAs and the 11 schedules, Verdolino relied on information it received from 12 the third parties to assist in the preparation? 13 A Correct. 14 Q You mentioned a summary of expenses earlier, is this a 15 summary of expenses you received from someone at Golden 16 Spring breaking down the debtor's monthly expenses? 17 A Well, they're breaking down the expenses paid on behalf 18 of the debtor, paid by a third party on behalf of the 19 debtor, yes. 20 Q This was about seven categories? 21 A About that. 22 Q To your knowledge, Golden Spring is the debtor's family 23 office in New York City? 24 MR. BALDIGA: Objection. 25 THE COURT:

Jalbert - Cross 44 THE WITNESS: That's not my understanding. THE COURT: Hold on a second, sir. What's your objection? MR. BALDIGA: Well, the witness answered the question, so I'll withdraw the objection, Your Honor. THE COURT: Okay. Thank you. THE WITNESS: I'm sorry. Ask the question again. BY MS. ARONSSON: Q To your knowledge, Golden Spring is the debtor's family office in New York City? A No. That's not my understanding. MS. ARONSSON: Okay. Madam Clerk, can we please pull up PAX Exhibit 14. (Pause.) BY MS. ARONSSON: Q So just to confirm -- THE CLERK: On the screen -- MS. ARONSSON: Sorry. THE CLERK: On the screen is Exhibit 14, page 1. MS. ARONSSON: Thank you. THE CLERK: PAX Exhibit 14, page 1. BY MS. ARONSSON: Q So just to confirm -- A No. That's not what mine says. Mine says I'm on page 171. Does it -- does it have a whole bunch of -- Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 48 of

Jalbert - Cross 45 THE CLERK: Yes. THE WITNESS: -- exhibits all in one PDF? Okay. THE CLERK: That's page 1 in Exhibit 14. THE WITNESS: And if you say it's page 1, it's page 1. BY MS. ARONSSON: Q So just to confirm, what is your understanding of Golden Spring? A My understanding is it's the debtor's son's company/family office. MS. ARONSSON: All right. You can take those down. Thank you. THE COURT: So you're not moving for the admission of Exhibit 14, Counsel? MS. ARONSSON: No, I'm not. Thank you. THE COURT: Okay. Thank you. BY MS. ARONSSON: Q You communicated with one person at Golden Spring regarding the information contained in the monthly operating report, right? A Yes. Q That provided -- that person provided you certain information relevant to the monthly operating report? A Yes. Q Who was that person? Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 49 of

I only know his first name. 2 THE WITNESS: Am I permitted to say it? 3 MR. BALDIGA: Objection, Your Honor.

4 let Golden Spring argue. 5 MR. MILTENBERGER: Your Honor, this came up at Mr. 6 Jalbert's deposition.

7 harassment, intimidation of its employees.

8 there's a specific reason why an employee's name needs to be 9 said on the record, we would like the identification of the 10 employees to remain confidential and be kept off of the 11 record. 12 THE COURT:

13 that, Counsel, I think.

14 something under seal or confidential, you have to seek that 15 through an appropriate motion. 16 But I think what counsel was asking was -- and 17 maybe I'm wrong, we can play back the recording -- was you 18 were asking about a specific person that was providing 19 information from Golden Spring.

20 question. 21 MS. ARONSSON: That's right. 22 THE COURT: Okay.

23 though, sir, okay, because we have to figure out what the -- 24 what the issue is here. 25 So what is the need to know the specific person's

1 name from Golden Spring? 2 MS. ARONSSON: Sure.

3 particular motion, the retention of V&L, Pacific Alliance, 4 we sought discovery to understand the purpose of Verdolino & 5 Lowey's retention and why it's in the best interest of the 6 estate. 7 We believe we're entitled to explore that, the way 8 in which Verdolino & Lowey prepared the SOFAs, the 9 schedules, the monthly operating reports, including who 10 provided Verdolino with the underlying facts, and what those 11 facts are, is important to uncovering whether this retention 12 is in the best interest of the estate. 13 THE COURT: All right.

14 question if we're -- and I'm not -- I'm not ruling on 15 anything at the moment -- but does -- do you have an 16 opposition to us putting the witness answering the question 17 -- but has the witness already answered this question at the 18 deposition? 19 MS. ARONSSON: He did not. 20 THE COURT: Okay.

21 deposition? 22 MS. ARONSSON: Yes.

23 and we received a redacted email, so that was the root of 24 the question. 25 THE COURT: I see.

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1 someone at Golden Spring, but it had redacted people's 2 names? 3 MS. ARONSSON: Correct. 4 THE COURT: Okay.

5 Attorney Miltenberger? 6 MR. MILTENBERGER:

7 privacy of their employees, Your Honor.

8 by PAX's attorney, I didn't see anything that made it clear 9 that the identity of the person that provided the 10 information to Verdolino & Lowey is important. 11 We don't have any issue with the disclosure of the 12 information that was provided and when that happened.

13 only concern that we have is the privacy of our employees 14 and we would ask that the employee name be kept 15 confidential. 16 THE COURT:

17 Spring have to testify at some point? 18 I mean, what are you going to -- are you going to 19 designate a Rule 30(b) representative or what -- you're not 20 going -- I mean, someone's going to have to, it can't just 21 be the corporate entity.

22 some point. 23 MR. MILTENBERGER: That's correct, Your Honor. 24 Golden Spring has been examined.

25 of Golden Spring testify and answer all questions.

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Jalbert - Cross 49 THE COURT: So the person that provided the information to Mr. Jalbert is not the president of Golden Spring, is that the -- is that the issue? 4 MR. MILTENBERGER: That's the issue, Your Honor. It was a rank and file employee of Golden Spring who was just passing information over to Verdolino & Lowey. And, again, we don't have any objection to inquiry about what that information was or why Verdolino & Lowey wanted it, just as to the identity of the employee to protect that individual's privacy. THE COURT: Well, you'd have to have sought a protective order I think. But the other way we could handle it is -- I mean, you didn't do that. What did you do at the deposition when this question was asked? 16 MR. MILTENBERGER: I objected to it, Your Honor. THE COURT: Okay. And did you say that you were going to seek some form of a protective order? 19 MR. MILTENBERGER: No, Your Honor. I objected and the questioner moved on. THE COURT: Okay. MS. ARONSSON: Your Honor, if I may? THE COURT: Yes. Go ahead. MS. ARONSSON: Two more quick points. Even if the name were not relevant -- we dispute that it's not relevant

1 -- I'm not just aware of any applicable rule that allows the 2 debtor of Golden Spring to redact for relevancy.

3 just not something that I've ever seen happen. 4 I'm also not aware of any rule that allows the 5 debtor to redact otherwise discoverable information, the 6 name and the email address of a person based on the STAG 7 security threat. 8 And I would also point out that, you know, we've 9 seen Golden Spring employees be identified on LinkedIn, 10 which is publicly available. 11 MR. MILTENBERGER:

12 that the probative value of this individual's name is 13 outweighed by the prejudicial effect of disclosing it. 14 THE COURT: Well, I don't know if that's true.

15 understand your argument, but I don't know if that's true. 16 Maybe what we need to do is, you know, set this 17 issue aside for some further discussion and/or -- I mean, 18 what we could do in the short term -- but I don't know if 19 it's acceptable to PAX, it may not be -- is the question 20 could be asked and answered, whatever the answer might be, 21 and we could put that part of the record under seal pending 22 a ruling on the issue, but that's I think the best that we 23 can do right now. 24 I don't have anything in front of me to make an 25 educated evidentiary ruling on this issue, right?

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Jalbert - Cross 51 But if we're going to do that, we have to give the courtroom deputy a moment because we'd have to -- our software, that is, the recording that is the record of the case, does allow us to put certain parts of the record underseal. And I'd have to orally rule that there -- because there is no motion pending, no written motion -- that because there's an objection to a question that is an evidentiary objection in nature, and because I don't have anything in front of me to allow me to make an educated ruling, that I would have to rule at this point that if we want to proceed this way, that the record for this question and answer would be under seal until further order of the Court. Mr. Baldiga? MR. BALDIGA: Yes, Your Honor. For the debtor, our objection is -- in addition to Mr. Miltenberger's -- just on relevance. You gave PAX an opportunity to say how the name is relevant and there was no reason given. The name is simply not relevant to anything here. THE COURT: Okay. Well, again, I'm not sure I agree with you, but I'm not prepared to rule on that at the moment. MR. BALDIGA: But there could be at least some

Jalbert - Cross 52 showing as to why that is relevant. THE COURT: Well, there is -- I mean, under the Federal Rules of Civil Procedure, discovery is broad, evidence is broad. She's asking a question about the preparation of the financial information that forms the basis of this Chapter 11 case where -- and Mr. Jalbert has testified quite, you know, admirably about what he's done, what he hasn't done, and what -- how the information has come to him from third parties and not from the debtor directly. So I do think it's relevant. If that's your -- on that objection, I think it's relevant. MR. BALDIGA: Okay. THE COURT: I think that's relevant. But whether or not it should be confidential or protected is a different issue at least from the Court's view. Again, this is an individual Chapter 11 case. The debtor has duties under the bankruptcy code. Apparently those -- I shouldn't say -- that's not fair -- let me make sure I say this properly -- from what I've heard today, and Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 56 of

that's all I've heard so, the debtor has not directly communicating with the party who is preparing and submitting the financial information that is the basis for this case. If that's the case, which it appears to be --

1 which is fine, but, I mean, there's nothing -- but that 2 doesn't -- that does not preclude then a party from asking 3 who provided the information. I think it is relevant. 4 And even -- but it may ultimately be not material. 5 I could see that it's relevant, but you could argue at some 6 point possibly that it's immaterial who it is because it was 7 just somebody at Golden Spring. 8 Now, that doesn't mean that the -- that PAX as the 9 objection party -- objecting party shouldn't know who that 10 is because maybe PAX wants to depose that person. 11 Now, you could -- you could object to that and you 12 could file a protective order and motion to quash and all 13 kinds of things, but that doesn't mean it's not relevant 14 under the facts of this case that have been established so 15 far this morning. 16 MR. BALDIGA: Okay.

17 is that before we go through all these other machinations, 18 it's possible that the witness simply doesn't know the name. 19 And perhaps the Court could inquire as to whether we're all 20 just sort of wasting time because the -- 21 THE COURT:

22 MR. BALDIGA: Thank you. 23 THE COURT:

24 pending question, right? 25 There's a pending objection.

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Jalbert - Cross 54 So Golden Spring is trying to -- not trying, is asserting that the answer to that question is confidential and they don't want it disclosed -- MR. BALDIGA: I understand that fully. THE COURT: -- even though they haven't filed any documents or anything with this court with regard to this examination. So why don't I -- Well, how would you like to proceed, Counsel? MS. ARONSSON: Pacific Alliance is happy to proceed under seal as you suggested. I just wanted to also note that we have relevancy arguments, and that Mr. Friedman will address in connection with the DIP objection on this very point. THE COURT: Well, I just ruled that I think it is relevant. MS. ARONSSON: Thank you. Yeah. THE COURT: Okay? I think it is relevant. So, you know. And Mr. Baldiga may find that objectionable and may, you know, note the objection for the record for appeal purposes, whatever he needs, but I think it is relevant in this case. Under the specific facts and circumstances of this case, I think it's relevant to know who provided the information to the party -- that the financial advisor that is preparing and submitting all the financial information

1 that is the basis for this case. 2 So that is the Court's ruling. 3 With regard to the -- placing it under seal, now, 4 if you'd all just give me a minute. 5 I don't want to burden the courtroom deputy, but, 6 how much time do you need to get that set up to turn on the 7 -- to make sure that this question that's been pending -- 8 and I'm going to make -- I'm going to ask you to ask it 9 again once we go under seal -- and Mr. Jalbert's answer be 10 placed under seal? 11 THE CLERK:

12 it's just flipping the buttons. 13 THE COURT: Okay. Great. 14 THE CLERK:

15 THE COURT: Okay. Hold on a minute, Mr. 16 Miltenberger. Just hold on. 17 THE CLERK:

18 THE COURT: No, not yet. I'll tell you. 19 THE CLERK: Okay. 20 THE COURT: I'll say when to start.

21 to hear from -- I still want to hear from counsel for PAX 22 and then I'm going to let Mr. Miltenberger speak again too. 23 THE CLERK: Okay. 24 THE COURT:

25 to add for the record before I let Mr. Miltenberger talk for

Jalbert - Cross 56 a moment? MS. ARONSSON: No. Thank you. THE COURT: Okay. Thank you. Mr. Miltenberger? 5 MR. MILTENBERGER: Your Honor, just to inquire, the public access line would be active during the question and answer? THE COURT: I guess that's a good point, isn't it, Mr. Miltenberger? THE CLERK: We would put it in the waiting room, Your Honor. THE COURT: All right. So that's what we'd have to do first. We'd have to put -- we'd have to turn off the phone too, right? We've got a phone line going, don't we? THE CLERK: That's the public access line. THE COURT: Yeah. But then who else -- is there anybody else beside -- people in the courtroom are all here, so how are we -- how are we going to do that? (Pause.) THE COURT: We'd have to -- you know what? We'll have to think about this for a second because we'd have to have everybody be excused from the courtroom, which I don't know how much sense this makes right now. Because if it's under seal, but everybody hears it, then it's not under seal. Then it becomes public Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 60 of

Jalbert - Cross 57 record. MS. ARONSSON: Could I just have one moment, please, Your Honor? THE COURT: Certainly. (Pause.) THE COURT: Go ahead, Counsel. MS. ARONSSON: I think we're happy to proceed with this. THE COURT: Yeah. The only problem is there is a -- there is a problem, right? We'd have to put everybody that's in the public access line out of the -- out of this session right now. And there's all these people in the courtroom, right? So how do I deal with that? If it's under seal and everybody's just heard it, then it's not under seal, right? MS. ARONSSON: Another option, Your Honor, the witness could write the name on a piece of paper and mark it as Court's Exhibit 1. THE COURT: That would be placed under seal? MS. ARONSSON: Correct. THE COURT: Yes. Okay. I think that's a good solution. That's what we're going to do, Attorney Miltenberger, so then we don't have to -- But of course Mr. Jalbert probably doesn't have Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 61 of

Jalbert - Cross 58 any paper or a pen. THE WITNESS: Your Honor is correct. THE COURT: Yes. Thank you. All right. So, Mr. Jalbert, don't write anything down yet. I'm going to ask counsel to ask the question again. I'm going to note that there are two objections to the question, one of which was relevance that I've overruled. And one of which is from Golden Spring with regard to confidentiality, which I'm not prepared to rule on at the moment because I don't have anything in front of me to address that in an educated manner. So then I'm going to instruct you to answer the question by writing the answer on the paper and then we'll have to mark that as an exhibit under seal. Okay? So you're not going to say anything into the microphone. You're not going to say anything on the record. It's just going to be on that piece of paper. Okay? THE WITNESS: Understood, Your Honor. THE COURT: Okay. Thank you. All right. Counsel, if you would please ask your question again that was the subject of two objections. BY MS. ARONSSON: Q Who is the person from Golden Spring who provided you Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 62 of

1 certain information relevant to the monthly operating 2 reports? 3 THE COURT: Okay.

4 Mr. Baldiga, on behalf of the debtor, has objected to your 5 question, Counsel, on the basis of relevance. 6 I have stated that I believe it is -- your 7 question is relevant given the prior testimony of Mr. 8 Jalbert that the information that he and his office has 9 compiled and filed in this court, the financial information 10 in the statements and schedules of affairs, and the monthly 11 operating reports, were provided to him by third parties, 12 not directly from the debtor, and that one of those third 13 parties was Golden Spring. 14 So I've overruled the objection to relevance. 15 There was a further objection by Mr. Miltenberger, 16 on behalf of Golden Spring, arguing that the disclosure or 17 answer to that question of an individual's name could -- is 18 a -- Golden Spring would like to keep confidential. 19 And I've said that I can't rule on that right now 20 without appropriate paperwork in compliance with the Federal 21 Rules of Civil Procedure. 22 So what we all discussed, and what we're going to 23 do is, Mr. Jalbert is going to write an answer to that 24 question. He's going to hand you that document.

25 you're going to hand it to the courtroom deputy and it's

1 going to be marked as Court's Exhibit 1 under seal.

2 will stay under seal until further order of the Court. 3 Attorney Claiborn? 4 MS. CLAIBORN: Yes, Your Honor.

6 THE COURT: We can't hear you.

7 that towards you? 8 MS. CLAIBORN:

9 right to access to everything in the Court's file. 10 THE COURT: Yes. You will have that. Yes. 11 MS. CLAIBORN:

13 THE COURT:

14 has access to everything under seal.

15 knows that, so -- but good point to make for the record. 16 And, yes, the United States Trustee's Office will have 17 access to that document. 18 MS. CLAIBORN: Thank you. 19 THE COURT: Okay. Thank you. 20 All right.

21 THE WITNESS:

22 sure I follow your directions quickly? 23 THE COURT: Sure. 24 THE WITNESS:

25 as you said. Am I to fold the piece of paper or just hand

Jalbert - Cross 61 it over? THE COURT: You can just hand it to her. It's fine. THE WITNESS: Okay. THE COURT: Thank you. You can -- now, whenever you're done writing it down, just let her know, please. Let counsel know. And then I'm going to allow her to approach and take that from you. And then she's going to approach the courtroom deputy and hand it to the courtroom deputy who will then mark it as Court's Exhibit 1 under seal. Mr. Baldiga? MR. BALDIGA: All right, Your Honor. I'd just like to see it before it's handed up. THE COURT: Go right ahead. MR. BALDIGA: Thank you. THE COURT: The U.S. Trustee, you can show it to the U.S. Trustee after you show it to Mr. Miltenberger too. (Pause.) MR. BALDIGA: Thank you, Your Honor. THE COURT: All right. Thank you. Yes. Would you approach, please -- and thank you -- and hand that to the courtroom deputy and she will mark that. So we just need a minute to give the courtroom Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 65 of

1 deputy time to make that exhibit. 2 And I am indicating on the record it's 11:03 a.m. 3 I'm marking Court's Exhibit 1 under seal until further order 4 of the Court and that is so ordered on the record. Okay? 5 So we just need a minute if you don't mind.

7 (Mr. Jalbert's written answer to PAX attorney's 8 question marked Court's Exhibit No. 1 under seal.) 9 THE COURT:

10 the courtroom deputy is marking the exhibit, as I mentioned 11 to all the parties -- and I don't think you were here, 12 Counsel, the last time, but maybe you were and I apologize 13 if you were -- we have another hearing at 12:00 p.m., so we 14 have to take a break at 12:00 p.m.

15 last a little while, but I don't know that for sure.

16 that's all. I just wanted to let you know that. 17 Obviously, we have not a tremendous amount of time 18 between now and 12:00 p.m., but I wasn't sure if you were 19 here, and I just wanted to remind everyone that we do have 20 to take a break in the hearing today at that point in time. 21 MS. ARONSSON: Understood. 22 THE COURT: Okay. Are we ready to go?

23 set? 24 THE CLERK: Yes. 25 THE COURT: Okay. Thank you.

Jalbert - Cross 63 So go ahead. Continue your cross-examination, Counsel. BY MS. ARONSSON: Q Without mentioning the name, you received at least one email from this person at Golden Spring? A The firm did. I was cc'd on one or two of them, but I was not the direct. Q You testified that Melissa Francis was part of the debtor's bankruptcy team, right? A Yes. Q Are you aware whether Ms. Francis works at Golden Spring? A That's my understanding. Q Turning back to your work in connection with the monthly operating report, do you recall Verdolino & Lowey removing certain line item expenses from the draft expense report that you received from Golden Spring? A Yes. Q Is this -- was this in connection with Sherry Netherland expenses? A Yes. Q Because the debtor did not live there? A Correct. Q Is it your understanding that the debtor still does not reside at the Sherry Netherland? Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 67 of

Jalbert - Cross 64 A Yes. MS. ARONSSON: Madam Clerk, will you please display PAX Exhibit 4. THE CLERK: On the screen is the Exhibit 4, page 1 of PAX Exhibit 4. On the screen is page 1 of PAX Exhibit 4. MS. ARONSSON: I'd like to turn to page 14 of PAX Exhibit 4. (Pause.) MS. ARONSSON: Thank you. BY MS. ARONSSON: Q Mr. Jalbert, do you recognize this document? A I do. Q This is the engagement letter filed in this case? A I think it was filed as an exhibit to our motion to be employed. MS. ARONSSON: I'm having a little trouble scrolling. THE COURT: Is the mouse -- yeah, try the mouse. (Pause.) BY MS. ARONSSON: Q Looking at these bullet points here, the first one we covered I think. We talked about the SOFAs and the schedules? A Yes. Q Looking at the second bullet point, if retained, Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 68 of

Jalbert - Cross 65 Verdolino would provided services related to cash flow and budget projections, right? A Yes. Q You discussed earlier you set up an account? A We set up the debtor's account. Q And you used your relationships to establish this account? A Yes. Q If the DIP loan is approved, Verdolino anticipates preparing a budget for committee counsel, financial advisors, and other ordinary course professionals to effectuate disbursements? A Conceptually. We'd have to be asked actually to do it, but it's something we could do. Q Are you aware that no ordinary course professionals have been approved? A Yes. Q Are you -- are you aware of any other financial advisors besides yourself involved in this case? A No. Q Do you understand the committee would need your help in preparing a budget for its counsel? A I don't know that they would need my help, but they certainly can ask. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 69 of

Q Turning to the third bullet point here related to

Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 70 of

1 monthly operating reports, we have covered that, right? 2 A I see the third bullet is being a need to opening and 3 maintaining a DIP. 4 Q Sorry. The fourth bullet point. Thank you. 5 A Yes. 6 Q In addition, Verdolino would review the quarterly 7 reports provided by the U.S. Trustee? 8 A Well, the U.S. Trustee, when they do their quarterly 9 report, it's really a bill based on the disbursements in the 10 preceding calendar quarter.

11 accuracy. And in the first quarter, they're never accurate. 12 It's not their fault.

13 advance. 14 Q This is pretty straightforward, right? 15 A Well, if you have experience, yes. 16 Q The fifth bullet relating to estate, federal tax and 17 state income tax, you haven't performed any connection -- 18 any work in connection with this item? 19 A In actual preparation, no. 20 Q But you would suggest that the debtor and the estate 21 file tax returns? 22 A I absolutely would, but there's other services related 23 to that too. 24 Q The estate may come as currently zero? 25 A Well, I don't know technically whether that's true or

1 not because I don't know what -- I don't know exactly, 2 legally, where the boat is.

3 it's going to come in and how that's going to impact the

5 THE WITNESS:

6 May, Your Honor, so I don't know what implications that's 7 going to have. It might have to be reviewed by someone with 8 a tax background. 9 BY MS. ARONSSON:

So this assume the Lady May as part of the estate?

No, I don't assume that.

12 was part of the estate, then it would be an issue.

13 going to be contributed to the estate at some point in time, 14 it's an issue. I'm not making a declaration of whether it's 15 property or not. I don't know that.

Turning to the sixth bullet, assistance with the 17 reviewing, reconciling, analyzing, and if necessary 18 objecting to proofs of claims, Verdolino has not performed 19 any investigation into the pending litigation claims in this 20 matter, right?

Correct.

Verdolino has no experience analyzing pending 23 litigation claims?

Correct.

Regarding the seventh bullet, we already talked about

Verdolino has not reviewed the debtor's books and records? A Correct. Q Are you aware that there are 21 professional service providers who have received a pre-petition payment in the 90 days before filing? A Yes. Q Verdolino has not performed any work in connection with those services? A Can you -- I'm confused by your question. Q Has Verdolino prepared -- withdrawn. Has Verdolino performed any work in connection with the 21 pre-petition service providers? A Besides ensuring that they were disclosed in the proper SOFA schedule, no. Q This is a pretty straightforward process you described? A Yes. Q Regarding the eighth bullet, the assistance with necessary litigation support, Verdolino has not performed any work in connection with this line item, but anticipates potential miscellaneous tasks as requested by counsel? A Miscellaneous what? Q Tasks? A Tasks. Yes. Q The final bullet, assistance with plan developments and preparation, including feasibility, you are aware that the

1 debtor already filed a plan? 2 A I am. 3 Q Verdolino did not do any work in connection with that 4 filing? 5 A In connection with the original plan, correct. 6 Q You are aware that the estate purports to have 7 approximately 3,800 in assets other than the litigation 8 claims? 9 A Correct. 10 Q Do you know what a best interest test is in connection 11 with the confirmation of a Chapter 11 plan? 12 A I think so. 13 Q Do you anticipate you would do a liquidation valuation 14 of the \$3,800 in assets for a best interest test analysis? 15 A Well, we don't know what the assets of the estate are 16 going to be at the time that someone's going to do the best 17 interest test. 18 And when it comes time to do the best interest test, we 19 will not be part of the team that does value those assets to 20 the extent that they're not already reduced to cash. 21 But we would, I'm sure, participate in preparing the 22 analysis that would be the best interest test using 23 information from an expert that is a valuation of whatever 24 the assets that need valuing. 25 Q The only other potential asset besides the \$3800 would

1 be future litigation claims? 2 A So far. 3 Q Again, Verdolino has no experience valuing litigation 4 claims? 5 A Correct. 6 Q So if the estate consisted only of litigation claims, 7 Verdolino would have a very small role in any plan? 8 A I don't know you could draw that conclusion. 9 Q Verdolino billed on an hourly basis, is that right? 10 A Yes. 11 Q As a principal, your hourly rate is \$515? 12 A Correct. 13 MS. ARONSSON: No more questions. 14 THE COURT:

15 admission of PAX Exhibit 4? 16 MS. ARONSSON:

17 Exhibit 4. It was filed on the docket as Exhibit 90, Docket 18 No. 90. 19 MR. BALDIGA: No objection. 20 THE COURT:

21 will ultimately be marked as what you've indicated their 22 numbers are on your list of witnesses and exhibits. 23 So PAX Exhibit 4, there's no objection to, 24 according to the joint grid of the admission of that -- of 25 exhibit in full.

Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 75 of 1 And so after today's hearing, what the courtroom 2 deputy will do is we'll compile the list of admitted 3 exhibits -- and this would be one of them -- and it will 4 have a -- the Administrative Office of the United States 5 Courts form of sticker on it that essentially says it's been 6 admitted as an exhibit full. Okay?

8 MR. BALDIGA: No objection. 9 THE COURT: Okay. Good.

11 MR. BALDIGA: That's right. 12 THE COURT:

13 conclusion. 14 MR. BALDIGA: No.

15 THE COURT: Okay. Thank you. All right. 16 Nothing further? 17 MS. ARONSSON: Nothing further. 18 THE COURT: Okay. 19 MS. ARONSSON: Thank you. 20 THE COURT: Any redirect? 21 MR. BALDIGA: Yes, Your Honor. 22 Thank you.

24 BY MR. BALDIGA:

Mr. Jalbert, do you speak Mandarin?

1 A No. 2 Q Do you understand that the debtor speaks some English? 3 A Some, yes. 4 Q But are you able to converse directly with the debtor 5 regarding financial matters? 6 A I've not tried, but I don't think so. 7 Q Okay. You know that the debtor pre the work that you 8 did did not have a checkbook, correct? 9 A Yes. 10 Q And that the debtor's needs on a daily basis, security, 11 food and so forth, were provided by the love and goodwill of 12 his son through Golden Spring, correct? 13 A Yes. 14 Q You've worked with debtors that have general ledgers? 15 A Yes. 16 Q Does this debtor have a general ledger? 17 A No. 18 Q Okay. Does this debtor have a check register? 19 A No. 20 Q But it will going forward? 21 A Yes. 22 Q Okay. Has this debtor been subject to audits? 23 A Not to my knowledge. 24 Q All right. Does this debtor keep inventories? 25 A Again, not to my knowledge.

Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 77 of

So does this debtor have the type of assets that you 2 would have discussed directly with the debtor, such as 3 equipment, inventories and accounts receivable?

Not those type of business assets, no.

Right. So in the -- in the ordinary case, where you 6 represent or where you're assisting a corporate debtor, you 7 would sit down and talk to the controller or chief financial 8 officer or someone like that about the various assets that 9 the company has, correct? 10 MS. ARONSSON: Objection, Your Honor.

11 leading the witness. 12 MR. BALDIGA:

13 THE COURT:

14 MR. BALDIGA: -- foundation I guess. 15 THE COURT:

16 MR. BALDIGA:

17 THE COURT: I'm going to allow it. Go ahead. 18 THE WITNESS: Yes. 19 BY MR. BALDIGA:

Okay. And the debtor's assets here are comprised 21 primarily -- other than the clothes on his back -- of two 22 lawsuits, correct?

Two lawsuits. And a third possible, I think.

Okay. A possible lawsuit?

Yes.

1 Q Okay. So you understand that the assets, the primary 2 assets, that you were disclosing on the schedules and SOFAs 3 were three litigation claims, two pending and one possible, 4 correct? 5 A Yes. 6 Q And you talked about those legal claims with lawyers, 7 correct? 8 A Yes. 9 Q Okay. And do you understand that the debtor's primary 10 debts here are litigation claims against him, correct? 11 A Yes. 12 Q PAX for example? 13 A Yes. 14 Q And others here in the courtroom and not in the 15 courtroom have 20 or 30 other litigation claims against the 16 debtor? 17 A Yes. 18 Q Okay. And about these legal litigation claims against 19 the debtor, you spoke to the debtor's lawyers or the people 20 who handled his legal claims against him, correct? 21 A Yes. 22 Q So did you speak to the people for the debtor who you 23 thought had the most relevant and concrete information 24 regarding the debtor's assets and liabilities? 25 A Yes.

1 Q And did you get the information you thought you needed 2 to do a professional job in this case? 3 A Yes. 4 Q And obviously this case is a lot different from a 5 business with inventory and receivables and financial 6 statements and so forth, but did you go through the same 7 process, but here, talking to the people who had the most 8 relevant information? 9 A Well, I wasn't looking for financial statements and 10 general ledgers and the like.

11 information. 12 Q Because the debtor doesn't have any? 13 A I've never seen an individual debtor have those. 14 MR. BALDIGA: Okay. Nothing else, Your Honor. 15 Thank you. 16 THE COURT: Thank you. 17 Any recross?

19 THE COURT: Go ahead, Counsel. I'm sorry. 20 MS. ARONSSON: Thank you, Your Honor.

21 quick questions.

23 BY MS. ARONSSON: 24 Q Could the debtor obtain an interpreter to communicate 25 with Verdolino & Lowey?

Jalbert - Recross 76 A Yes. I'm sure it could. Q Are you aware that the debtor has an interpreter? A I am. Q I just want to ask about the basis for your understanding that Golden Spring provided money out of the love and support of a family member. What's the basis of your understanding of that knowledge? A From talking with the legal team. MS. ARONSSON: Thank you. Nothing further. THE COURT: Okay. Thank you. You can step down, Mr. Jalbert. Thank you. THE WITNESS: Thank you, Your Honor. THE COURT: Thank you very much. (Witness excused.) THE COURT: Mr. Baldiga, do you have another witness? MR. BALDIGA: I do not, Your Honor. Thank you. THE COURT: Okay. Thank you. Mr. Friedman? MR. FRIEDMAN: No, Your Honor. THE COURT: So both sides are resting other than your arguments? MR. BALDIGA: Yes, Your Honor. THE COURT: Okay. MR. FRIEDMAN: Your Honor, one moment. We're just Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 80 of

1 conferring to see if there's anything else we'd seek to move 2 into evidence. 3 THE COURT: Okay. Yes.

4 I've told everyone at the last hearing, I'm happy to have -- 5 and I appreciate that the parties took the time and complied 6 with the Court order to submit lists of witnesses and 7 exhibits, which you're required to do -- but the Court is 8 not going to look at any exhibits unless they're admitted as 9 full exhibits. 10 And even if they are admitted as full exhibits, 11 I'm not bound to look at anything that you didn't point out 12 to me that was important in your presentation with regard to 13 these issues. Okay? 14 Does any -- so I'm -- if anyone has anything they 15 want to make sure is in the record, then now would be the 16 time to take care of that issue.

18 MS. ARONSSON: Thank you, Your Honor.

19 further from us. 20 THE COURT: Okay. Thank you. 21 Nothing further from the debtor? 22 MR. BALDIGA: Correct, Your Honor. 23 THE COURT: Okay. All right.

24 application to retain Verdolino & Lowey is ripe for 25 adjudication. I'm not going to adjudicate it right now.

Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 82 of 1 obviously have to look at what you all just talked about on 2 the record, but I'm sure that it's something that I will be 3 able to do in short order. Okay? 4 MR. BALDIGA: Thank you, Your Honor. 5 THE COURT: All right. Thank you. 6 Now, with regard to the DIP financing motion. 7 Again, that is a matter that I don't know how long you 8 anticipate the questioning and the evidence to be on the DIP 9 financing motion, so I have a couple of questions. 10 One of the other matters on today's calendar is 11 the application to employ the creditors committee counsel. 12 I didn't see any objections to that application. 13 Is that correct? 14 MS. CLAIBORN:

15 a statement of no objection, but that just asked for two

17 THE COURT: Okay. 18 MS. CLAIBORN:

19 was in the supplement filed by Attorney Goldman in support 20 of the application. 21 THE COURT:

22 docket? 23 MS. CLAIBORN: I haven't seen one, Your Honor. 24 THE COURT: Okay.

25 any party have an objection to the application to employ

Pullman & Comley as counsel to the Official Committee of Unsecured Creditors, ECF 157? MR. BALDIGA: Not by the debtor. We support the application. THE COURT: Okay. Thank you. None by Pax? MR. FRIEDMAN: No, Your Honor. THE COURT: Okay. Anyone else wish to be heard on the application to employ Pullman & Comley? Attorney Goldman, you're going to be submitting a new order, is that what Attorney Claiborn is saying? MR. GOLDMAN: Yes, Your Honor. As long as it's in my supplemental declaration, then no problem in revising the order to comport with what's in the supplement. THE COURT: Okay. How much time would you like to submit that order? You can have as much time -- I mean, I'm going to grant the application subject to the submission of a revised order. MR. GOLDMAN: Your Honor, I could submit it by tomorrow. THE COURT: Sure. I'll give you until Friday, how's that? MR. GOLDMAN: Thank you. THE COURT: The 29th. All right. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 83 of Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 84 of 1 Then, the other thing that I didn't mention to Mr. 2 Kindseth -- and I'm going to mention to Mr. Goldman and 3 Attorney Claiborn -- with regard to the monies that we 4 talked about this morning, the \$37 million that's at the 5 Zeisler & Zeisler client funds account and the monies that 6 will be held by Attorney Goldman if the DIP loan is 7 approved, bank statements every month have to be submitted 8 at least to the Office of the United States Trustee and 9 among the parties to evidence that those funds are there. 10 Every month. 11 And I'm so ordering that on the record right now. 12 And I can go back to this hearing.

13 comply with that, then they'll be in violation of a court 14 order. We need to ensure that the funds are there in the 15 amount that are supposed to be there. 16 Now, with regard to the \$37 million, there 17 shouldn't be any change in that amount other than a gain of 18 some interest hopefully unless and until there's a further 19 order when the boat is returned. That's my understanding. 20 Mr. Kindseth's working on the order, but that's what -- 21 that's the mechanics. 22 MR. BALDIGA: Yes.

23 that you will see, Your Honor, provides that there is a 24 national bank that will be acting as co-agent. 25 So Mr. Kindseth is holding the money just so there

Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 85 of 1 wouldn't be any concern in the courtroom today whether the 2 money was really coming or whatever there were -- from the 3 last hearing, we spent way too long on those types of 4 concerns, so no one has to have that concern.

5 the permanent solution.

6 or two is to have the money go into a bank as more 7 customary. 8 THE COURT: However it works is fine.

10 MR. BALDIGA: Understood. 11 THE COURT:

12 that those funds are there.

13 you know, every month. 14 And I guess we will figure out -- it might not be 15 as cumbersome with the 37 million if the boat is returned in 16 two months, but with regard to the DIP financing, there's 17 going to be in that order, if there is an order, it's going 18 to say that I need -- the Court -- there has to be evidence 19 supplied of the amount of the funds in the account every 20 month. 21 I know the DIP orders may have some more specifics 22 with regard to what's being paid and drawn down and all 23 that, all those issues, but that was the other thing that I 24 wanted to raise. 25 Now, with regard to the DIP financing evidentiary

1 hearing, I'm happy to start right now, but we have to end at 2 noon. 3 So the other thing we can do is you mentioned at 4 the beginning of the hearing that there is some discussion 5 about how we were going to set up the hearing on the motion 6 to dismiss, so I don't -- whatever way you want to proceed, 7 I have no problem. 8 MR. BALDIGA:

9 to clear up the Brown Rudnick application, that there's no 10 evidence on that, and that could be taken care of.

12 THE COURT:

13 MR. BALDIGA:

14 to be made. 15 THE COURT: Okay. 16 MR. FRIEDMAN: Yeah.

17 THE COURT:

18 to fix or did you fix that order yet? Or you agreed to? 19 MR. FRIEDMAN:

20 Your Honor. We have a very short reservation of rights and 21 then I think we could do the pre-trial -- the pre-motion, 22 you know, conference before noon.

24 MR. BALDIGA: I think that that's right. 25 MR. FRIEDMAN: Okay.

MR. BALDIGA: Yeah. MR. FRIEDMAN: So -- THE COURT: I didn't hear what you said now. MR. FRIEDMAN: Sorry, Your Honor. THE COURT: That's okay. MR. FRIEDMAN: Peter Friedman from O'Melveny & Myers. We don't have an objection to Brown Rudnick's retention per se. We just want to make clear that, you know, we do believe that Lamp -- that Mr. Kwok was restrained by Judge -- Justice Ostrager's retraining order pre-petition from transferring his assets. We believe that by encumbering himself with the Lamp loan to pay Brown Rudnick's retainer that he violated that restraining order. Brown Rudnick reads Justice Ostrager's order differently than we do. We believe that his order was specific as to two assets, but also had a broader, sweeping clause that made it clear that any outside of the ordinary course transaction was prohibited. Brown Rudnick, Mr. Baldiga, has cited to a portion of a transcript that he believes supports his view of the language that was specific as to two assets. We believe that page 24 of that transcript, which was attached to their response, says that Justice Ostrager Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 87 of

1 says I want to know if any transaction is going to take 2 place in which Mr. Kwok is the guiding hand that's something 3 other than an ordinary course of business transaction.

4 it wasn't so limited. 5 And so we just want to reserve rights that to the 6 extent, you know, there's litigation in the future over 7 whether there was a breach of that and whether there's any 8 damages or there's any liability for anybody who 9 participated in that breach or is tort related to the 10 breach, that nothing in the retention order absolves anybody 11 of liability for that. 12 We have no objection to retention if it's to the 13 reasonable staffing in light of this case.

14 make clear that, you know, we believe it was one final act 15 of contempt, one last finger in the eye, right before filing 16 of bankruptcy. 17 And note that we've never received the Lamp 18 Capital loan despite numerous requests to Mr. Lamp's -- I'm 19 sorry -- to Lamp Capital's lawyers.

20 nothing. We'll go back at it. 21 But, you know, the whole circumstances around that 22 episode we believe are very troubling and that's why I 23 wanted to make a reservation of our rights. 24 THE COURT:

25 understanding -- and I didn't look at it, okay -- but Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 89 of

sometime last night or this morning, there was an order submitted with regard to the Brown Rudnick application? Is that -- is Attorney Friedman in agreement with that or not -- that order? If not, then you both have to talk and tell me when you're going to -- you think you're going to resolve that order. (Pause.) MR. FRIEDMAN: (Indiscernible.) THE COURT: Certainly. Take your time. (Pause.) MR. FRIEDMAN: So, Your Honor, I think we do have an issue with the order. We just want a reservation of rights with respect to any party for receipt of those funds. We have no objection to the retention and to their filing fee applications, but we don't think the retention should wipe out the prospect that there might be liability for having received these funds. THE COURT: So you're going to have to add that reservation of rights language to the order, correct? MR. FRIEDMAN: Yes. Unless that reservation is acceptable on the record? MR. BALDIGA: If I could address it, Your Honor, please. THE COURT: Sure.

1 MR. BALDIGA:

2 first. 3 MR. GOLDMAN:

4 speaking of reservations, we -- our resolution of the DIP 5 motion -- I should have mentioned this at the outset -- is 6 really based on a resolution of the boat delivery order I'll 7 call it -- which they're working on -- 8 THE COURT: I'm sorry. I didn't hear you.

9 what order? 10 MR. GOLDMAN: The boat delivery. 11 THE COURT: Okay.

12 upon order? 13 MR. GOLDMAN: Correct. Correct.

14 confident they'll be able to do.

15 so to speak, and so before we actually formally withdraw 16 objections, I would like to see that on the record. 17 THE COURT:

18 Brown Rudnick. 19 MR. GOLDMAN:

20 the resolution of the DIP motion.

21 resolve the DIP motion and we also agree to withdraw our 22 objections to all the retentions. 23 Of course the resolution of the DIP motion depends 24 on the resolution of this boat delivery order that we're 25 working on. So they're all linked together is basically

what I'm saying. And so I would just appreciate if we could wait until after the lunch break when we are absolutely certain that the boat -- the PAX motion for relief from stay has been resolved and then we can formally withdraw all these objections. That's all I'm saying. THE COURT: Okay. Mr. Baldiga? MR. BALDIGA: Well, we've been trying to work and have actually been able to work hand in hand with Mr. Goldman on so many things that I don't want to -- I mean, I accept his premise that it would be easier perhaps to know that we are all in accord on the boat order. It won't affect PAX's objection because PAX's position on everything, right, will continue to be the same regardless. So the -- I can address PAX's reservation of rights if the Court so wishes or if the Court wants to wait until after lunch, after the boat issue, to do that, we're happy to do that. Whatever the Court -- THE COURT: All right. Why don't we just see what happens after the -- what will -- what should be essentially an agreed-upon order resolving PAX's motion for relief from stay, correct, that's what it is? That's what Mr. Kindseth is working on? MR. BALDIGA: Yes.

1 THE COURT: Okay. So why don't we wait for that. 2 So then the only other issue is the -- the interim 3 professionals, everything, Mr. Goldman, you reserve your 4 rights on everything until -- all right. 5 So let's just start with the DIP financing 6 evidentiary hearing. 7 Or if you -- if all of you would rather take a 8 break and not start, we can do that too.

9 all of you. 10 MR. FRIEDMAN:

11 discussion of the dates? 12 THE COURT: On the motion to dismiss? 13 MR. FRIEDMAN: Yes. 14 THE COURT:

15 said a few minutes ago I thought made some sense. 16 MR. FRIEDMAN: Yes.

17 obviously pending the Court's schedule, we have -- we've 18 reached out to counsel for other parties this week and we 19 made a proposal. We got some feedback.

20 a little more time, which we were -- you know, even though I 21 don't think we have a statutory obligation to provide it, we 22 were willing to do that. 23 What we would propose is that there be a -- and I 24 tried to accommodate as many people as I could -- May 16th 25 would the date on which parties need to file oppositions if

1 acceptable to the Court. 2 We would ask for the ability to file a reply on 3 May 25th. We would ask to be able to file a reply on the 4 25th of May. 5 And then we would ask for a hearing on the -- to

7 THE COURT: All right.

8 the calendar. 9 MR. FRIEDMAN: -- if that works for the Court. 10 THE COURT:

11 calendar before we go any further.

13 THE COURT: I have some time on the 1st. 14 MR. FRIEDMAN: Okay. 15 THE COURT:

16 have to take a break again. I have time on the 2nd.

17 have at least the morning of the 3rd. 18 MR. FRIEDMAN: Okay.

19 Your Honor. 20 I would also ask, given the potential complexity, 21 if it would be okay to propose a submission of post-trial 22 findings of fact and conclusions of law for any party the 23 10th. Or if the hearing lasts longer than the 3rd, you 24 know, seven days after the conclusion of the hearing if the 25 Court believes that would be helpful. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 94 of 1 THE COURT:

2 will tell you at the end of the hearing if I would like 3 that, but I think it's a possibility. Sure. 4 MR. FRIEDMAN:

5 propose is that the parties, you know, by the 20 -- Friday 6 the 27th, if this works for the Court, if the Court would 7 like it to be the 26th, that the parties exchange, you know, 8 witness lists and exhibits and provide the Court with a -- 9 you know, the appropriate grid if possible by that date as 10 well and listing objections, and that the parties be ordered 11 to meet and confer on all pre-trial procedures in good 12 faith. 13 You know, my understanding is that Mr. -- that Mr. 14 Kwok's counsel believes that this schedule, which we believe 15 is actually a substantial accommodation to people, should be 16 contingent on no more 341 hearings, a cessation of Mr. 17 Kwok's 341 obligations, which is due -- which is expected to 18 continue this Friday -- I don't see why that should be an 19 issue. 20 We certainly are seeking to depose Mr. Kwok again 21 in connection with the -- with the motion to dismiss or 22 motion to appoint a trustee.

23 discovery. 24 I'd note that one issue we've had -- and I'm not 25 asking the Court to do anything other than to know about it

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-- is we asked Golden Spring last Thursday if they would express -- if they would accept service of the subpoena on Miles Kwok's son. We've heard crickets. And so not a surprise, but given the purported centrality of Miles' son to this case and his support of beneficence and love, I guess if they don't want to accept a subpoena, we can try to do it in the Hague. And if we have to maybe we won't complete on that time, but the Court can draw whatever conclusions it wants to from Mr. Kwok's son's refusal to participate in good faith in discovery. So that shouldn't take six days to find out from somebody if a subpoena can be accepted. That's our proposed schedule. You know, we hope we don't have discovery disputes to bring to the Court's attention. If we do, we will. We'll work with Mr. Birney on how to tee those up correctly for you. And I believe we've provided everybody with copies of the discovery we've served. If anybody hasn't, please let me know. THE COURT: Okay. Thank you. Attorney Claiborn? MS. CLAIBORN: Thank you, Your Honor. The U.S. Trustee, as you know, has a pending motion for an examiner or in the alternative the appointment of Chapter 11 trustee.

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And the dates that Attorney Friedman has just outlined are fine for the U.S. Trustee. And I would assume that scheduling is applicable to both PAX's motion and the U.S. Trustee's motion. THE COURT: Yes. Except I will be addressing the PAX's motion first. MS. CLAIBORN: Understood, Your Honor. THE COURT: Okay. MS. CLAIBORN: With respect to the point about the 341 meeting, that request was just made to me this morning. I haven't had a chance to confer with my office. I haven't had a chance to confer with counsel for the parties who are here today. So I don't have an answer as to whether or not the U.S. Trustee is willing to delay that 341 meeting to a different date. THE COURT: Okay. MR. BALDIGA: I'm sorry. I missed what you just said. I couldn't hear. I'm sorry. MS. CLAIBORN: I don't have an answer for you as to the 341 meeting date. THE COURT: All right. Anyone else wish to be heard on the scheduling of the motion to dismiss and the -- I'm going to reiterate it, but go right ahead. MR. BALDIGA: Well, the -- I think the debtor is not available the first week of June so, I think,

1 unfortunately, like so many other things, we're probably 2 going to have to spend some time over the lunch break to try 3 to pin those dates down. 4 THE COURT: All right.

5 about because I'm not sure why the debtor would need to be 6 here on the motion, I mean, unless you're going to call him 7 as a witness. 8 MR. PERLMAN:

9 to me because I proposed this schedule to Mr. Aulet before. 10 THE COURT: Okay.

11 talk about it. 12 But I will say one thing in particular, that it's 13 going to be shortly thereafter if it's not those days.

15 MR. BALDIGA: We understand that. 16 THE COURT:

17 and he's agreed, and I don't know if he's expressly 18 consented on the record again today, but under the -- under 19 the code, I have to hold that hearing within 30 days unless 20 the movant, the movant expressly consents to the extension 21 of time, to a continuance for a specific period of time, 22 which Attorney Friedman has done right now, but I don't know 23 if he's going to do it when you have your discussions.

24 you're going to have to have your discussions. 25 MR. FRIEDMAN:

1 the debtor doesn't have a job, doesn't have a business to 2 operate, I can't imagine if there's a justifiable reason for 3 not being here. 4 THE COURT:

5 about that. 6 MR. BALDIGA:

7 with the client, Your Honor. 8 THE COURT:

9 that. 10 MR. BALDIGA: Thank you. 11 THE COURT: Okay? 12 So let me just again go through what is on our 13 calendar today.

14 point not to start the DIP evidentiary hearing if we're only 15 going to have 15 minutes. 16 Does that make sense to anyone? 17 MR. BALDIGA: Yes. Correct. 18 THE COURT:

19 the time. 20 Now, I don't know, you've all been here in the 21 hallway longer than I've been sitting here, but I assume the 22 conference rooms are unlocked.

23 is a hallway to talk in except there are other agencies so 24 you have to be somewhat quiet if possible.

25 back here with vending machines, but it has no tables and

1 chairs. There's a place next door to eat with tables. 2 I mean, you know, I would think that I would be 3 surprised if I'm ready to see you again before one o'clock. 4 Okay? 5 MR. BALDIGA: Understood. 6 THE COURT:

7 don't think it should be much longer than that. 8 I'm just checking to make sure we have -- we are 9 addressing in one way -- some way, shape or form everything 10 on today's calendar, and I think we have.

11 to -- a lot of it is linked to Mr. Kindseth's revisions to 12 that order. 13 So does anyone else wish to be heard before we 14 recess in this case, in the Kwok case?

16 THE COURT: No? Okay. 17 Well, then I'm going to take a recess until 12 18 noon for the other matter.

19 was available to see you before one o'clock.

20 you should expect one o'clock at the earliest. 21 If you are all talking and you need more time and 22 we are completed with the other hearing, then you can let 23 the courtroom deputy or someone in the clerk's office know, 24 and I will, you know, take that into consideration. 25 But if we are going to have the evidentiary

1 hearing this afternoon on the DIP, which I think we are, 2 then I would like to start sooner as opposed to later 3 understanding that you all may be talking about different 4 things. 5 MR. BALDIGA: Understood. 6 THE COURT: Okay? 7 MR. BALDIGA:

8 posted, Your Honor. 9 THE COURT: Okay. Great. 10 MR. BALDIGA: Thank you. 11 THE COURT: All right. All right.

12 all. 13 Then Court is in recess until 12 p.m. 14 (Recess from 11:45 a.m. until 1:10 p.m.) 15 THE CLERK: Case No. 22-50073, Ho Wan Kwok. 16 THE COURT: Sorry about that.

17 record after taking a recess in the Kwok case, which we left 18 the court about 11:45 or so a.m. It's now 11:12 [sic] p.m. 19 and we're back after the morning session where we had some 20 evidence presented in connection with the application of 21 Verdolino & Lowey. 22 And, Attorney Baldiga, are we moving to go forward 23 with the evidentiary hearing on the DIP financing motion? 24 MR. BALDIGA: Yes, Your Honor.

25 we can report as to the boat, because remember how that

Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 100 of 1 affected everybody? 2 THE COURT: Yes. 3 MR. BALDIGA:

4 THE COURT: Oh, Mr. Kindseth is back. 5 MR. BALDIGA: -- connective string. 6 We do have, and Mr. Kindseth can report, and 7 should, a fully conformed, agreed order as to the boat that 8 resolves the lift stay motion. 9 THE COURT: Okay. 10 MR. BALDIGA:

11 objections I believe that the committee has to everything 12 else today. And so we proceed in full accord.

13 should -- Mr. Goldman should report and Mr. Kindseth should 14 report. 15 And then -- and then I think we do move to the 16 relief from stay. 17 THE COURT: Okay. Mr. Goldman and Mr. Friedman? 18 MR. GOLDMAN: Yeah.

19 THE COURT:

20 order on the relief from stay?

21 it's true. 22 MR. GOLDMAN: Yeah. 23 THE COURT:

24 accurate. 25 MR. FRIEDMAN: Yes.

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Honor. We have reached an agreement. An order can be submitted. We're pleased with the outcome. MR. KINDSETH: Yes. Just in terms of the logistics, Your Honor, we're actually not going to be in a position to submit it to this court at this moment. We're submitting it to the escrow agent, U.S. Bank, for their counsel, Shipman & Goodwin, to review it and ensure that they don't have any issue with it. I'm hoping to hear back later today or tomorrow. Once they're good with it, we're going to fund the escrow, and we will submit the order hopefully Friday or Monday at the very latest. THE COURT: Okay. I mean, I think that's fine. And that's -- that's a positive development obviously in the case. So, Attorney Goldman? MR. GOLDMAN: I was going to say would it be appropriate to put just the basic terms of the order on the record so we -- the Court is aware and we have an enforcable agreement here? MR. KINDSETH: I'm prepared to do that, Your Honor, if you'd like. THE COURT: Go right ahead. MR. KINDSETH: So the proposed, stipulated order provides that my client will return the vessel known as the Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 103 of

Lady May to the navigable waters of Connecticut by July 15th. That may or may not address the various repairs that are being performed now.

We're going to try to complete as much as possible. The repairs that are not complete will be addressed through a reserve, a repair reserve, a separate one entirely, and there's a process through which that reserve will be established.

To secure my client's performance of the delivery, we will be posting \$37 million with a third-party escrow agent, U.S. Bank. We've worked out the terms of an escrow agreement.

And subject to final approval by U.S. Bank and the party's signature, we'll be providing bi-monthly progress reports with respect to the location of the yacht, and the repairs, status of arrangements for the delivery of the yacht, and the anticipated delivery date.

The way the escrow is going to be handled is that my client will file a certification with this court and there will be a period of time for parties to object to the certification. The certification, you know -- the certification is pertaining really just to the delivery of the yacht timely to Connecticut.

As well as an order to ensure that the yacht stays in Connecticut, we've agreed in that certification that

Fiore Reporting and Transcription Service, Inc.

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would be certifying that we served the then captain of the vessel as well as the yacht management company with that and we'll be filing the certification of service with the Court as part of that process. We'll also have the repair reserve in place and that is a requirement of the certification. So if those elements, which are described as certification conditions, are met and we certify it, we'll provide 15 days to object. And if nobody objects, my client will be allowed to provide that HK certification to the escrow agent, which is the triggering event for the return of the \$37 million. If there is an objection, then we'll appear before Your Honor. And there's -- depending upon the severity of the default, there are different consequences. Obviously if the boat's not here, it's the most severe consequence. The other consequence -- consequences for the other conditions if they're not met, there's remedies in place that are proportionate to the default. My client will maintain insurance and provide proof of insurance. There's a provision in here requiring my client and agents and representatives and so forth to continue to maintain the boat here in Connecticut and subject to further order of this court. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 105 of

1 And there is a provision in here that says that if 2 the boat isn't delivered timely and we are unable to 3 establish extenuating circumstances -- and they're 4 delineated very clearly -- then the funds, the 37 million 5 escrow agent will be directed by order of this court to turn 6 over those funds to an account designated by this court to 7 be held in substitution for whatever the estate's rights are 8 in the Lady May, those rights will be against the \$37 9 million. 10 And then, as I said, we're establishing the repair 11 reserve in accordance with the process set forth in the 12 order. And so I believe that is the most salient terms of 13 the agreed-upon order. 14 MR. GOLDMAN: Yeah. I appreciate the recitation. 15 The committee is in agreement with those terms and we'll 16 follow it up obviously with the written order. 17 And I'll leave it to PAX. 18 MR. FRIEDMAN:

19 are also provisions of what happens upon dismissal, if the 20 case is dismissed while the boat is in the jurisdiction or 21 the escrow's jurisdiction. Those are also in there. 22 I do want to say -- not to mix metaphors -- but 23 the boat is not -- I mean, the boat should never be the tail 24 that wags the dog in this case.

25 because it's an asset.

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1 of what Mr. Kwok has to pay his creditors.

2 I just want to be really clear from our 3 perspective that this is important, but this is just a 4 beginning step in the pursuit of getting paid for people who 5 have substantial judgments against Mr. Kwok. 6 MR. KINDSETH: It's still progress. 7 THE COURT: Understood. 8 MR. GOLDMAN:

9 committee can formerly withdraw its objections to the DIP 10 motion as well as the retention applications and lend our 11 support to the interim DIP order that's being advanced for 12 today. 13 I can say with certainty, Your Honor, that it is 14 absolutely critical that the committee have this funding in 15 place in order to function properly and do what it's 16 supposed to do in a case like this, especially in a case 17 with this profile. 18 We're expected to investigate potential assets of 19 this estate. And I can ensure Your Honor that we have been 20 actively engaged in interviewing financial advisors to 21 assist us in that endeavor and we will be submitting an 22 application shortly to get the Court's approval to retain 23 one who will be highly capable, skilled and experienced in 24 what we need them to do. 25 THE COURT: Okay. Thank you.

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1 Mr. Kindseth, I know you said this already, but I 2 don't think I -- I didn't write it down, so I don't remember 3 -- what date do you think you're going to submit this order 4 to the Court? 5 MR. KINDSETH: Friday or Monday. 6 THE COURT: All right.

7 Monday. What is Monday? May 1st of 2nd? Oh, it's the 2nd. 8 Is it the 2nd? Yeah. It has to be in by Monday.

9 yeah, you have to because -- all right. Yeah.

10 May 2nd. Okay? All right. 11 But what were you going to say? I'm sorry. 12 MR. KINDSETH: May I be excused?

13 doesn't have a stake in the afternoon's proceedings. 14 THE COURT:

15 thinks that you don't need to be here. 16 MR. BALDIGA:

17 it's assumed in all of the comments of everybody so far, but 18 the stay will continue in force until entry of the order? 19 Okay.

20 timely basis? 21 THE COURT: Yes. 22 MR. BALDIGA: Okay. Thank you. 23 THE COURT:

24 MR. BALDIGA:

25 clear.

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1 THE COURT:

2 entered, then there isn't any stay anymore under 362(e)(2), 3 so I would assume you are motivated to get it timely 4 entered. 5 MR. BALDIGA: Yes. 6 THE COURT: Okay. All right. Thank you. 7 No one else wants -- needs to have Mr. Kindseth 8 here for this afternoon's hearing, is that correct?

10 THE COURT: Okay. Thank you, Mr. Kindseth. 11 MR. KINDSETH: Thank you, Your Honor. 12 THE COURT: All right.

13 start the evidentiary hearing given the committee's position 14 now of withdrawing its oppositions to certain things. 15 So the application to employ Brown Rudnick, the 16 committee has withdrawn its objection. 17 PAX still wants to reserve its rights, correct? 18 MR. FRIEDMAN: Yes, Your Honor.

19 Mr. Baldiga we have no issue with the order.

20 looking at the order I don't think the order releases the 21 kind of claims that we want to reserve, and so I'm not going 22 to ask Mr. Baldiga to agree in the order to the language. 23 I just want to note for the Court and for 24 everybody else that that's our position. 25 And, you know, Brown Rudnick has their own Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 109 of

1 position with the order as proposed is fine. 2 THE COURT:

3 Thank you, Attorney Friedman. 4 So the order that was submitted sometime last 5 night or -- I don't -- I know there was several, but is that 6 the order that you're looking to have entered? 7 MR. BALDIGA: Yes.

8 Honor. And just for the record, we're -- we don't, the 9 debtor doesn't, and Brown Rudnick doesn't agree to anything 10 that's not in the order. And it's that simple. 11 MS. CLAIBORN:

12 record, I just wanted to let the Court know that the U.S. 13 Trustee has reviewed the order that was uploaded last night 14 and it does resolve the U.S. Trustee's objections. 15 THE COURT: Thank you. 16 So if I'm correct, that's ECF No. 259 that was 17 filed last night, correct?

19 THE COURT: Okay.

20 please.

22 THE COURT: All right.

23 259 because it was submitted last night, which is fine.

24 going to take a look at it right now and then tell you 25 whether I think there's any issues.

(Pause.) THE COURT: The order looks fine to me. So ECF 259 will enter and the application to approve Brown Rudnick as counsel to the debtor is approved -- is granted. MR. BALDIGA: Thank you, Your Honor. THE COURT: Okay. Thank you. So let me just make sure we're getting to everything we need to get to before we get to the evidentiary hearing on the DIP motion. (Pause.) THE COURT: So the bar date order then, everyone's fine with that other than the Court putting in a bar date? MR. BALDIGA: I believe so, Your Honor. THE COURT: Okay. So I'll take a look at that after today. That will enter though tomorrow or Friday at the latest. Okay? MR. BALDIGA: Thank you. THE COURT: I would assume -- I shouldn't say that. I haven't looked at the order, Attorney Baldiga, but is -- who's serving that bar date order? Are you serving it? Is the debtor serving it? MR. BALDIGA: The debtor. THE COURT: Okay. Okay. I'll take a look at that. MR. BALDIGA: Thank you.

THE COURT: And I think it probably will have no problem other than me possibly changing your bar date for a little bit more time. MR. GOLDMAN: I just wanted to mention the committee did have a limited objection to that. And I hadn't been following the variations of the proposed orders, but did they take into account our objections? MR. BALDIGA: We did. MR. GOLDMAN: Okay. All right. THE COURT: Okay. MR. GOLDMAN: Thank you. THE COURT: The motion to establish procedures for entering compensation and reimbursement expenses, is everyone in agreement with that now as well? The committee, you had an objection, did you, or not? MR. GOLDMAN: I'm sorry, Your Honor. Could you repeat that. THE COURT: The motion to establish procedures for interim compensation and reimbursement of expenses. MR. GOLDMAN: No objection. THE COURT: Did the U.S. Trustee have an objection? MS. CLAIBORN: Your Honor, we have been looking on some language. And I haven't had a chance to review what Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 111 of

1 just got uploaded in the last hour.

2 reporting back to Your Honor maybe by the end of today, I'm 3 not -- I think we probably could lose that loop.

4 need to read it. 5 THE COURT:

6 for now? 7 MS. CLAIBORN: Yes. 8 MR. BALDIGA: That's right.

9 just a matter of looking at language. 10 MS. CLAIBORN:

11 their language. 12 MR. BALDIGA: We've worked out everything. 13 THE COURT:

14 know, I will tell you these matters, these motions, I'll 15 look at the language.

16 asking the Court to do something that's -- essentially 17 shorten the time and the procedures that are required by the 18 code for fee applications.

19 lot of cases for many, many reasons. 20 I'll do it in this case if everyone is in 21 agreement. But I will tell you if there's -- if I see that 22 there's anything of any concern at any point, I may schedule 23 a status conference and/or vacate any order entered if I 24 think that there's any issue. 25 I mean, you know, what you don't want to have is a

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1 situation where everybody believes that we're just seeing 2 how much fees are incurred.

3 happening in this case.

4 against that. 5 And entry of these types of orders sometimes gives 6 -- give people arguments that that's the major concern.

7 I'm not suggesting it is, but all I'm saying is if this 8 enters, and it apparently will subject to some language, 9 that doesn't mean that I'm not going to look at it in the 10 future. 11 MR. BALDIGA: Of course. Of course. 12 THE COURT:

13 MR. BALDIGA:

14 day one that we're -- we're trying to spend as little as 15 possible, but we need to be responsive to a particular 16 creditor that is not funded from the estate.

17 control how many motions with what enthusiasm they bring so 18 we're -- we're trying to keep up and do the right thing and 19 responsibly represent the estate. 20 Mr. Goldman has a lot of work to do himself in 21 that regard as we've already talked about. 22 We've all agreed there has to be an examination 23 before people are comfortable confirming a plan.

24 has supported that from day one.

25 do that and the DIP helps to do that. They go hand in hand.

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THE COURT: Understood. MR. BALDIGA: Thank you. THE COURT: Thank you. MS. CLAIBORN: Your Honor, if I just could make a quick comment? I wanted to preview for the Court that the order that was uploaded is different than the original proposal. But what it does have is the obligation to file interim fee applications at a 90-day interval. So there will be an actual -- THE COURT: Okay. MS. CLAIBORN: -- fee application process -- THE COURT: Okay. MS. CLAIBORN: -- that's a component of it. But there was also the existing monthly option where the professionals get paid 80 percent of their fees and 100 percent of their expenses upon there being no objection from any of the parties. THE COURT: Okay. Thank you. I appreciate that. So that motion will be granted. But we have to wait and see what -- if there's any minor -- any final comments to the proposed order, Attorney Claiborn, correct? MS. CLAIBORN: Yes, Your Honor. Thank you. THE COURT: Okay. The only thing -- the only

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other matter I'd like to discuss before we turn to the evidentiary hearing on the DIP motion is the scheduling on the motion to dismiss. Were you able to discuss that during the break? MR. FRIEDMAN: We were, Your Honor. With respect to our motion, we I guess propose to begin -- so we would -- oppositions, we would ask to be set for the 11th of May. THE COURT: All right. So that's a change, right? MR. FRIEDMAN: Yes. THE COURT: So let me just make a note. Okay? I just want to make sure I have the right things in my -- on my notes. (Pause.) THE COURT: May 11th did you say? MR. FRIEDMAN: Yes, Your Honor. THE COURT: Okay. MR. FRIEDMAN: We would ask for our reply to be filed on the 18th, and to commence the hearing on the 25th. THE COURT: All right. Let me take a look at that. I haven't looked at that date obviously. Hold on. (Pause.) THE COURT: Okay. I can commence the hearing on the 25th. I can even have some time on the 26th, but no time on the 27th. MR. FRIEDMAN: Okay. And so, Your Honor, we would Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 116 of

1 ask the 25th and 26th. We will submit witness statements. 2 I'm sorry. We will submit exhibits.

3 meet and confer and propose a schedule for exhibits over -- 4 hopefully, Mr. Jonas and I can have some discussions.

5 submit something by early next week on those, on when we'll 6 submit exhibit lists and witness lists. 7 THE COURT:

8 submit exhibit lists. 9 MR. FRIEDMAN: Even better.

10 Honor. 11 THE COURT: I think that will help you.

12 no need to meet. 13 MR. FRIEDMAN: Yes. 14 THE COURT: Just give me one second, please.

16 THE COURT:

17 and exhibits by 12 p.m. on May 20. 18 MR. FRIEDMAN: Yes, Your Honor. 19 THE COURT: Right. 20 MR. FRIEDMAN:

21 will take. We will endeavor to examine Mr. Kwok on the 22 first day. Because I've been advised there are some dates 23 the following week, if we have to go into the following 24 week, that he's unavailable, so we will endeavor to have him 25 examined on the first day of the hearing.

1 THE COURT: Okay. Go ahead, Counsel. 2 MR. JONAS: Good afternoon, Your Honor.

3 Jonas from Brown Rudnick.

4 again. 5 Those are all acceptable, and I appreciate Mr. 6 Friedman's courtesies with respect to Mr. Kwok. 7 THE COURT: Okay. Thank you. 8 MR. JONAS: Thank you. 9 THE COURT: Attorney Goldman? 10 MR. GOLDMAN: Your Honor, yes, thank you. 11 I just wanted to mention obviously we are not a 12 formal party to this motion.

13 but we do intend to most decidedly oppose this motion and 14 may want to participate in the evidentiary phase as well as 15 discovery. 16 So I just wanted to make clear I think the moving 17 party doesn't have a problem with our formally intervening 18 as a party to the extent that's necessary, but if everybody 19 could be in agreement that we would be treated as a party 20 for discovery and evidentiary hearing purposes, then I don't 21 think it's necessary. 22 MR. FRIEDMAN:

23 PAX, we certainly consent.

24 discovery we've served is I believe on both the committee 25 and the U.S. Trustee.

1 trustee's statutory right as well.

2 motion of the U.S. Trustee, so that's certainly fine by us. 3 MS. CLAIBORN:

4 fine with the U.S. Trustee. 5 THE COURT: Okay. Thank you. 6 Mr. Jonas? 7 MR. JONAS:

8 Jeff Jonas from Brown Rudnick -- but of course we welcome 9 the committee's involvement in connection with the motion to 10 dismiss. 11 THE COURT: Okay. All right. Thank you.

12 right. 13 So then what will happen either today or tomorrow 14 is a scheduling order will issue setting forth the dates we 15 just discussed on the record this afternoon. 16 Obviously, those are different from this 17 mornings', and that's fine.

18 wanted to talk about the dates at the break, and you did, so 19 a scheduling order will enter with the dates and the times. 20 We'll start at 10 a.m. on the 25th and the 26th. 21 And the scheduling order, Attorney Friedman, will 22 say that the moving party expressly consents to a 23 continuance of the hearing to the specific dates, okay, in 24 accordance with 1112(b)(3). 25 MR. FRIEDMAN: Yes, Your Honor.

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THE COURT: Okay. Thank you. And the other thing I should note is that the U.S. Trustee's motion for the appointment of an examiner or a trustee will also be continued to those dates, the dates of the motion to dismiss. Okay? MS. CLAIBORN: Thank you, Your Honor. THE COURT:

calendar, today's calendar, that we have not addressed is the debtor's motion for entry of interim final DIP orders for which we are going to conduct an evidentiary hearing. So, Mr. Jonas, you may proceed. MR. JONAS: Thank you, Your Honor.

from Brown Rudnick on behalf of the debtor. Your Honor, one -- perhaps I should call it housekeeping matter.

the need of an interpreter.

with us. Her name is Una Wilkinson.

THE COURT: Could you spell her first name for us? MR. JONAS: Sure. U-N-A. THE COURT: Okay. MR. JONAS: It's pronounced Una. THE COURT: Okay. MR. JONAS: But it's U-N-A.

Wilkinson, W-I-L-K-I-N-S-O-N. THE COURT: Thank you.

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MR. JONAS: She's a 1995 graduate of the Westminster University in the U.K. with a degree in translation. In terms of her qualifications, the United Court System of New York State, she's a certified interpreter in both Mandarin and Cantonese. She's on the list of interpreters of the Eastern and Southern District Courts of New York. She's interpreted for the grand jury in multiple trial cases in the Eastern and Southern District Courts, state criminal, New York State Criminal, and New York Civil courts. She has a long list of notable assignments that I won't go through here, Your Honor, but I did want to provide the Court with some background with respect to Ms. Wilkinson's qualifications. THE COURT: Okay. Thank you. MR. JONAS: Your Honor, my suggestion -- although I've never done this before this way, so what do I know -- but perhaps Ms. Wilkinson could sit next to the witness. THE COURT: Yeah. The box is very small, but we can move a chair over there. MR. JONAS: That's what I was thinking, Your Honor. THE COURT: Okay. I don't think we could put two people in the box.

1 MR. JONAS: No. I don't think so.

3 THE COURT: That would be great. 4 MR. JONAS: Okay. 5 THE COURT: Sure. 6 MR. JONAS: Thank you. 7 THE COURT:

8 objection or issue with the qualifications of the 9 interpreter that have just been noted on the record by 10 Attorney Jonas? 11 MR. HARBACH:

12 Pacific Alliance. 13 We have no quarrel with Ms. Wilkinson's 14 qualifications and no reason to question them.

15 is also our understanding that Ms. Wilkinson is Mr. Kwok's 16 personal interpreter and that she has worked with him for 17 quite some time. And we have some concern about bias. 18 And we brought a similarly certified interpreter 19 for use today, one that is -- we hired -- and this is the 20 first time I believe we're using this person.

21 the courtroom. She's also qualified and certified. 22 And the procedure that we had used in the past, 23 Your Honor, is to utilize the neutral interpreter as the 24 primary interpreter.

25 Ms. Wilkinson as a check interpreter to the extent there is

an issue with how something is being interpreted or perhaps a peculiar way how -- in which Mr. Kwok's speaks or something. But that's how we would propose we proceed today. THE COURT: And have you talked about that with Attorney Jonas? MR. HARBACH: No, ma'am. THE COURT: Okay. All right. Well, Attorney Jonas, what's your response to what we just heard from -- MR. JONAS: Yeah. My response, Your Honor, is as follows. First of all, Ms. Wilkinson, I don't think it's fair, and I think she would take some umbrage to any allegation of bias. That's number one. Number two, she's not Mr. -- I don't know what it means to say she's Mr. Kwok's personal interpreter. Has she worked with him quite a bit over the years? And he's been involved in a number of litigation matters as you know or as I think the Court's aware, yes, absolutely. But that being said, my suggestion -- and we fully welcome subject to learning a little bit about the qualifications of the -- PAX's interpreter, I suspect we'll have no objection. But what I would suggest, Your Honor, is that Ms. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 122 of

1 Wilkinson will translate for Mr. Kwok.

2 questions, she'll translate.

3 answers. 4 And of course I would -- we would welcome what 5 I'll call the check interpreter to the extent there's any 6 issue to raise those. And we'll do the same, Your Honor. 7 They may have -- if they'd like, they can have 8 their interpreter for the I guess I'll call it the cross and 9 we'll have Ms. Wilkinson check if you will.

10 my suggestion, Your Honor. 11 THE COURT:

12 just be an objection? I mean, wouldn't it be? 13 I mean, I'm not -- I haven't had two interpreters 14 at one time. I've had one interpreter. 15 But I understand the issue that Attorney Harbach 16 raises. I understand the issue you raise. 17 So in order to try to have the issue proceed, 18 wouldn't it be appropriate for -- for example, if you are 19 going to do a -- conduct a direct examination of the debtor 20 and use Ms. Wilkinson to be translating whatever the debtor 21 is saying in response to your answer? 22 Mr. Harbach, wouldn't it be appropriate to have 23 your translator if she believes it's inaccurate to tell you 24 that and you can object to that and we can address the issue 25 of whether or not that testimony stays part of the record?

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MR. HARBACH: That's certainly one way to proceed, Your Honor. All we're talking about now is who's doing the primary interpretation in the first instance. THE COURT: Right. MR. HARBACH: And all I can represent to the Court is that on multiple occasions at the 341, and also at the deposition of other witnesses, Ms. Wilkinson has been on standby as the check interpreter and it has worked just fine. MR. JONAS: Your Honor, with all due respect, I don't think saying that the 341 worked just fine is a fair representation. It was a mess. The level of interpretation at the 341, in my opinion, was not good. Ms. Wilkinson was required quite a bit to intervene if you will. We got through it. But I really -- it did not work, that I can assure you. And if you were to read the record, I think you'd agree with me. THE COURT: Well, I don't get the record of the 341 meeting -- MR. JONAS: Understood, Your Honor. THE COURT: -- unless you all decide to get it transcribed and docket it, so I can't speak to that. But the United States Trustee's Office has stood, so I'd like to hear from you, Attorney Claiborn. MS. CLAIBORN: Your Honor, I wanted to confirm Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 125 of

1 what Attorney Harbach has represented to the Court. 2 And that is that during the course of this case 3 thus far, Ms. Wilkinson has participated on a number of 4 occasions as the personal interpreter to the debtor, and 5 that Ms. Wilkinson did very capably interrupt the 6 proceedings to correct and/or criticize and/or elaborate on 7 the interpretations provided by the interpreter who was the 8 official interpreter for both the meetings.

9 happened during both sections of the 341 meeting. 10 THE COURT:

11 happening though, are we? 12 I mean, I thought you were saying Ms. Wilkinson 13 was going to be the main interpreter. 14 MR. JONAS:

15 THE COURT: So what happened?

16 mean, I have no idea what happened at the 341 meeting. 17 You had -- the office had an interpreter? 18 MS. CLAIBORN: We hired an interpreter. 19 THE COURT: Okay.

20 just now. Okay. 21 MS. CLAIBORN: Correct. 22 THE COURT:

23 MS. CLAIBORN:

24 would be that we have an independent corroborated -- I mean 25 -- sorry -- an independent interpreter who has no

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affiliation whatsoever to anything be the primary interpreter. THE COURT: Okay. And that person is the person that PAX has brought today? MS. CLAIBORN: I'm not -- I'm not privy to the qualifications or the interactions between that interpreter and PAX, but I'm sure that Mr. Harbach can address that. THE COURT: Okay, Mr. Harbach, go ahead. MR. HARBACH: We have someone who can fill that role here today, Your Honor, and I'm happy to do a brief voir dire of her and allow counsel also to elaborate on her qualifications. I don't have them committed to memory. THE COURT: I'm not suggesting you should. I'm just trying to figure out how to proceed, right? MR. HARBACH: Yes. Yes. THE COURT: That's what -- that's what I'm trying to do. MR. HARBACH: So the record -- THE COURT: I have obviously no knowledge until you just all told me about what happened at a 341 meeting, right? The 341 meeting transcript isn't in the record. The Court doesn't participate in the 341 meetings, so I have no idea about these issues. And as I had said, you know, a few hearings ago, the issue of the interpreter is an important issue. I

1 raised the issue -- I raised it at some point because it is 2 an important issue. 3 So if the parties don't have an agreement as to 4 how this is going to proceed, then unfortunately I'm going 5 to have to determine how that's going to proceed.

7 The U.S. Trustee's Office, you hired an 8 interpreter from where? 9 MS. CLAIBORN:

10 creditors I used an interpreter who was provided over the 11 telephone through I think the service is called 12 INTERPRETALK. And then there's a service that the U.S. 13 Trustee Program provides nationwide.

14 and get an interpreter in whatever language you need and 15 that interpreter gets placed onto the telephone line and 16 then interprets. 17 So one of the challenges we had with that process 18 was the fact that the telephone line doesn't always lend 19 itself to the best hearing on either end of it. 20 The second 341 meeting was an in-person 21 interpreter who we hired from another third party in an 22 effort to get somebody in person. 23 THE COURT: Was it in-person? Yes. 24 MS. CLAIBORN: It was. 25 THE COURT: Okay.

MS. CLAIBORN: It was an improvement. I'm sure that no one would tell you that their experience was 100 percent awesome, but we tried to accommodate the idea that an in-person was a better product than on the telephone line. THE COURT: Okay. Well, it's clear -- as I told all of you I think at a hearing, one or two hearings ago, the Court does not have -- the judiciary is not -- the bankruptcy court anyway is not allowed to spend money to hire an interpreter in a case. It's not allowed by the United States Judicial Conference, the Administrative Office, and then essentially Congress, so the Court can't hire anybody. The issue then becomes the parties having to hire people. We've got two people here today, one of whom two parties have said -- have suggested I should say -- might not be the person that the Court wants to use as the primary interpreter. That's the suggestion. And, Mr. Jonas, you're -- I didn't know any of this, right, that there was a problem with the interpretation or at least a perceived problem with the interpretation by parties who are objecting to the DIP financing motion and that financing coming from a third party. Okay? So it's hard for me to say that -- to agree with

1 what you've just said, Mr. Jonas, when I didn't know that 2 there was a problem. 3 So the issue that I would assume, Mr. Harbach, 4 that you're saying is you want your interpreter to be the 5 primary interpreter? 6 MR. HARBACH: Yes, Your Honor. That's right.

7 I'll add a couple of other facts for your consideration in 8 making this decision. 9 Number one, that the person who we've arranged to 10 be in court today is from TransPerfect Legal Services.

11 provide interpreters like this as a matter of course for all 12 different sorts of languages.

13 assigned, as I said earlier, I don't believe we even knew 14 her identity until today. 15 So the point is the obvious one, that although we 16 are paying for her, she is not in any way affiliated with us 17 or anything, doesn't know anything about this case other 18 than some names that we've given her ahead of time to listen 19 for. 20 The second thing that I should mention is that Ms. 21 Wilkinson also performed the check interpretation role at 22 our deposition of Yvette Wang, who was the Golden Spring 23 30(b)(6) representative.

24 primary interpreter we hired through a similar agency, not 25 TransPerfect, but I believe it was called Veritext, another

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1 agency, and that interpreter performed extremely well. 2 There were not the same problems, some of which we 3 encountered at the 341 hearing. 4 So I mention all this to say -- and the reason I 5 mentioned the track record of what we've done thus far is to 6 hopefully illuminate for the Court why we obviously 7 erroneously assumed we would do something similar today. 8 So apologies for this rearing its head without any 9 notice to the Court, but that's our position. 10 THE COURT: Okay. Thank you. 11 Attorney Jonas? 12 MR. JONAS: Yes, Your Honor.

13 Rudnick for the debtor. 14 I'll just add, Your Honor, first of all, I take no 15 offense -- I don't think the Court should either -- with 16 what PAX has had to say.

17 that the Court couldn't provide interpreters.

18 out -- obviously it would have been great if we had spoken, 19 unfortunately we didn't -- but we both went out and hired 20 interpreters. So that's just the way it is. 21 And, again, I have no reason without further 22 information to question the capabilities of their 23 interpreter. 24 What I would say, Your Honor, in addition to my 25 prior comments, is, as you can imagine, Mandarin is a

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complicated language I've learned in the few weeks I've had to deal with it. And, yes, Mr. Kwok, there has been -- he's used -- and Ms. Wilkinson is familiar with Mr. Kwok, the way he speaks, and I think it would be particularly helpful to him. Obviously this is a critical hearing. And he's going to be testifying live for the first time in this case. And I think that level, having some level of -- again, without bias -- but simply a level of comfort and understanding as to his tone, his inflection, how he speaks, I think that ultimately will benefit the trier of fact in terms of getting the most accurate translation. I'm not really sure of the relevance of what's happened before. We're here now. He's going to testify for the first time. And on that basis, Your Honor, we, again respectfully -- happy to leave it up to the Court if it comes to that -- but respectfully would prefer and suggest that Ms. Wilkinson be the primary interpreter. THE COURT: Okay. Thank you. MR. JONAS: Thank you. THE COURT: Attorney Harbach, anything else you'd like to add? MR. HARBACH: No, Your Honor. Thank you. THE COURT: Okay. Thank you. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 132 of

Well, again, under the circumstances of this case and the arguments that have been advanced with regard to the interpreters, and the fact that the United States Trustee's Office has highlighted some concerns it had -- it experienced is a better term -- word -- I suppose at the 341 meetings, I think -- well, the Court will rule that the interpreter hired by PAX will be the main interpreter and Ms. Wilkinson can be the check interpreter. But we all have to understand that means there's going to be three people up here, okay, and so we're going to have to figure out a way that I think we're going to have the interpreters understand that the questioning is probably going to have to move a little slowly. MR. JONAS: Yes. THE COURT: Okay? That you're going to ask a question, Mr. Jonas, and then Mr. Harbach will answer -- ask a question on cross-exam, and we're going to have to wait for the debtor to respond, then we're going to have to wait for the -- and this is all fine, I'm just explaining to everyone how it's going to work -- that we're going to have to wait for the interpreter. And I don't remember the person's name that PAX has hired. What's the interpreter's name? MR. HARBACH: It's because I haven't put her on the record, Your Honor.

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THE COURT: Okay. MR. HARBACH: It's not an issue of memory. THE COURT: Okay. MR. HARBACH: To be honest, I do not even know her name. THE COURT: Okay. MR. HARBACH: But I know she's in here. THE COURT: Well, then the interpreter to tell us the answer that Mr. Kwok has given in English. And then we'll have to wait to see if Ms. Wilkinson has a problem with it. And if she does, then, you know, we'll have to address it. I think that's all we can do. Okay? I think that's the best we can do given the circumstances of today. MR. JONAS: Your Honor, one question? THE COURT: Yes. MR. JONAS: And I very much appreciate and respect the Court's ruling. Thank you, Your Honor. Just a suggestion so we understand the ground rules, would it be okay if the lawyers step back a little and -- THE COURT: Yes. MR. JONAS: Yeah. And let the -- to the extent -- THE COURT: Absolutely. MR. HARBACH: -- there's an interpretation by the primary of an answer, to the extent Ms. Wilkinson, she can

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1 speak for herself and raise it, I just -- I don't -- I'd 2 prefer we not be on the front lines of it because -- 3 THE COURT: No, I agree. 4 MR. HARBACH: Okay. 5 THE COURT: I think you should step back.

6 think we might need another chair too. 7 MR. HARBACH: Yes. Yes. 8 THE COURT:

9 chair readily available at the moment. 10 MR. JONAS:

11 now. 12 THE COURT: Okay.

13 time? 14 MR. JONAS: Yes.

15 and then we'll figure it out. 16 THE COURT: Okay. All right. 17 MR. JONAS: I'll take somebody else's chair. 18 THE COURT: All right.

19 the circumstances. 20 And just we'll note for the record that once Mr.

22 Someone's bringing in another chair too, so if 23 anybody needs another chair, we'll be all set. 24 Thank you very much.

25 to need it, but that's okay.

so thank you. UNIDENTIFIED: I'll return it if you don't need it. THE COURT: Thank you. So what's -- so everyone's clear, Mr. Jonas is going to start his presentation on behalf of the debtor on the debtor's -- and I keep calling it shorthand -- but a DIP motion, a DIP motion -- and then he will call his first witness, which I'll -- And then we'll have the interpreters come forward. The interpreters are going to have to note their names for the record. And I'm going to have to make sure that both -- every party -- no one is challenging the qualifications of either one of the interpreters. And then, Mr. Jonas, you'll be able to proceed. Okay? MR. JONAS: Absolutely. Thank you, Your Honor. THE COURT: All right. You can -- you may start, please. MR. JONAS: Well, may we call the interpreters, Your Honor? THE COURT: Sure. Absolutely. MR. JONAS: And we would obviously ask Ms. Wilkinson to come up and I guess take the second chair, right?

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1 THE COURT: Yes.

2 the courtroom? 3 MS. WILKINSON: Yes. 4 THE COURT: Would you please come forward.

6 THE COURT: All right.

7 going to -- the courtroom staff is going to make sure that 8 that microphone can capture at least both the people. 9 Ms. Wilkinson, just because you came first, the 10 courtroom deputy is going to swear you in. Okay?

12 THE COURT: Okay. Thank you. 13 THE CLERK:

14 business address for the record, please. 15 THE CHECK INTERPRETER: Yes.

16 THE COURT: We can't hear you. 17 THE CLERK: I need Ms. Wilkinson. 18 THE COURT: We need Ms. Wilkinson's first.

19 don't you come to the microphone. Yeah. 20 THE CHECK INTERPRETER:

21 Wilkinson, W-I-L-K-I-N-S-O-N. 22 THE COURT: Just your business address. 23 THE CHECK INTERPRETER:

24 home. 25 THE COURT: Okay.

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1 THE CHECK INTERPRETER:

2 Forest Hills, New York, New York 01375. 3 THE COURT: Thank you. Thank you very much.

5 know your name. I'm sorry. If you could tell me your name. 6 THE MAIN INTERPRETER: Sure.

7 is I Ching Ng, the spelling is I-C-H-I-N-G, last name is N 8 G. 9 THE COURT: N-G. Okay.

10 your business address, please. 11 THE MAIN INTERPRETER: Sure.

12 Avenue, Unit 3294, New York, New York 10163. 13 THE COURT: And the company you work for? 14 THE MAIN INTERPRETER:

15 TransPerfect. 16 THE COURT: TransPerfect. Okay. 17 THE MAIN INTERPRETER: Yes. 18 THE COURT:

19 you in. Okay. 20 THE CLERK: Raise your right hand, please.

22 THE COURT: Okay. Thank you. 23 You can take off your coat. You know.

24 have to be -- whatever you're more comfortable in, but I'm 25 going to have you sit right next to the witness chair.

Ms. Wilkinson is going to sit to your right. Okay? And now, both of you, what I'm going to ask you to do -- you don't know this, but we only -- our record comes through the microphone. So once the witness, Mr. Kwok, speaks, after he speaks and you interpret, you're going to have to speak into the microphone. And so, Ms. Wilkinson, it might be that you have to come up and stand at this microphone if Mr. Jonas steps (indiscernible) -- because if we can't hear you, we're going to have to stop you. Don't worry about that, that happens sometimes. We have -- this is -- our only record is through a microphone. So if I stop you, it's not because you've done anything wrong, it's because we weren't able to hear or for whatever reason. Okay? I just want to -- I know you haven't done this before -- or maybe not in this courtroom -- but we can only -- we don't have a transcriber. We don't. We have to get everything on the record this way. And if we don't get it, then we have to stop and make sure it's on the record. Okay? THE CHECK INTERPRETER: Okay. THE COURT: So do either of you have any questions? THE MAIN INTERPRETER: So that means I can use this microphone, right?

THE COURT: Yeah. You can. And it will be after -- there's another microphone here too. Okay. Great. Okay. That will be helpful for Ms. Wilkinson too. Great. Thank you. After Mr. Kwok has answered the question, then, yes, you can -- that's why we turned the microphone a little bit so it will be able to pick up your voice as well. If for some reason we're wrong and it doesn't pick up your voice, we'll figure out where to get you to stand so we can understand what you're saying as well. THE MAIN INTERPRETER: Okay. THE COURT: Okay? Does that make sense to both of you? (No audible response.) THE COURT: Okay. I just want to make sure. If you have any questions, please let me know before we begin. Okay? All right. All right. Hearing no questions, then what else do we need to do? THE CLERK: I have a note here we're going to have the witness (indiscernible). THE COURT: I think Mr. Jonas is going to call his witness, so there you go. MR. JONAS: Yes, Your Honor. If we're ready, I'm happy to do that.

THE COURT: Yes. Go right ahead. MR. JONAS: Thank you. Your Honor, we would -- the debtor would call Ho Wan Kwok to the witness stand. THE COURT: Okay. Mr. Kwok, if you'd come forward, please. MR. KWOK: Good afternoon, Your Honor. THE COURT: Good afternoon, sir. Now, Mr. Kwok, you can just stand when you get in there, please. And then you're going to raise your right hand and listen to the courtroom deputy. She's going -- You'll interpret it -- but this is the person who is speaking to you right now. THE CLERK: I'm sorry. You know. THE COURT: It's okay. It's not a problem. THE CLERK: Let me just get my notes. I'm so sorry. THE COURT: And you can break it down if you would like so that the interpreter can break it down for Mr. Kwok. Okay? THE CLERK: Okay. THE COURT: You can say a few words at a time, and that will be helpful I think for Mr. Kwok to understand as well. HO WAN KWOK, SWORN THE COURT: Okay. Thank you. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 140 of

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1 THE CLERK:

2 record, please. 3 THE MAIN INTERPRETER:

4 to get a spelling for the address from Mr. Kwok. 5 THE COURT: The spelling? 6 THE MAIN INTERPRETER: Yeah. 7 THE COURT: Yeah. Go ahead. You can ask him. 8 THE WITNESS: The name is Kwok, K-W-O-K.

9 name is Ho Wan, H-A -- I'm sorry -- H-O W-A-N.

10 is in Technic(ph)[sic], Connecticut, but I don't know how to 11 spell it. 12 THE COURT: I didn't hear what you said.

13 Connecticut? I think it's Greenwich, Connecticut.

14 what you think you heard? 15 THE WITNESS:

16 don't remember the street name.

17 Connecticut. 18 THE COURT: Okay. 19 MR. JONAS: Your Honor, I believe it's Taconic. 20 THE COURT: I think it's Taconic, yes. 21 Okay. Thank you. Thank you. All right. 22 You may be seated. 23 THE WITNESS: Thank you, Your Honor. 24 THE COURT: Okay. 25 MR. JONAS:

Kwok - Direct 138 -- I'm just wondering if it will pick up Mr. Kwok? THE COURT: I think if he just leans a little toward it -- MR. JONAS: Okay. THE COURT: -- so that we can get both of them. MR. JONAS: Okay. Okay. THE COURT: Okay. (Pause.) DIRECT EXAMINATION BY MR. JONAS: Q Good afternoon, Mr. Kwok. Mr. Kwok, why did you file this Chapter 11 bankruptcy case? A First of all, I would like to take the opportunity -- first of all, I would like to say that I'm very excited today. This is the first time I get to appear in this case. It's been going on for five years. And I appreciate this opportunity. And also excited that I couldn't sleep last night. THE COURT: Thank you. BY MR. JONAS: Q I'll just -- I'll repeat my question. Mr. Kwok, why did you file this Chapter 11 bankruptcy case? A In early February this year, at the Southern District Court, the judge made a judgment asking me to pay \$120 million in five days. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 142 of

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1 THE CLERK: Excuse me, Your Honor.

2 interrupt to the extent that there's a message that we're 3 not hearing the interpreter.

4 (indiscernible), we're getting messages that we cannot hear. 5 THE COURT: Okay. 6 MR. JONAS: May I make a suggestion, Your Honor? 7 THE COURT: Sure. 8 MR. JONAS:

9 we really need to hear is the interpreter as long as she 10 hears Mr. Kwok. So my suggestion would be that I can turn 11 the microphone directly to the interpreter and we'll pick up 12 the interpreter since that's really all that's I think 13 important. 14 THE COURT: I think that makes -- let's try it. 15 MR. JONAS: Okay. 16 THE COURT: Okay. 17 MR. JONAS: We'll try it. 18 THE COURT: Let's try that. Okay. 19 MR. JONAS: Thank you for your patience. 20 THE COURT: Okay. No. Thank you.

22 MR. JONAS:

23 we left off. 24 THE COURT: Yeah. 25 MR. JONAS:

Kwok - Direct 140 of the answer, so shall we start again? THE MAIN INTERPRETER: If you wouldn't mind. MR. JONAS: Be happy to. THE COURT: That would be helpful. Thank you. MR. JONAS: Sure. BY MR. JONAS: Q Let's just go back, Mr. Kwok. Mr. Kwok, why did you file this Chapter 11 bankruptcy case? A In February of 2020, the judge at the Southern District Court made a judgment for my case with PAX and the judgment asked me to pay \$120 million of fines within five days. THE MAIN INTERPRETER: Let me clarify the figure with Mr. Kwok. Okay. Let me clarify. That should be 124 million. THE COURT: Okay. Thank you. THE WITNESS: Under such circumstances, I had no choice. And in order to quickly resolve and fairly to resolve the debt issues with my debtors -- I have many debtors -- that's one of the choices I had to make, even though I have no choices, to resolve the issues of the creditors. THE COURT: Okay. MR. JONAS: Your Honor, I just want to make sure. I actually think it's working okay. I just want to make sure the Court's satisfied and -- Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 144 of

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1 THE COURT: I can hear.

2 deputy and the recordings that make sure that it's getting 3 picked up. 4 THE CLERK: Yes. 5 THE COURT: Okay. 6 MR. JONAS:

7 Ms. Wilkinson, I think this is -- the system is working. 8 THE COURT: That's fine. Yes, I agree. 9 MR. JONAS: Okay. Thank you, Your Honor. 10 THE COURT: Okay. Thank you. 11 BY MR. JONAS:

Were you finished with your answer?

13 make sure, Mr. Kwok, as to why you filed this Chapter 11 14 case?

Yes, I'm done.

Okay. Thank you.

17 positions critical of the Chinese Communist Party or what's 18 commonly referred to as the CCP?

Yes.

And why have you done that?

During the Tiananmen Square democratic protest in 1989 22 in China, I funded the students.

23 arrested and I was jailed for 22 months, and my younger 24 brother was killed. 25 And since my parents were tortured by the CCP, and

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during my arrest I've witnessed that many student protesters

were being killed, and because of that I've sworn that I need to eliminate the Chinese Communist Party.

Mr. Kwok, in connection with your activities opposing the CCP, have you done and do you do broadcasts in opposition to the CCP?

In the past five years, I've made more than 5,000 live broadcasts with thousands of hours of air time to criticize the CCP regarding the corruptions and to expose them to the world.

(indiscernible) and also in Hong Kong and how they conducted spying activities in the West, in U.S., and human right violations.

How many people have watched or viewed your broadcasts?

I feel tens of millions, hundreds of millions.

Does being an outspoken public critic of the CCP put you at risk?

It has a huge risk.

And what are those risks?

On January 10, 2015, these people behind me, the two people who (indiscernible), and they also paid the lawyer's fee, by the name of Wu Zheng (ph), he spied on me. And my family members were arrested, including my wife, my daughter, and hundreds of my colleagues were

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Kwok - Direct 143 arrested as well, and my family assets were being seized. And they said to me that if I don't collaborate with the Chinese Communist Party they would kill me. THE MAIN INTERPRETER: The interpreter would like to clarify a few names with the witness. THE COURT: Sure. Go right ahead. THE WITNESS: Bernard Wu, he was the former partner of an investigation company called CGI and he worked with (indiscernible) and also they were involved in this investigation. And also they were -- THE MAIN INTERPRETER: Let me clarify a term with Mr. -- MR. HARBACH: Your Honor, I realize that interpretation is being clarified, but we'll interpose an objection as to relevance and non-responsiveness. The question, if memory serves, were what are the risks? And it's not clear at all to me that this answer is responsive to that question or relevant to the purposes of this hearing. THE COURT: I understand. I'm going to allow this question and the answer and then we'll move on to the relevant issues for the DIP filings. MR. JONAS: Your Honor, I couldn't agree more. I was just trying to provide some background and this was the last question on this topic.

Kwok - Direct 144 THE COURT: Okay. Go right -- go right ahead. But may I ask you, the interpreter -- THE MAIN INTERPRETER: Yes. THE COURT: -- there was a name that you said. I don't know if I heard you. Was it Bernard Wu, is that the name? THE MAIN INTERPRETER: Yes. Mm-hmm. THE COURT: All right. Can we -- can you just spell that for the Court, please. THE MAIN INTERPRETER: Let me clarify the spelling with Mr. Kwok. THE COURT: Sure. THE WITNESS: Bruno Wu. THE COURT: Bruno. THE WITNESS: B-R-U-N-O, last name is W-U. THE COURT: Thank you. BY MR. JONAS: Q Thank you, Mr. Kwok. THE MAIN INTERPRETER: Yeah. I'm sorry. I haven't finished my translation already. THE COURT: Okay. Go ahead. MR. JONAS: My apologies. THE WITNESS: And regarding the Puff (ph) case, Bruno Wu Partners was also involved, and also concerning the case with the Department of Justice about trying to get Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 148 of

Kwok - Direct 145 President Trump to extradite me. And I would like to say that in the past five years I was in dire, extreme risky situation. There were numerous moments where somebody came to my residence and wanted to harm me. And I don't want to take the time to elaborate on that. THE COURT: Okay. BY MR. JONAS: Q Thank you, Mr. Kwok. Let's move on. Do you have the financial ability to satisfy all of the liabilities asserted against you in this case? A No. Q Are you aware of allegations that you have the appearance of being a wealthy man? A Yes. Q And in this case, you've disclosed that you have very few -- is it true that in this case you've disclosed very few assets? A Yes. Q Can you explain that contradiction? A In 1989, I was arrested during the (indiscernible) movement because I participated in a campaign. And then I emigrated to Hong Kong in the year 2000. And then from 2015 until now, I have mobilized campaigns to eliminate the Chinese Communist Party, Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 149 of

1 therefore, I'm the notably known number one enemy of the 2 CCP. And because of that, there's no way I can hold any 3 assets.

But, sir, you -- again, I want to come back to my 5 question about the alleged appearance that you have the 6 means to live well and yet you've disclosed very few assets. 7 Where are you -- where are you getting the means to support 8 yourself?

Right now, I'm in a very special circumstances.

10 very unique. I'm in the phase of the campaign to eliminate 11 the Chinese Communist Party. 12 And my son and my daughter and my family business 13 have been very successful.

14 (indiscernible).

15 supporting me with my living expenses and with the campaign 16 to rejoin that is necessary. 17 And in the past five years, the Chinese Communist 18 Party have conducted multiple investigations against my 19 family, and also publicly scandalized me.

20 never said -- they never disclosed my assets or cited that I 21 committed any crime.

Mr. Kwok, are you familiar with your request for debtor 23 in possession or DIP financing in this case?

Yes.

And who is the proposed DIP lender?

1 A New York Golden Spring. 2 Q And let me ask you, what is Golden Spring New York, 3 Limited? 4 A This is a company owned by my son.

5 company to invest in New York, and also to help the family, 6 and also to handle family affairs in the west. 7 Q Okay. And did you assist him in setting up Golden 8 Spring? 9 A Yes. 10 Q And were any of your funds used to set up Golden 11 Spring? 12 A I was at one point authorized to transfer funds to help 13 Golden Spring and to transfer funds to J.P. Morgan. 14 Q But those funds -- strike that. 15 Were those funds yours? 16 A No. 17 Q Whose funds were they? 18 A My son's. 19 Q Do you own Golden Spring? 20 A No. 21 Q Do you control Golden Spring? 22 A No. 23 Q Do you work for Golden Spring? 24 A No. 25 Q Has Golden Spring lent money to you in the past?

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1 A Yes. 2 Q And for what purpose? 3 A It was because in the past few years there were many 4 lawsuits, numerous lawsuits, from the Chinese Communist 5 Party against me, so I had to get the loan, the borrowings, 6 from New York Golden Spring to pay these lawyers' fees. 7 MR. JONAS:

8 parched. May I provide this to Mr. Kwok? Thank you.

9 you, Your Honor. 10 BY MR. JONAS: 11 Q Mr. Kwok, does Golden Spring pay your living expenses? 12 A Yes. 13 Q Why? Why would Golden Spring do that? 14 A It is because during this time I am in this campaign to 15 eliminate Chinese Communist Party and of course there's no 16 choice. 17 And at the same time, my son loves me very much. 18 I am his only father.

19 pay the living expenses. 20 Q And are you familiar with Lamp Capital? 21 A That is my son's company. 22 Q And do you work for Lamp Capital? 23 A No. 24 Q Do you control Lamp Capital? 25 A No.

1 Q Has Lamp Capital lent you money in the past? 2 A Yes. 3 Q For what purpose? 4 A Yes. To pay one million U.S. dollars to be our law 5 firm to handle my bankruptcy case. 6 Q Are you aware that certain pleadings have been filed in 7 this case alleging that you have a connection to G Music? 8 A I am a volunteer for G Music.

9 eliminating the Chinese Communist Party for G Music. 10 Q And are you -- strike that. 11 What is your connection, if any, to Himalayan 12 Exchange? 13 A I am the advisor and promoter. 14 Q And what is your connection, if any, to GETTR, G-E-T-T 15 R? 16 A I am the advisor and one of their promoters. 17 Q And is your -- is the activities that you take in 18 connection with these entities all part of your public 19 opposition to the CCP? 20 A Regarding all these companies that have been mentioned, 21 I work with my (indiscernible) for the purpose of 22 eliminating the Chinese Communist Party, so I sort of the 23 promoter for the cause. 24 Q Do you get paid from any of these entities? 25 A No.

1 Q Do you dispute some of your creditors' claims against 2 you? 3 A Yes. 4 Q Prior to this bankruptcy, do you recall being examined 5 under oath in connection with some of the litigations that 6 you're involved with? 7 A Yes. 8 Q Do you recall invoking your Fifth Amendment right 9 against self-incrimination in connection with some of those 10 examinations? 11 A Yes. 12 Q At your recent 341 meetings, did you assert your Fifth 13 Amendment right at all? 14 A No. I did not use it at all. 15 Q And why is that? 16 A Because with the bankruptcy case, there's a need for 17 more transparency and fairness.

18 disclosing more of my financial information can help handle 19 the relationship with various debtors, so I hope the judge 20 -- I'm sorry -- creditors -- and I hope the judge and also 21 all the creditors can know all this information so that we 22 can do it in an open manner. 23 Q And I want to return to the DIP.

24 describe how the DIP loan initially was arranged? 25 A When I learned that the judge at the Southern District

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1 Court imposed a fine of 124 million and asked me to pay it 2 off in five days, I asked my lawyer and my son to make 3 contacts to help me to resolve this loan.

And was that what resulted ultimately in the DIP loan 5 that's before the Court today?

Yes.

And briefly, what is your understanding of the current 8 proposed terms of the DIP loan?

Regarding the loan amount, that is an \$8 million and an 10 \$1 million, the \$8 million and the \$1 million were being 11 prioritized to fairly to pay all the creditors, and also any 12 fees that incurred for other third parties due to this 13 bankruptcy case, such as the lawyers and other 14 professionals. And to add onto that -- and the one million 15 is the donation.

And do you understand whether the DIP loan can be paid 17 back before creditors or ahead of creditors?

18 how that translates, but.

No. That is not allowed.

And do you understand whether the DIP loan can be

21 to fund an examiner if an examiner is appointed in this 22 case?

Yes. That is feasible.

And do you understand whether the DIP loan can be used 25 to pay the creditors committee's professionals in this case?

1 A Yes. 2 Q And do you understand whether the DIP loan can be used 3 to pay the United States Trustee fees that will be due in 4 this case? 5 A Yes. 6 Q As you sit here today, do you think it's likely that 7 the DIP loan will be repaid?

9 Q And why would Golden Spring do this? 10 MR. HARBACH: Objection.

11 speculation. 12 THE COURT: I'll allow it. 13 THE WITNESS:

14 company owned by my son. And he has only one father.

15 our family has gone through many hardships.

16 the suppression of the Chinese Communist Party. 17 And also because of his personal considerations 18 and Chinese family values, he wants to safeguard of the 19 interest of the family and me and his mother.

20 would have been thrown into jail and been killed. 21 BY MR. JONAS: 22 Q Do you know if the \$9 million of DIP loan proceeds are 23 now available? 24 A I know that the money has arrived yesterday, but I'm 25 not sure whether it has landed in the escrow account of the

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Kwok - Direct 153 lawyer. I know that the money has started to arrive yesterday. I'm not sure whether it has already reached the escrow account of the counselors. Q Do you believe that any other party, that is, other than Golden Spring, would provide a DIP loan on better terms than are provided here? MR. HARBACH: Objection. Speculative. THE COURT: I'm going to allow it, and I'll give it whatever weight I think is appropriate. THE WITNESS: No. BY MR. JONAS: Q Mr. Kwok, you mentioned an examiner, do you support the appointment of an examiner in this case? A Yes. Q And why is that? A And since the first day of this case until now, this is the only moment that I feel secure, I feel safe, because I have a chance to speak for myself here. And also because my goal to eliminate the Chinese Communist Party, I need the chance to voice, to make noise, and this judicial system provided that platform. And I understand the U.S. legal system and -- so that it will offer a chance to have a fair and transparent and more professional way to resolve my debt issues with the

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Kwok - Direct 154 creditors. Q If the DIP financing is not approved, do you have any other source to pay the costs and expenses of this Chapter 11 case? A No. Q Have you filed a proposed plan of reorganization? A Yes. Q And do you believe having the DIP loan in place is necessary and will facilitate the prosecution or your plan moving forward? A Yes. MR. JONAS: Your Honor, I have no further questions right now on direct. I would ask, if it's convenient for the Court at some point, just to take a short break? `I do appreciate Mr. Kwok needs to be instructed not to speak with anyone, and that's fine. I just want to make sure he and I have an opportunity to take a quick break if we may. THE COURT: Opposing counsel have an objection to that? MR. HARBACH: Not at all, Judge. THE COURT: Okay. Then if there's no objection, that's fine. So how much time would you like?

Kwok - Direct/Cross 155 MR. JONAS: Oh, just five or ten minutes, Your Honor. THE COURT: Well, it's ten of three. Would you like to come back at three? MR. JONAS: That would be fine. And I appreciate the courtesy, Your Honor. THE COURT: Okay. We're going to take a quick recess until 3 p.m. Okay? All right. All right. Court is in recess until three. (Recess from 2:47 p.m. until 3 p.m.) THE COURT: All right. So we can go back on the record after recess, please. THE CLERK: Yes. We're still on case Number 22- 50073 Ho Wan Kwok. We are in court after (indiscernible). THE COURT: Okay. Mr. Harbach, you ready to proceed? MR. HARBACH: Yes, Your Honor. May I inquire? THE COURT: Yes, please. Go right ahead. CROSS-EXAMINATION BY MR. HARBACH: Q Good afternoon, Mr. Kwok. I'd like to start by talking about an entity Mr. Jonas asked you about, called GETTR. Do you know the entity I'm talking about, sir? A First of all I want to say, good afternoon, sir, and I do know GETTR. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 159 of

Kwok - Cross - Harbach 156 Q Okay. What is GETTR? A It's a social media platform. Q I believe you testified on direct that you were an advisor and promoter to GETTR. Is that right? A Yes. Q When did GETTR launch its platform? A 2021. Q Does the -- approximately the summer of 2021 sound about right to you? A I cannot remember. Q Okay. How was GETTR funded initially? A I don't know. Q Were you involved in donating any money to GETTR? A No. Q Did you help raise any money for GETTR from others? A No. Q Did your family make any donations or payments to GETTR related to the startup? A No. Q What's Himalayan Exchange? A It's an online company for the trading or the exchange of digital currency. Q Did you found it? A No. Q Were you among those who helped found it? Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 160 of

Kwok - Cross - Harbach 157 A No. Q Okay. What's Himalaya Coin? A That is a digital currency on the Himalaya Exchange. Q So Himalaya Exchange is a platform that supports trading of Himalaya Coin. Is that fair? A Yes. Q Okay. And do you know about a music video called HCoin to the Moon? THE MAIN INTERPRETER: I'm sorry, counselor, can you repeat -- BY MR. HARBACH: Q HCoin -- oh, the witness knows. A I know. Q Okay. That was a successful and popular music video, wasn't it? A Yes. Q And it features you, does it not? A I was a small portion of it. Q You feature prominently in the video, don't you, sir? A I only spoke -- I only spoke one line. Q And did you have any role in producing the song? A I only sang one line. In fact, this song, HCoin to the Moon, took 30,000 people to complete. Q Isn't it true that HCoin to the Moon has been a very popular download on iTunes for example? Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 161 of

Kwok - Cross - Harbach 158 A What do you mean by a lot or very popular? Q Wasn't HCoin to the Moon at one point in the top 10 downloads on Apple iTunes? A Yes. Q Okay. So it made lots of money. A I don't know. Q And I take it then, your testimony will be that you received no money in connection with royalties from that song? A Yes. Q You mentioned your invocation of the Fifth Amendment earlier. Do you recall that testimony? A Yes. Q And you understand, do you not, that the purpose of the Fifth Amendment is a protection in circumstances where truthful testimony might incriminate you. MR. JONAS: Objection, Your Honor. THE COURT: What basis? MR. JONAS: He's asking for legal conclusion. I don't think the witness is -- THE COURT: No, I think he was asking for -- he asked him what his understanding is, so I'll -- MR. HARBACH: Thank you, Your Honor. THE COURT: -- overrule that objection. THE WITNESS: No, that's not the case. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 162 of

Kwok - Cross - Harbach 159 BY MR. HARBACH: Q Okay. What is your understanding of the purpose of invocation of the Fifth Amendment? A I requested to use the Fifth Amendment under the advice of my counsel. Q Well, I understand that and believe me, I'm not intending to ask about communications with your counsel about whether you should invoke it or not, that's privileged. But I -- but your counsel made a point of establishing on direct examination that you had evoked the Fifth Amendment in the past but did not do so at the 341 meeting. And you said it was because you wanted to be more transparent. MR. JONAS: Objection, Your Honor. THE COURT: On what basis? MR. JONAS: I don't think there have been questions the last two -- he's -- Mr. Harbach has made statements, but there's been no question in the last two alleged questions. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 163 of

MR. HARBACH: I'm just pausing for the interpreter, Your Honor, instead of asking one great big long question, I'm leaving time for her to --

THE COURT: I'm not sure it's not a question. I mean, you're asking him what he said. I don't -- I'm not

Kwok - Cross - Harbach 160 sure it's not a question, so I think let's let it go and see how we -- where we get to, okay? BY MR. HARBACH: Q The question, sir, is, what is your understanding of the reason one would invoke the Fifth Amendment? A I don't understand this question. Q Do you understand what -- do you have an understanding of what the Fifth Amendment is? A I know. Q Do you know what it means to invoke the Fifth Amendment? A The U.S. law gives the right to the people to do so. Q That's absolutely right, and what I'm trying to understand is a right to do what? What is it -- what is the reason that one might invoke the Fifth Amendment, according to your understanding? MR. JONAS: Objection, Your Honor. Again, I -- and I respectfully -- I -- I'm not trying to interrupt, but I do need to preserve my objections for the record. I don't think it's appropriate to ask a witness -- he's now asked, I don't know, 10 questions relating to the Fifth Amendment, his understanding. Obviously, some of that is privileged to the extent his understanding comes from us. THE COURT: He's not asking for privileged Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 164 of

Kwok - Cross - Harbach 161 information. He made that clear. And I think it's a relevant question and I'm overruling your objection. MR. JONAS: Fair enough. Thank you. THE COURT: You did open the door on direct examination to this issue. MR. JONAS: Understood, Your Honor. THE COURT: Okay. MR. JONAS: And that's why I -- at the beginning, I let it go but we're kind of deep into this and I'm not sure where it's going. THE COURT: I -- but he hasn't gotten an answer yet. MR. JONAS: Thank you, Your Honor. THE COURT: Okay. BY MR. HARBACH: Q Would you like me to repeat the question, sir? THE MAIN INTERPRETER: Yes. Yes, please. This is the interpreter. MR. HARBACH: Sure. BY MR. HARBACH: Q What is your understanding of what it means to invoke the Fifth Amendment? A I listen to my counsel -- I listened to my counsel's advice. Q Okay. Well, I think I'll move on. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 165 of

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1 At the very beginning of your examination, when you 2 were asked why you filed this Chapter 11 case, you mentioned 3 that it was because a judge in New York ordered you to pay a 4 \$124 million fine in five days.

5 testimony?

Yes.

And I don't want to go too deep into this, except to 8 say that there was a judgment in place against you because 9 of a decision that was made by the judge against your side 10 of the lawsuit, correct?

Are you talking about a judgment from the Seventh 12 District of New York? I know that one.

Well, I'm talking about a judgment from the Supreme 14 Court of the State of New York, Justice Barry Ostrager 15 presiding.

Yes, I know that.

Okay. And so, there were actually -- there are two 18 judgments that have been issued.

19 judgment in connection with PAX's breach of contract claim. 20 Do you remember that?

Are you talking about me breaching the contract?

I'm merely trying to illustrate that there are two 23 judgments against you from the New York Supreme Court.

24 not asking you to admit whether you agree with them or not. 25 I'm just asking if you know of their existence.

Kwok - Cross - Harbach 163 A Yes. Q Okay. You understand that one of them is a judgment in connection with a contempt finding, right? A Yes. Q Okay. And did you attempt to file an appeal bond in connection with that contempt judgment? A Yes. Q How much was it? A Are you talking about appeal bond? Q Yes. A I don't understand what you mean by appeal bond. Q Do you know what an appeal bond is? A So are you asking about me -- about the case of contempt of court issued by Justice Ostrager? Q That is correct. And my question is, did you file or attempt to file an appeal bond in connection with that judgment? A My counsel is working on it, but I don't know the details. Q So as far as you understand, it has not been done yet, to your knowledge. A We already appealed against a judgment of Justice Ostrager. Q I understand that. MR. HARBACH: And I'll move on very shortly, Your Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 167 of

Kwok - Cross - Harbach 164 Honor. BY MR. HARBACH: Q Just so we're clear, my question is not about whether you appealed the decision, it's about whether you posted an appeal bond. Now, a moment ago you said that you believed your attorneys were working on it, which is fine. A Yes. Q Okay. And so all I want to establish is that they're working on it. To your knowledge, it hasn't been done yet, correct? A My counsel is handling this matter. Q Understood. Thank you. One other piece of cleanup from direct. Mr. Jonas asked you about the risks to you as a result of your opposition to the CCP, and among the things you said was that your family was arrested and that the CCP seized your family's assets. Do you recall that testimony? A Yes. Q Some of those assets were yours as well, correct? A No. Q So is it your testimony that the CCP has seized none of your assets? A Yes. Q Okay. Only your family's assets. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 168 of

Kwok - Cross - Harbach 165 A Yes. Q Because of your conduct. A Yes. Q Golden Spring New York was set up in March of 2015, correct? A Yes. Q And I believe you said on direct that it's -- it was an investment firm? A At the time, one of the functions served by this company was to look for investment opportunities in the US for the family. Q And since March of 2015, how many successful investment opportunities have -- has Golden Spring carried out? A We had some cases whereby we were almost successful. However, because of Bruno Wu representing the Chinese Communist Party to make phone calls and make threats, so they were in futile. Q I didn't hear the last word. They were -- A In futile. Q They were futile? THE INTERPRETER: Yeah. BY MR. HARBACH: Q Okay. So is the answer to my question that there have been no successful investments by Golden Spring since it was set up in March of 2015? Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 169 of

Kwok - Cross - Harbach 166 A I don't know what happened after 2015. Q Okay. So is the answer to my question that you have no idea whether Golden Spring has had any successful investments since 2015? A Yes. Q This is the company that you say is owned by your son? A Yes. Q The son whose love and goodwill has resulted in their generosity to you, according to you? A Yes. Q A son with, given that, you're pretty close? A Yes. Q You've never asked him about how the business is going or what they're interested in investing in? A That has to do with his partner, Bruno Wu, who went to London and -- with many people, there were Chinese spies from the Chinese Communist Party and try to kill them. And in 2015, my daughter, my wife were arrested and -- because of this -- these issues, and the fact that I'm being chased and was -- and they were attempted -- they attempted to kill me, and therefore they did not want to tell me much about their personal affairs or what happened, and I do respect that. Q So your answer is, you've never asked him. A I did. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 170 of

1 Q And he refused to answer your question. Is that it? 2 A Because I was threatened to be killed and because of 3 me, many problems has risen.

4 to answer that. 5 Q I didn't hear the tail end of the answer. I'm sorry. 6 A Because I was being threatened and because many 7 problems has risen because of me, they did not want to 8 answer that. 9 Q Out of fear that what, that the Chinese Communist Party 10 would come after their assets? 11 A It was not just about seizing the assets.

12 fact was arrested by the Chinese Communist Party before, and 13 he was being threatened to be killed, so he has been in this 14 process. And also, many of his assets in Hong Kong and in 15 Mainland China have been seized or confiscated by them. 16 Q And you've testified before, have you not, that you, 17 yourself, do not have any bank accounts, right? 18 A Yes. 19 Q And the reason for that, according to you, is because 20 of the Chinese Communist Party, right? 21 A Yes. 22 Q And the -- you can't hold on to any assets for the same 23 reason, right? 24 A As I mentioned in the beginning, because of the 1989 25 incidents, I was arrested for 22 months, and then I became a

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1 personality that is anti Communist Party, and then in year 2 2000, I had a Hong Kong passport, and in 2015, I became anti 3 Chinese Communist Party.

4 different stages and because of the political climate at the 5 time, I could not own or hold any assets.

Okay. And let me get to one of the points, hopefully. 7 You seem to have no trouble swearing in very public filings 8 that your son owns Golden Spring New York, right?

9 that true, that you have sworn in very public filings that 10 your son is the owner of Golden Spring New York?

Yes.

Okay. And it's also true, is it not, that Golden 13 Spring has millions of dollars at its disposal?

I don't know how much money they have.

Well, you know they have millions of dollars, right, 16 because you just testified a few minutes ago that they've 17 pledged to give you eight, or the estate, eight. Right? 18 MR. JONAS: Objection, Your Honor.

19 actually not accurate.

20 terms of the DIP, I believe he said \$9 million. 21 THE COURT: I think he can answer the question. 22 THE WITNESS:

23 stated \$9 million. 24 BY MR. HARBACH:

And my question to you was, you know, don't you, that

1 Golden Spring has millions of dollars at its disposal? 2 A Yes. 3 Q Isn't it true that you owned Golden Spring when it was 4 set up in 2015? 5 A No. 6 Q Do you recall on April 6th of this year, at the 341 7 hearing that was held in New Haven, the one that was in 8 person? 9 A Yes. 10 Q Do you recall testifying that at one time you held a 11 title at Golden Spring but you couldn't remember what the 12 title was? 13 A Yes. 14 Q Is that still the case that sitting here today, you do 15 not remember what the title was? 16 A Yes. 17 Q Or when you held it? 18 A That was in the very beginning in early 2015, when the 19 company just founded. 20 Q For approximately how long? 21 A I don't remember. 22 Q On direct examination you were asked some questions 23 about Golden Springs being set up, and I believe you 24 testified that you assisted your son in setting up Golden 25 Spring. Is that right?

A Yes. Q And if we could just take a brief detour and put your son's name on the record. It is Qiang Guo, is that correct? A Yes. Q Okay. And I'll spell that for the record.

last name G-U-O. A Yes. Q Thank you. Now, you also testified on direct that none of your funds were used to set up Golden Spring, right? A It did not use money that was owned by me. Q Okay. It was used by money contained in an account you owned, wasn't it? A I was authorized to use the account under my name. Q Do you recall, Mr. Kwok, preparing an affidavit in the case of Ace Decade Holdings Limited v. UBS AG in New York State Court in February of 2016? A I remember. MR. HARBACH:

display PAX's Exhibit 18? Actually, my mistake.

start with PAX's 19, please? Sorry, Your Honor. THE COURT: That's okay. THE CLERK: On the screen is PAX Exhibit 19. MR. HARBACH: Thank you, ma'am. BY MR. HARBACH: Q I'd like to go to the next to last page of 19, which is

Kwok - Cross - Harbach 171 -- looks like it should be 17. It's the page that -- well, it may be -- it may be a different page number, but it's the page with Mr. Kwok's signature on it. And for the record, Exhibit 19 is the Chinese version of the affidavit I referenced earlier, and so what's on the screen for the witness right now is the signature page for that affidavit, and the question to the witness is whether that is your signature, sir. A Yes. Q Okay. MR. HARBACH: Now, if we could, Madam Clerk, rewind in that document to paragraph 36? And, Your Honor, this is a little cumbersome because of the Chinese, but what PAX intends to offer -- well, what PAX intends to do is to question the witness using the version with Chinese characters that he signed, and then we'll offer to the Court, the Chinese version as well as the English translation that is also certified and is a separate exhibit. THE COURT: Okay. Thank you. BY MR. HARBACH: Q So, Mr. Kwok, I'd like you to take a look at paragraph 36, please. And so, could you please read paragraph 36 to yourself and then just let me know when you're finished? A I'm done. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 175 of

1 Q Isn't it true that in this affidavit, in February of 2 2016, you swore that in April 2015, Mr. Wong, W-O-N-G, Ms. 3 Fu, F-U, and Ms. Lam, L-A-M, assisted me with setting up 4 Golden Spring New York by transferring funds from one of my 5 accounts at UBS to Golden Spring New York's JP Morgan Chase 6 Bank account in New York? 7 A Yes. 8 Q Okay. In your affidavit, you didn't say anything about 9 your son setting up Golden Spring New York, did you? 10 A Yes. 11 Q Okay. In fact, isn't it true that you set up Golden 12 Spring with your own money? 13 A That money was my son's money, but my account was being 14 used to transfer funds to his account.

15 money. 16 Q How much money was it? 17 A I cannot remember clearly.

18 well, I cannot remember. 19 MR. HARBACH: Can I just have one moment, Judge? 20 THE COURT: Certainly.

22 MR. HARBACH:

23 Honor. I hope we've streamlined things a little bit. 24 THE COURT: That's fine. 25 BY MR. HARBACH:

1 Q Mr. Kwok, isn't it true that in November or December of 2 2014, you had \$1 billion at your disposal? 3 A Yes. 4 Q Okay. That wasn't your son's money, was it? 5 A That was family's money, including my son's money. 6 Q Okay. That was, as you said a moment ago, at your 7 disposal. 8 A I was authorized to use that money. 9 Q Did I hear you correctly earlier to say today that you 10 never -- you never worked at Golden Spring New York? 11 A Yes. 12 Q Okay. 13 A As I mentioned earlier, at one point, I did have a 14 title. 15 Q Okay. Did you do any work in connection with that 16 title? 17 A I did get a salary. 18 Q You got a salary. How much was the salary? 19 A \$300,000 U.S. dollars. 20 Q For what time period? 21 A 2015. 22 Q So for the calendar year 2015, you earned \$300,000 from 23 Golden Spring? 24 A Around that, but I cannot remember clearly. 25 Q Okay. For doing what?

1 A At the time it was to help setting up Golden Spring New 2 York, and also to serve as an advisor to find investment 3 opportunities. 4 Q Okay. An advisor to whom? 5 A Golden Spring. 6 Q Who at Golden Spring? Who did you give advice to? 7 A My son. 8 Q According to you, the Golden Spring New York has 9 advanced you loans to fund various lawsuits that you're 10 involved in, some \$21 million, right? 11 A Yes. 12 Q Okay. Now I'm not -- I'm talking about those loans 13 now, the 21 million. Okay?

14 requested those loans yourself from your son? 15 A Yes. 16 Q Okay. And what did he say? 17 A He just loaned it to me. 18 Q Okay. Did he say anything about needing to consult 19 with the other directors of Golden Spring? 20 A That was handled by my son. 21 Q Did he say anything about needing to convene a vote of 22 the other directors of Golden Spring, a vote of the board, 23 before lending you millions of dollars? 24 A It was because my son and the family office in Europe, 25 including other family members, would hold meetings to talk

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1 about that. So my son would convene meetings to handle that 2 issue, but I don't know the details.

My question is what he told you, and I think a moment 4 ago you said he just told you that he would do it.

That was a long time ago and there are too many 6 details, but he would consult family members and their 7 lawyers, and then they would hold meetings and I don't 8 handle all the nitty gritty details.

So is your testimony that when you asked your son for 10 loans to cover your litigation expenses, he told you that he 11 needed to consult with the family first?

12 testimony?

Yes.

Okay. Isn't it true that you don't know how many loans 15 you have had from Golden Spring?

I know.

You know or you don't know?

I know.

Okay. How many loans have you had from Golden Spring?

210 million. 21 UNIDENTIFIED SPEAKER: 21 million. 22 THE MAIN INTERPRETER: I'm sorry. 21 million. 23 BY MR. HARBACH:

Yeah. I'm not asking about the total amount.

25 asking about the number of loans.

Kwok - Cross - Harbach 176 A I cannot remember clearly. Q Okay. And you don't know which of the loans were put in writing? A I remember a few of them. Q But you don't know which ones or how many? A I know parts of them related to the litigations, but I cannot remember all of them. That is impossible. Q Well, all I'm asking is whether of the -- however many loans there are, do you know how many of them were in writing? A I believe more than 10 were in writing, but I cannot be sure at all. Q And isn't it also true that you don't know whether the written agreements were in English or Chinese? A They must have been all in English. Some of them have Chinese versions. MR. HARBACH: Just a -- just a moment, please, Judge. THE COURT: Certainly. (Pause) BY MR. HARBACH: Q Do you recall giving testimony at a meeting of creditors on March 21st, 2022, by telephone? A I remember. MR. HARBACH: And I'll ask for PAX 17 to be Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 180 of

Kwok - Cross - Harbach 177 displayed please, Madam Clerk. THE CLERK: On the screen is Exhibit 17, PAX Exhibit 17. MR. HARBACH: Thank you, ma'am. I'd like to go to page 73 of the transcript. Maybe I can try and control it myself. THE COURT: She has to give it to you first. MR. HARBACH: Oh, okay. THE COURT: But if you'd rather do that, she's -- she can do that for you. THE CLERK: It's up to you, whatever you -- I just gave you control. MR. HARBACH: Okay. I think that will work. Thank you. THE COURT: Are you having trouble moving it? MR. HARBACH: I think I've got it. THE COURT: Okay. Thank you. MR. HARBACH: Okay. So we're in that. That's behind 30. Okay. One off. Okay. For the record, I'm displaying Page 73 of PAX 17, and I'm going to direct the witness's attention to Lines 4 through 8. BY MR. HARBACH: Q Mr. Kwok, isn't it true that you were asked this question, were any of the loans that were put in writing in Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 181 of

Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 182 of

1 English, and your answer was, I don't remember?

2 you were asked, were any of them in Chinese, and your answer 3 was, I don't remember.

4 have a different memory of that today?

I cannot read English so I have to rely on the 6 interpretation.

7 from before.

Okay. And if I had you correctly, your memory today is 9 that most of the loans in writing were in English?

Yes, that's what I remember.

Okay. Now isn't it also true that you did not know the 12 \$21 million total amount until lawyers told you that's how 13 much it was?

What do you mean by that?

Well, before lawyers told you that the total was \$21 16 million that Lamp -- excuse me, that Golden Spring had 17 loaned you in litigation funding, did you know that that's 18 what the total was?

I know.

Okay. Let's stick with where we are on the transcript, 21 which is again, PAX's 17 at Page 73.

22 attention to Line -- starting at Line 22 of that page. 23 Question: "If you don't know -- " sorry. Withdrawn. 24 Isn't it true that you were asked this question and you 25 gave this answer?

1 took out loans from Golden Spring, not all of which were in 2 writing, how do you know how much you owe them?" 3 MR. HARBACH:

4 then I'll give the answer. 5 BY MR. HARBACH:

And your answer was, "My lawyer an the lawyer of Golden 7 Spring, they communicate with each other, tells me the 8 amount they can define is 21 million." 9 Isn't that what you said, sir?

Well, I cannot read English and through the 11 interpretations earlier, from my recollection, at the time 12 through the counsels I knew that the figure was 21 million.

And that's all I'm trying to establish is that your 14 knowledge about the amount, the 21 million, that came from 15 your lawyers, correct?

I confirmed that with my lawyer.

Okay. 18 MR. HARBACH:

19 patience. I have no further questions. 20 THE COURT: I appreciate that. Thank you. 21 MR. HARBACH:

22 the end, but I intended to offer PAX's 17, 18, and 19. 23 THE COURT: Okay. Any objection?

24 your list? PAX's 17, 18, and 19 -- 17 has no objection. 25 MR. HARBACH: Correct.

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1 THE COURT:

2 meeting. So that will be admitted as a full exhibit. 3 With regard -- go ahead. 4 MR. HARBACH:

5 I used for impeachment purposes.

6 and 19 is the Chinese version. 7 THE COURT: Okay.

8 an opposition with regard to the admission of exhibits -- 9 PAX Exhibits 18 and 19 in full? 10 MR. JONAS:

11 obviously the portions that were used, such that Mr. Kwok 12 had an opportunity to respond to them.

13 withdraw any objections and have no further objection. 14 THE COURT: Okay.

15 19 are admitted as full exhibits.

16 and 19 are admitted as full exhibits in connection with the 17 evidentiary hearing on the DIP financing motions. 18 MR. HARBACH: Thank you, Your Honor. 19 THE COURT: Thank you. 20 (PAX Exhibit Nos. 17 through 19 admitted into

22 THE COURT: Attorney Claiborn? 23 MS. CLAIBORN:

24 few questions. 25 THE COURT: Certainly.

Kwok - Cross - Claiborn 181 you going to have some redirect? MR. JONAS: I doubt it, Your Honor, but -- THE COURT: Okay. MR. JONAS: -- I'd like to consider that after. THE COURT: Okay. That's fine. Just curious. Thank you. Go ahead, Attorney Claiborn. BY MS. CLAIBORN: Q Good afternoon, Mr. Kwok. Did you negotiate the terms of the debtor in possession loan with your son? A First of all, I would like to say, good afternoon. And regarding the exact terms of the loans, it was my lawyer and their lawyers had negotiations. Q Before you filed your Chapter 11 bankruptcy case, did you ask your son to loan you money to fund your bankruptcy case? A Yes. Q And when you asked your son to give you money, did you ask him to loan it to you or to gift it to you? A It was a loan. Q And why did you ask for it to be a loan? A It was because Golden Spring, the company of my son, is also a family company and that money is not just my son's money. Q Mr. Kwok, do you know the source of the money that Golden Spring is using to loan to the estate if the loan is Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 185 of

Kwok - Cross - Claiborn 182 approved? THE MAIN INTERPRETER: Okay. I'm sorry. Counsel, do you mind repeating the question again? BY MS. CLAIBORN: Q Do you know what the source is of the money that Golden Spring is going to loan to your bankruptcy estate? A I don't know. Q Did you ask? A Yes, I did. Q And what was the answer? A My son asked me not to deal with it. He would communicate with my lawyer. Q Do you know whether or not your son told your lawyer what the source of the money would be? A I don't know. Q Did you ask your lawyers? MR. JONAS: Objection, Your Honor. She's asking for direct communication with counsel. THE COURT: No, she just asked -- the question was, did he ask his lawyers about the source of the funds. That's -- he can answer that question, just yes or no. MR. JONAS: Okay. Thank you, Your Honor. THE WITNESS: My lawyer did not answer that. BY MS. CLAIBORN: Q The money that Golden Spring uses to fund your life Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 186 of

1 expenses, your personal living expenses, is that a loan or a 2 gift?

It's a gift.

Why is that a gift and not a loan?

Because I could not repay it, and regarding supporting 6 my daily living, as his dad, well I had my son when I was 7 18, and from the Eastern culture, that is normal and also 8 the fact that right now I'm being threatened for my life.

So why is it that the debtor in possession loan that 10 Golden Spring is not a gift?

11 as money as a gift?

It was because since they loaned me \$21 million before, 13 and also including this one, it's a huge sum of money and I 14 wish I could repay that, and that was the result of the 15 communication between his lawyer and my lawyer.

If the Court approves the loan from Golden Spring, 17 where will the money be held?

Where that money would be placed, that would be decided 19 by the judge and my counsel. 20 MS. CLAIBORN: Thank you.

21 further questions. 22 THE COURT: Okay. Thank you. 23 MR. JONAS: Nothing further, Your Honor. 24 THE COURT: Okay.

25 witness, Mr. Jonas?

MR. JONAS: No, we're not, Your Honor. THE COURT: Okay. Mr. Kwok, you can step down. Thank you. THE WITNESS: Certainly, Your Honor. THE COURT: Thank you. THE WITNESS: I would like to say that I really appreciate Your Honor to give me the chance to sit here today. THE COURT: Okay. THE WITNESS: Because the fact that I cannot speak English, I cause more troubles for you. THE COURT: Okay. Thank you. Thank you. All right. Any -- no further witnesses for the debtor, correct? MR. JONAS: Correct, Your Honor. THE COURT: Okay. Witnesses for PAX? Any further witnesses? MR. HARBACH: Your Honor, we have no additional witnesses. We do have one additional exhibit we would offer to the Court, and it's PAX's 15. THE COURT: Okay. Take a minute. MR. HARBACH: It's the deposition transcript of Xiaoping Wang, also know as Yvette Wang. THE COURT: Okay. MR. HARBACH: It was the -- sorry. THE COURT: Go right ahead. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 188 of Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 189 of

MR. HARBACH: I should also say that it was the 30(b)(6) deposition of Golden Spring. She was testifying in that capacity, and I mentioned to counsel during the meet and confer process that I would tender the entire exhibit, and we had marked the entire exhibit, anticipating a possible completeness objection were we to only offer portions. So that's why we offered the whole thing. But if counsel would prefer that we only offer the precise pieces that we want Your Honor to focus on, I'm prepared to put those in the record, and so, I don't know how the Court wants to proceed. THE COURT: Okay. Well, I want to just hear the objection from the debtor first, because apparently the debtor objects to this transcript. MR. JONAS: Yes, Your Honor. Jeff Jonas, Brown Rudnick for the Debtor. Your Honor has noted, we have objected. We continue to object on hearsay grounds. The witness is, as I understand it, within subpoena power. They certainly could have brought her here if they intended to have her as a witness at trial. We didn't have any agreement that they would -- we'd permit transcripts in place of live testimony. I think it's inappropriate and it's just not a decision somebody gets to make that we're not going to bring a witness when

1 the witness is available and could be brought to trial.

2 I'll object. 3 THE COURT: And where is the witness located? 4 MR. JONAS:

5 New York within 100 -- I actually asked the question, Your 6 Honor. Within -- it might be 60 miles, but I believe it is 7 within 100 miles. I'm not sure.

8 case you asked me, so they certainly could have served a 9 subpoena and she could have been here. 10 We didn't think it's necessary, and having the 11 record come in, I continue to think it's not necessary.

12 again, I don't think counsel just gets to make a choice in a 13 case when you're having a trial and a witness is available, 14 to substitute in a transcript. 15 THE COURT: Okay.

16 grid, your basis of your exhibit -- excuse me, of the 17 objection was hearsay, but that's not what I'm hearing.

18 hearing you say they could have brought the witness in and 19 we're not going to allow, under the Federal Civil -- Rules 20 of Civil Procedure, you shouldn't allow the introduction of 21 a transcript when the witness could be here in person. 22 MR. JONAS:

23 somehow my vernacular is not correct.

25 THE COURT:

1 MR. JONAS: -- hearsay is, Your Honor. 2 THE COURT:

3 be. I mean, this is the Rule 30(b)(6) person that you 4 designated to be the 30(6)(b) person, right?

5 argue it -- we want to be very clear about it.

6 hearsay usually is not the testimony of the 30(b)(6) 7 representative. 8 But I understand what you're saying about your 9 issue of why didn't the PAX subpoena and bring this 10 individual to the court.

11 concern, so I'm going to -- I'm going -- not your concern, 12 your objection. So I am going to ask Mr. Harbach, what is 13 his response to the fact that this witness was not 14 subpoenaed and brought to court today? 15 MR. JONAS: Your Honor, may I -- I apologize.

16 just want to correct the record. 17 THE COURT: Sure. 18 MR. JONAS: Not argue.

19 technically, it's not the debtor's 30(b)(6) witness, it's 20 the Golden Spring 30(b)(6) witness.

21 record, Your Honor. 22 THE COURT: Oh, okay. I misunderstood.

24 MR. JONAS: Understood. 25 THE COURT: Okay?

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1 debtor's 30(b)(6) representative.

2 MR. JONAS:

3 THE COURT:

4 MR. JONAS: -- the debtor and is here. 5 THE COURT:

6 what happened in your discovery. 7 MR. JONAS: Understood, Your Honor. 8 THE COURT:

9 record. Thank you.

10 person to be objecting to that be Golden Spring? 11 MR. JONAS: I don't think so, Your Honor. 12 THE COURT: Why? 13 MR. JONAS:

14 if you will, the exhibits with counsel.

15 objection. I'm raising the objection here.

16 if you will, on our motion regarding the DIP, and if they 17 want to use a 30(b)(6) witness -- another party, if you 18 will, 30(b)(6) transcript, I think it's inappropriate. 19 THE COURT: Okay.

20 response to that, Mr. Harbach? 21 MR. HARBACH:

22 the Federal Rules of Civil Procedure. 23 THE COURT: Because they're not a party?

24 what you're trying to tell me? 25 MR. HARBACH: No, to the contrary.

1 are a party.

2 THE COURT: Okay. Hold on. I meant the debtor. 3 See, I didn't know who -- I -- as you all would expect, I 4 would think -- oh yes. See, I'm sorry.

5 apologize. Thank you. I'm sorry.

6 at any of your exhibits, you know?

7 they're about until and unless you introduce them. 8 So, all right.

9 MR. HARBACH:

10 THE COURT: -- 32. 11 MR. HARBACH: Sure.

12 is quite correct, of course.

13 witness designated by Golden Spring. 14 THE COURT: Okay. 15 MR. HARBACH: That's correct. 16 THE COURT: Okay. 17 MR. HARBACH:

18 can see, the 32(a) is captioned using depositions, and so we 19 believe that we satisfy all of A, B, and C, right there in 20 general. It says that all -- at a hearing or trial, all or 21 part of a deposition may be used against a party on these 22 conditions. 23 A, the party was present or represented at the 24 taking of the deposition, or had reasonable notice of it. 25 Well, the -- I would hope that counsel would be willing to

1 accept my proffer that Ms. Wang was represented at the 2 deposition, and indeed, the transcript makes it quite clear 3 that she was, or that Golden Spring was.

4 noncontroversial. 5 B, that it is used to the extent it would be 6 admissible under the Federal Rules of Evidence if the 7 deponent were present and testifying.

8 true insofar as it is essentially a sworn out-of-court 9 statement of a live witness. 10 C, you have to satisfy one of these subsections, 11 Rule 32(a)(2) through (8), and where we believe we squarely 12 fall is in 32(a)(3), which is captioned, Deposition of 13 Party, Agent, or Designee. 14 So we think that Golden Spring, by virtue of being 15 a proposed financier for the debtor in possession, and in 16 light of the fact that they are, to quote Section 8B of the 17 agreement, seeking rights, remedies, powers, and privileges, 18 and in addition to that are seeking a good faith finding 19 from the Court, for all of those reasons, we think it's 20 imminently reasonable for the Court to treat Golden Spring 21 as a party, at a minimum for purposes of this rule. 22 I'll just note finally, insofar as the 23 impropriety, leaving aside whether it falls within the 24 rules, is the impropriety of this, of course the debtor had 25 a lawyer present at the deposition of Golden Spring's

1 30(b)(6) witness and had an opportunity to cross her; chose 2 not to. And I'll also note that at one point, Ms. Wang 3 herself was on the debtor's witness list for this very 4 hearing today, and they removed her. 5 So I think that the suggestion that this is 6 improper isn't quite as strong as it otherwise might sound 7 under those circumstances.

8 beside the point.

9 said earlier, that the entirety of the transcript is 10 admissible under Rule 32. 11 THE COURT: Okay. Thank you.

12 Attorney Jonas? 13 MR. JONAS: Yes, Your Honor.

14 minute? 15 THE COURT: Yes. 16 MR. JONAS: Thank you.

17 thing.

19 MR. JONAS: Your Honor. 20 THE COURT: Yes. 21 MR. JONAS:

22 is, this is a rule that is incorporated into the contested 23 matter rules under Rules 9014.

24 THE COURT: Oh, yes. 25 MR. JONAS: -- this is also Bankruptcy Rule 7032.

1 THE COURT: Yes. Yes. Yep. Okay. Thank you. 2 MR. FRIEDMAN:

3 Honor. Just give me one moment, please. 4 MR. JONAS:

5 Rudnick on behalf of the debtor. 6 Your Honor, I'll renew my objection, just make a 7 couple quick comments.

8 we're not particularly concerned about the deposition.

9 being said, I just, I think we're entitled to have a fair 10 trial, and from our perspective, again, they are not a 11 party. This was -- this is effectively our motion, the 12 debtor's motion. We're prosecuting it and we're a party. 13 Certainly, PAX, the objector, is a party, and I think those 14 are the parties for purposes and I think -- 15 THE COURT: Well, Golden Spring is the lender. 16 MR. JONAS: I understand that, Your Honor. 17 THE COURT:

18 MR. JONAS:

19 the money up, the money is available, they're the lender. 20 THE COURT: Right.

21 can -- the Court has the obligation to understand what the 22 lender is or is not willing to do, and that may include the 23 testimony of the lender with regard to that issue.

25 MR. JONAS:

THE COURT: -- and every other -- and any other contested debtor in possession financing hearing that I've seen, the lender does -- you know, if there's a -- if there's a contested issue, the issue of the lender -- what - - is the lender ready, willing, and able to loan? Is the -- what are the terms and conditions all -- MR. JONAS: Exactly, Your Honor. The money is here, so -- THE COURT: Well, I don't know that it's here. Where is the proof in the record that's here? MR. JONAS: Well, you had -- you had testimony from Mr. Kwok. THE COURT: Well, I had testimony from Mr. Kwok that says he believes it's all here. He's not sure if it's all here, and -- but he believes it's here. MR. JONAS: There was no -- it's uncontroverted. THE COURT: I didn't say it was controverted. I'm just saying it -- he said he believes it's all here. I don't -- MR. JONAS: Oh, okay. THE COURT: -- there's no record in the -- there's no document in the record that says it's here. MR. JONAS: I don't -- with all due respect, Your Honor, I don't think -- we have put on our case. We have had a witness. He has testified. It was -- he could have

1 been crossed. He wasn't. It's uncontroverted.

2 fact.

3 THE COURT:

4 said. 5 MR. JONAS: Fair. Fair enough, Your Honor. 6 THE COURT: And he said, I believe it's here.

7 doesn't know if it's here. 8 MR. JONAS: I understand, Your Honor. 9 THE COURT: Okay. 10 MR. JONAS:

11 Court feels I need to -- I need to stand on my objection for 12 the record, however, I certainly respect the Court very 13 much. If the Court feels it's necessary to take in the 14 transcript, my only comment would be, we'd ask the whole 15 transcript come in. 16 We haven't been -- there's nothing been designated 17 to us. It's a little unfair to designate portions now on 18 the fly. So if they want to put the transcript in, so be 19 it, Your Honor.

20 belabor this with the Court, and I want to respect the 21 Court's opinion on that. 22 THE COURT: I haven't ruled on anything.

23 really just been asking questions at this point. 24 MR. JONAS: Understood. 25 THE COURT: Okay?

positions. MR. JONAS: And our position is, we continue the objection, Your Honor. THE COURT: Okay. Thank you. Mr. Harbach, anything else you want to add? MR. HARBACH: I don't have anything else to add, Your Honor. Just let us know how you'd like to proceed. THE COURT: Okay. Well, the -- when I'm look -- you know, I haven't looked at Rule 32 in the last few weeks so I -- you know, I'm looking at the -- I'm looking at the language of 32. The only part that is a problem for PAX, if it is a problem, is 32(a)(4), because 32(a)(1) -- 32(a)(2) -- 32(a)(4) could be a problem because it says -- 32(a)(1)(C) says, "And the use is allowed by Rule 32(a)(2) through (8)." So does that mean it's got to be allowed on all eight? All of those? I mean, I'm looking at this. I know 7 doesn't apply because there isn't a substitution of a party. Deposition taken in an earlier action doesn't apply because that's not what you're trying to do. You're not trying to enter a deposition taken in an earlier action. Using part of the deposition, you may -- that might be fine. Limitations on use, that at this point, no one is arguing that the deposition was taken on short notice or the Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 200 of

deponent was unavailable at the time of the deposition. Nobody has a problem with impeachment and other uses, or deposition of a party agent or designee, but the problem is -- I mean, I don't know, I haven't looked in a long time. Does A -- does 32(a)(2) through (8) mean you have to meet all those requirements?

requirements don't exist all at the same time. MR. HARBACH: Yeah.

- perhaps in starkest relief, Your Honor.

and 4, because 2 says, any party.

sorry. That's a witness whether or not a party.

true. Well, in any event, Your Honor, I -- all right. So, Your Honor, PAX concedes that Ms. Wang is not unavailable. THE COURT: Okay. MR. HARBACH: So, conceded. THE COURT: Okay. MR. HARBACH:

MR. HARBACH:

earlier. If you look at 3, Your Honor, an adverse party may use, for any purpose, the deposition of a party -- THE CLERK: Attorney Harbach, you're a little low. MR. HARBACH: Oh, sorry.

1 THE CLERK: We're not picking you up. 2 THE COURT: Go ahead. 3 MR. HARBACH: Thank you, Judge.

4 32(a)(3), it says, "An adverse party may use, for any 5 purpose, the deposition of a party or anyone who when 6 deposed was the party's 30(b)(6) representative."

7 THE COURT: It does say that.

8 say that. 9 MR. HARBACH: It does. That's true. 10 THE COURT:

11 not knowing that the 30(b)(6) representative wasn't the 12 debtor, but it was the debtor's representative, the Golden 13 Spring, which is when I started the conversation I said, you 14 mean you're opposing a 30(b)(6) representative's deposition, 15 but not knowing that it wasn't the debtor, it was Golden 16 Spring. 17 MR. HARBACH:

18 that helps is that it can't be that Rule 32 is restricted to 19 situations -- to 30(b)(6) depositions. 20 THE COURT: I agree with you. 21 MR. HARBACH:

22 THE COURT:

23 don't think (a)(1)(C) means that you have to comply -- that 24 the use of it has to comply with every situation in 32(a)(2) 25 through (8).

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MR. HARBACH: I think -- I agree with you, because otherwise, if 3 were required, then it would effectively restrict the rule to 30(b)(6) situation. Now, I also agree with the Court that, for example, 5, caption limitations on use, I mean, I think that would plainly apply, but -- THE COURT: If that situation was present, but it's not. MR. HARBACH: If it was -- if it were present, yes. In other words, you know, 2, 3, and 4, are all permissive. Those are different means by which a party can do something, and then 5 is limitations, and 6, 7, and 8 are other unique circumstances. THE COURT: Right. MR. HARBACH: So I don't think it's necessarily -- you have to put blinders on and only look at 2 through 8 and not any of the others, but I do think that 2, 3, and 4 cannot all apply at the same time. THE COURT: Right. I agree. They all can't apply at the same time. It doesn't make sense. So the debtor's objection to the introduction of PAX Exhibit 15, the 30(b)(6) representative of Golden Spring is overruled. MR. JONAS: Thank you for your consideration, Your Honor. (PAX Exhibit No. 15 admitted into evidence)

THE COURT: Thank you. All right. So are we now -- what are we -- are we moving to closing arguments based upon the evidence that's submitted? MR. FRIEDMAN: Yes, Your Honor. That concludes our evidentiary submission, if I may -- THE COURT: Okay. MR. FRIEDMAN: -- make some remarks about the DIP? THE COURT: Yes, please. CLOSING ARGUMENT ON BEHALF OF CREDITOR PAX MR. FRIEDMAN: Thank you. So, Your Honor, I have really three areas I want to address. Sort of, one is big picture, two is some of what you heard today and why you shouldn't believe it, and the third is the order, the proposed order. And to be fair -- I don't know if fair is the right word, but to be clear about the order, I'm going to refer to the current version of the order. There is an updated version of the order, apparently based on the proposed settlement between the committee and the debtor. I'm going to be -- THE COURT: When you say the current version, do you mean the version attached to the original DIP financing motion? MR. FRIEDMAN: No, the version that was filed with the Court on -- the redlined version -- Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 203 of

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1 THE COURT: Yesterday? 2 MR. FRIEDMAN:

3 THE COURT: Last night? 4 MR. FRIEDMAN:

5 version of the DIP financing was on the 10th of April. 6 THE COURT: Oh, okay.

8 MS. CLAIBORN: I think it's ECF 198. 9 MR. FRIEDMAN: Yes. 10 THE COURT: Thank you. 11 MR. FRIEDMAN: Yes. 12 THE COURT:

13 then -- give me one moment, then I'll be able to follow you

15 MR. FRIEDMAN: Okay. 16 THE COURT:

19 THE COURT:

20 me to be looking at the redlined version of that order?

21 that what you're suggesting, counsel? 22 MR. FRIEDMAN:

23 point. That's -- when I get to that portion of my remarks. 24 THE COURT: Okay.

25 there.

MR. FRIEDMAN: Okay. THE COURT: I just want to make sure I am there. (Pause) THE COURT: Okay. So what I'm looking at, when you get to the point that you were actually asking me to consider the terms and conditions of the order, I'm looking at ECF 198, starting at page 29. Does that sound right? MR. FRIEDMAN: Yes, Your Honor. THE COURT: Okay. Then go right ahead, please. MR. FRIEDMAN: Okay. So, Your Honor, we have here a proposed DIP between Golden Spring and Mr. Kwok. It was very subtle. I'm not sure if you heard it. The record will reflect it. These are not independent entities. Mr. Kwok referred today during his testimony, to Golden Spring as "we". Small word, enormous consequences. Mr. Jalbert also testified that there was a member of Mr. Kwok's legal team, Melissa Francis. Who is Melissa Francis, he was asked? Somebody he thinks works for Golden Spring. There's no separation between these two entities, Your Honor. This is a sham transaction. And I realize it's appealing. It looks appealing because in some respects it has some potentially salutary goals, but it doesn't work. It doesn't make sense. Who would spend \$8 million, maybe \$9 to defend \$3,850 in assets? Brown Rudnick alone's time today is probably cost Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 206 of

infinitely more than the \$3,850 that Mr. Kwok asserts he has in assets. So this DIP is designed to do one of two things. Either protect Mr. Kwok's massive assets that he sat there and said he didn't have, or to protect Golden Spring's assets from a variety -- which is a non-debtor, from people coming straight after it, for really being Mr. Kwok's money. Neither one of those is an appropriate use of a debtor in possession financing.

This case shouldn't be run for Golden Spring's benefit, and we shouldn't be spending, not just the 9 million because it's really not -- 9 million to \$3,850 vastly understates the amount of assets that have been put into defending Mr. Kwok, because there's also the \$21 million loan that you heard about, loan, with quotes, and the million dollars from Lamp.

So when you add that up, you have \$31 million to protect \$3,850. It doesn't make any sense unless something much more than meets the eye is happening here, and the debtor and Golden Spring are asking this Court to bless a transaction that is furthering that inappropriate scheme.

Now, Your Honor, PAX, in its reply brief to our papers, and you heard it sort of from Mr. Kwok today, attempts to blame PAX as -- the debtor attempt to blame PAX as the catalyst of this case, and he needs to, you know, straighten things out because of things PAX did. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 207 of

The debtor's own conduct forced him here today. He, I think effectively conceded that he had never been transparent before.

Now, I don't know if what you heard today was transparent, but his testimony today was, I didn't assert the Fifth Amendment today because I wanted to be transparent, which begs the question, because he gave no other answer, why didn't he want to be transparent before? Is that an -- is it appropriate to start borrowing money under a debtor in possession financing because you've been non-transparent in the past and all of a sudden you're going to turn a new leaf over? I realize some of this has overlap with our dismissal motion, but that's the reason he gave today. That's not an appropriate use of 364 authority.

You heard testimony from Mr. Kwok today, that this needed to be a DIP because he wanted to protect his family resources.

Go look at the MORS, they're spending millions of dollars to support Mr. Kwok. That wasn't a loan, it was a gift. This is a strategic effort by Golden Spring and Mr. Kwok, to use 364 for nefarious purposes. This -- as Ms. Claiborn's examatination clearly established, if this is going to be anything, it ought to be a gift just like everything else that's purportedly done for Mr. Kwok is. We don't believe it, but he should be held, and Golden Spring

1 should be held to their pattern of conduct. 2 You heard some, I think what can best be described 3 as far-fetched testimony from Mr. Kwok.

4 never asked my son about where the money from Golden Spring 5 came from. 6 I guess we are meant to believe that Golden Spring 7 is really scared and this Miles son is really scared about 8 telling Mr. Kwok where his money comes from, but not scared 9 about making a very public debtor in possession financing 10 loan for \$9 million in a case where the evidence is on the 11 docket. 12 These are public documents where Mr. Kwok filed 13 his declaration that talks about his purported crusade 14 against the CCP.

15 testimony that somebody would be afraid. 16 Or Mr. Kwok, as he testified, I won't ask my son 17 for money, Your Honor.

18 -- or I will be used by my son to manage accounts for his 19 benefit very publically. 20 I put in a declaration in the Ace Decade case that 21 said, you know, this is my money, when it's really my son's 22 money, and my son was fine with that.

23 where his money comes from.

24 believe that, because it's just not credible.

25 not credible, I think you begin to unwind the threads of why Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 209 of

this entire case isn't credible, but also why this is an inappropriate use of Section 364.

Your Honor, I want to turn to the DIP, which is a little bit of a yo-yo from what I understand. Particularly as it relates -- oh, I should note. Why did we try to put Ms. Wang's deposition in? Well, she was a 30(b)(6) witness for Golden Spring, which is asking the Court for a good faith finding. I'll get to the really confusing part about that in a moment.

They're asking the Court for an allowed subordinated claim. They're asking the Court for things. She was their designated witness. What did she say? On page 133, she wasn't involved in the negotiation of a DIP loan, has no knowledge of how the \$8 million figure was arrived at. Unfamiliar with the terms of the DIP loan. Didn't pay attention to the DIP loan agreement until the day before the deposition.

The first time she heard where the DIP loan dollars were coming from was the day before the deposition. When I asked her understanding of how the DIP loan was going to be repaid she said, I don't know. So, Your Honor, this is the designated witness who binds Golden Spring, that knows nothing about this loan.

So turning to the order, I don't think there's anything to support the finding in E that there is an Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 210 of

immediate need for financing. I certainly don't think that there's anything to support the finding that there's any value to the debtor seeking confirmation of a plan of reorganization under Chapter 11 of the bankruptcy code, given that we've seen, I think the outrageous nature of the plan proposed by the debtor. There's good cause in Section H on page 4.

The entry of this interim order that says, we'll preserve the assets of the debtor's estate for the benefit of creditors. There's no evidence that that's true. There are no assets, according to Mr. Kwok, other than \$3,850 and certain litigation claims which the DIP loan isn't being used to fund.

He says it's in the interest -- it's an exercise of the debtor -- debtor's exercise of the prudent business judgment. You didn't hear any testimony on that.

Your Honor, I think the same issue on the next page, page -- the top 335, good cause, the ability of the debtor to obtain financing is vital to the estate of the debtor and his creditors so that the debtor can maximize the value of his estate and confirm a plan or reorganization.

Again, no -- you've, I think, heard what creditors think of this purported plan, and I believe that language should be struck.

Then there's stuff I just don't know -- I just

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1 don't understand, right? Page 35. Page 6.

2 of loan proceeds and cash collateral.

3 collateral under this agreement, unless it's being snuck in 4 somewhere.

5 collateral. There isn't any.

7 THE COURT:

8 moment on the cash collateral.

10 MR. FRIEDMAN:

11 underlining is Amendments and Modifications. 12 THE COURT: I see. Okay. Yep. 13 MR. FRIEDMAN:

14 proceeds and cash collateral. 15 THE COURT: I see. I see. 16 MR. FRIEDMAN: Now maybe it's a typo.

17 know, but it makes me nervous. Shouldn't be in there. 18 Sub A, issues with respect to budgets.

19 note that there's never been a budget. 20 Mr. Jalbert basically testified there can't -- he 21 would have no idea how to put together the budget, but if 22 there's going to be a dip, and there's going to be budgets, 23 and there's going to be uses, and accruals, then PAX should 24 get copies of it. 25 Page 36, I think PAX should be added to subsection

-- what's currently subsection C, that was added after we filed our objection, we should certainly be entitled to receive copies of bank accounts.

In E, which was added as well, after we filed an objection, you know, I'm really troubled by the notion in this kind of case that no money can be spent in pursuing money damages or equitable relief from DIP lender. Not DIP lender in DIP lender's capacity as DIP lender, but DIP lender. If this case goes forward and Mr. -- you know, and Pullman and Comley as Committee counsel has the right to be pursuing estate actions, then they should be able to use whatever money for whatever purpose they see fit.

I have an issue on page 38-C. This is -- I think is where, in the second sentence, the notwithstanding any language to the contrary contained in this interim DIP order, I think it should be added, or the DIP loan, because the DIP loan can -- should be clear.

It says, "The rights of the DIP lender shall be subject and subordinate to the claims of all other creditors of the debtor existing as of the petition date." Well, what if we seek a substantial contribution motion for our work getting the boat back? We should be senior to this bogus loan. It shouldn't be creditors existing as of the petition date. It should be all creditors, any creditors. And the same -- you know, I think -- so I think Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 213 of

there are some other places in paragraph 8, termination of events. Certainly PAX should get notice of that. At the beck end of that on page 40, in the revised language they said the DIP lender shall provide notice to the U.S. Trustee of its election to charge interest of the default rate. That's no reason that should just be to the U.S. Trustee, it should be to everyone. And where I really get concerned, Your Honor, is to -- to flip back, and this is where I just have trust issues -- the debtor took out, on page 33, the good faith finding, right? Now my understanding is, it may be back in. But they took out the good faith finding. So I thought, okay, that's sort of progress.

then I looked at page 40, and I looked at page -- paragraph 10, which has 364(e) baked into it.

good faith provision. So when people ask, you know, why are -- why are you so suspicious, that's one of the reasons we're really suspicious, because you take out a good faith finding but you keep in a 364(e) provision, you're not really taking out the good faith finding. So we -- and then we look at, on page 41, no deemed control.

the DIP lender shall not be deemed in control of the debtor to be acting as a responsible person, managing agent, or

1 owner or operator as such terms are defined in Circla (ph) 2 as amended or any similar federal -- similar state or

4 How could that be appropriate in a case where the 5 debtor says he doesn't own anything except the suits on his 6 back and a couple of dogs?

7 doesn't make any sense.

8 of pause when these things are put into orders. 9 Paragraph 15, no waiver.

10 should be included in the notice parties.

11 points that are important to us.

12 be clear about something. 13 The fact that I spent so much time on the order, I 14 just don't want the Court to think that we're okay with the 15 order. I realize the Court will do what it does.

16 will put forward arguments as to why maybe this does benefit 17 the estate. We strongly disagree.

18 inclined to go in a different direction, we do have very 19 substantial concerns with the order and with the credibility 20 of what you heard today. 21 I have nothing further, Your Honor. 22 THE COURT: Okay. Thank you. 23 MR. FRIEDMAN: Thank you. 24 THE COURT:

25 arguments of PAX?

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1 MR. JONAS:

2 there were any other parties that wished to be heard. 3 THE COURT: Oh, that's a good point. I'm sorry. 4 Attorney Claiborn? 5 CLOSING ARGUMENT ON BEHALF OF THE U.S. TRUSTEE 6 MS. CLAIBORN: Thank you, Your Honor.

7 few comments. 8 I had hoped that after today's testimony I'd have 9 a better understanding of what money is being loaned, where 10 it's coming from, why it's really being loaned, and why 11 can't it be a gift.

12 informed than I did at the beginning of today. 13 There may be a dilution of the events of default 14 that were raised earlier today by Attorney Goldman, and 15 that's progress. But at the end of the day, I see no reason 16 why this couldn't just be a gift.

17 being funded by Golden Spring.

18 loan? Why couldn't it just be a gift? 19 But there is control mechanism left over that I 20 didn't hear being removed from this suggested order as to 21 how you can use the funds.

22 being used to help facilitate this Chapter 11, they need to 23 be unrestricted so that anyone who needs to do something 24 with it can do so, and that includes the committee. 25 So hamstringing the committee, as I think the Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 216 of

order is currently proposed, hamstringing its ability to use it to investigate and/or pursue appropriate actions as a result of investigations, is not something that makes this a loan that's worth giving.

The other thing I wanted to say to the Court is that earlier today, Attorney Goldman posited that one of the areas of consensus that prompted the withdrawal of their objection to the loan was that the money -- the first initial traunch of the loan, \$2 million, would be held by Pullman and Comley.

And I wanted to let the Court know that the U.S. Trustee opposes that, to the extent it's based on a lack of trust of the debtor holding funds, and that in and of itself is demonstratable that this case needs a Chapter 11 trustee.

The loan, to the extent the Court approves it, should go to the debtor's funds account, the debtor in possession account, and if that's not comfortable for everybody else in this case, then that speaks volumes.

So based on all of what I've heard today, and then the comments I think that Mr. Friedman just eloquently made about concern are well taken, and I think that thus far to date, as of now, the debtor has not met its burden to demonstrate that this is an appropriate loan for the estate to be involved in.

THE COURT: Thank you. Attorney Goldman. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 217 of

CLOSING ARGUMENT ON BEHALF OF UNSECURED CREDITORS MR. GOLDMAN: Yes. Thank you, Your Honor. Just to respond to a few of the points that Mr. Friedman made, and let me just say at the outset that the committee certainly shares the skepticism and, you know, outright disbelief that PAX has as to where these so-called family assets really reside, and who really controls them, which I think cries out for the need for funding for the disinterested committee in this case, and an examiner to do a proper investigation and uncover the rocks that need to be uncovered in this case to get the -- get at the bottom of what these assets are. Now Mr. Friedman referred to the idea that this is designed to protect Golden Spring from parties pursuing it. To the contrary. There's a specific carve out that we negotiated in the most recent version of the order that provides just the contrary. It states in the new paragraph 16 of the proposed order, that this interim DIP order shall not be construed in any way as a waiver or relinquishment of any rights that the debtor, the DIP lender, the committee, any creditor, or any estate representative may have to bring or be heard on any matter brought before this Court, including without limitation, any claims that may be asserted by the committee, any creditor, or any other estate representative Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 218 of

against the DIP lender based on any conduct, act, or omission relating to the debtor, other than an extension of the interim DIP loan.

And then it goes on to list a litany of examples of what claims could be asserted, notwithstanding the reentry of this order, including veil piercing, substantive consolidation, fraudulent transfer.

So there's no protection in this order for Golden Spring against actions that a creditor or an estate -- a representative would bring.

I would point out that PAX is the only creditor of this estate that I'm aware of that has a judgment. And consequently, they have a substantial head start over every other non-insider creditor of this estate, which is why they want this case dismissed, so that they can sail off with the boat and wave in the rearview mirror to the other creditors of this estate.

All the other creditors are in the middle of litigation and they aren't certainly close to getting judgments, which is another reason why we need this loan to do a proper investigation for the benefit of all creations, not just the judgment creditors.

And PAX, like -- unlike the committee, is funded by a well-healed litigant, whereas the committee obviously has on funding to do anything in this case. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 219 of

So we considered it a win for the estate, this DIP loan, where we are being given the resources to get the tools we need to get to the bottom of where the assets are. And so, the -- so the case isn't -- so the case is used properly. Yes, the debtor only has -- or claims \$3,900 in assets and no income, but this bankruptcy case is legitimately used to discover where the assets are and to see if we can negotiation if, once they're encumbered, we can negotiate a plan that's acceptable to the creditor body. So I think that I would urge the Court to grant the DIP loan with the limitations and revisions that we've managed to negotiate with the debtor. As far as holding the funds, I find it anomalous that the U.S. Trustee would rather have the funds held by a debtor who they say should be replaced by a trustee as opposed to Pullman and Comley, which has been a firm that's been around since the early 1900s, and certainly the money is going nowhere. It is the functional equivalent of a retainer and they have no problem with Brown Rudnick holding \$1 million in their account. So there -- I would maintain, a complete disconnect between their position about wanting to appoint a trustee for the debtor, yet wanting him to hold the \$2

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1 million. So I think it's entirely proper for the Court to 2 authorize us to hold money and be subject to all the orders 3 of the Court, the interim compensation procedures, et 4 cetera, and we'll be bound to hold the money in trust until 5 authorized to disburse it by the Court. 6 THE COURT: Okay. Thank you. 7 MR. GOLDMAN: And that's all I have. 8 THE COURT: Thank you. Mr. Jonas. 9 MR. JONAS: Oh, I'm sorry.

10 THE COURT: Oh, Mr. Miltenberger. 11 MR. JONAS: Yeah. Thank you. 12 CLOSING ARGUMENT ON BEHALF OF GOLDEN SPRING NEW YORK 13 MR. MILTENBERGER: Thank you, Your Honor.

14 Miltenberger for Golden Spring New York. 15 I'd just like to follow up briefly on some of the 16 comments that Attorney Goldman made.

17 client is interested in making a loan for the benefit of the 18 estate. 19 The position of PAX was, as it said earlier, 20 something much more than meets the eye is happening here, 21 and that's not something the Court's going to be able to 22 decide today. 23 And the way it's going to be decided is if there's 24 money available to fund a committee and to fund an examiner 25 so that everybody can understand what has or has not

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1 happened, and that's what Golden Springs would like to see 2 happen. That's What the debtor would like to see happen. 3 The big picture, as Attorney Friedman says, 4 clearly points to the fact that a bankruptcy estate with \$9 5 million is better than a bankruptcy estate with zero 6 dollars, and that's what this motion is about.

7 close call. Having \$9 million is really in the benefit of 8 the estate and all of its creditors. 9 I can report to the Court that as of 3:30 10 yesterday, my client was wiring money to my firm.

11 not yet been received by my firm, but it is in transit. 12 When we have it, we'll make arrangements with the U.S. 13 Trustee and all the parties as to where to warehouse that 14 money after we give \$2 million to the committee. 15 THE COURT:

16 million is coming to your firm? 17 MR. MILTENBERGER: Yes, Your Honor. 18 THE COURT: Okay.

19 because we've talked to a lot of -- about a lot of different 20 things happening at different points, so -- okay. Mr. 21 Jonas? 22 CLOSING ARGUMENT ON BEHALF OF THE DEBTOR 23 MR. JONAS:

24 Rudnick on behalf of the debtor.

25 Honor, I know it's been a long day, and on behalf of myself Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 222 of

and the firm and the debtor, I want to thank you. I think it's been under difficult circumstances. I actually think it came off pretty well and we thank the Court and the Court staff for accommodating us today.

That said, Your Honor, let me make a few remarks. Mr. Kwok filed this case, bankruptcy, to deal with his many alleged creditors, and he wants to do that during the breathing spell that bankruptcy affords. That's the whole purpose of bankruptcy.

Mr. Kwok is here in good faith. He's not only saying he wants to do that, but let's review the proof of that. He has arranged an unsecured subordinated \$9 million DIP loan to fund this case. Among other things, that will fund the creditor's committee to do their work. It will fund U.S. Trustee fees, and it will fund, if appointed, which we support, an independent examiner to investigate the allegations against him.

He also has obtained a commitment as set forth in the -- as filed in the proposed plan, to have a boat costing \$37 million contributed to creditors as set forth therein. There's been a lot of allegations against Mr. Kwok. Today, they're just that, allegations. There will be a time and a place for these allegations to be determined. In fact, Mr. Kwok, or the DIP lender is paying the cost of determining those allegations, and he welcomes that. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 223 of

There is no basis for the DIP loan, which all creditors as represented by the creditor's committee, support, except for one single creditor, PAX, which has a long history of litigating with Mr. Kwok. Your Honor, it would truly be a travesty if this debtor, on the basis and the record before this Court, can't go forward with this bankruptcy case, which would be the result if the DIP loan is not approved.

Let me respond to a number of the comments that were made. Mr. Friedman focuses on the alleged \$3,000 or so in assets. Your Honor, there's \$400 million, or thereabouts, I think it's 370-something, in claims asserted in this case. \$400 million. That should be the focus. That's what we're here -- we'll deal with those. Yes, there's disputes. That's what bankruptcy is for, to resolve on a financial basis, claims asserted against the debtor.

Mr. Kwok referred to -- I want to make one comment, Your Honor, which might be a little unusual, but Mr. Kwok referred to Chinese or Eastern culture, which I've learned during my career is very different than our Western culture.

And so, yes, a son may be prepared to lose millions of dollars in order to help and protect his father. And there was also a comment by Mr. Friedman that certain -- he said far-fetched testimony about communications between

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1 Mr. Kwok and his son.

2 easy for Mr. Friedman to say.

3 life and the life of his family are not at risk every day. 4 By the way, Your Honor, with respect to the 5 comments Mr. Friedman made on the DIP loan, had he called 6 us, we'd be happy to accommodate many of his changes, which 7 I'm about to do right now, but that didn't happen.

8 me address them. 9 First -- well, first he said there was no 10 immediate need for financing.

11 uncontroverted on that by Mr. Kwok.

12 will be no creditor's committee to carry out its work, there 13 will be no examiner, or at least funding for an examiner, if 14 and when appointed to carry out its work. 15 The DIP documents, Your Honor, were heavily 16 negotiated with the creditor's committee.

17 little bit of a guess, but based on the drafts, and I wasn't 18 in the weeds on it, but I think there were literally 19 hundreds of changes made to accommodate creditor's 20 committee's request. It was not -- it was in negotiation. 21 It went probably until not that long ago today and into the 22 night or nights, but nevertheless, there were many, many 23 changes, and unfortunately, occasionally there will be a 24 typo when that happens and the cash collateral reference is 25 just that. It's a typo, it can be removed. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 225 of

In terms of reporting, we're happy to provide PAX with reporting notices, et cetera, that's not a problem. We're happy to, as we've represented, if Mr. Friedman feels there needs to be better language making the loan fully subordinate to all creditors, we're happy to do that. There was a reference to Circla not being deemed an owner and having done a few DIPs in my day, I think that's -- I'm guessing that's probably in our form and it just got carried over. Again, creditor's committee didn't have an objection to it, but we'll remove it. Not a problem. Let me address the issue the U.S. Trustee made, and others, which is why not a gift. Your Honor, while the DIP loan may effectively be a gift in that it's unlikely to be repaid, the DIP lender gets to decide on what terms it will advance funds. Not creditors. Not the United States Trustee. You know, I have to say it's I think -- I'm not sure anybody has ever seen a DIP where the DIP lender has agreed to be fully subordinate, not be secured. Effectively, doesn't expect to get paid. Nevertheless, it's their -- they get to determine on what basis. They determine to do it as a loan. That's the basis on which we're before the Court. Your Honor, the Committee asked us to -- that it Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 226 of

hold the funds, and again, on the basis set forth in the order. And in an effort -- in the many efforts we took to resolve disputes, which I think is our charge in many bankruptcy cases, an effort to get to an agreement, a consensual resolution, within my opinion, perhaps the most important creditor body in this case, the creditor's committee, we made many concessions. One of them was, okay, if you want to hold the money, hold the money. And now we're being criticized for that, and effectively it's being used as a basis for the DIP to not be approved. Again, Your Honor, we are here. We've agreed to a schedule to move forward on the motion to dismiss. I think you heard Mr. Kwok. He intends to be as open as possible. I think sometimes there are translation issues, but nevertheless, I think his testimony was honest today. He intends to continue down that road. He welcomes the opportunity to have an independent examiner take a look at everything and inform creditors and the Court. He's going to pay for that, and we welcome that day. I don't think today, unfounded allegations should be the basis to deny the DIP. And with that, Your Honor, we'd ask that the Court, with the changes which were -- I represented we're happy to make, approve the DIP. Thank you, Your Honor.

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THE COURT: Let me just ask you what version of

the order you want me to be looking at, because I'm looking at a version of an order that was filed on April 10th. MR. JONAS: May I just consult, Your Honor? THE COURT: Yes. MR. ROMNEY: And again, Your Honor, we would be prepared to make the changes I've mentioned, but let me check. THE COURT: Just a second, Attorney Friedman, okay? MR. JONAS: Your Honor, and I think Mr. Goldman can confirm this. The actual form we would have asked to, even before make -- agreeing to make changes to respond to Mr. Friedman hasn't been filed because we were working on it. THE COURT: Well, that's what I'm asking. MR. JONAS: Yeah. THE COURT: So there's nothing else that I should be looking at right now. MR. JONAS: No, but we will -- THE COURT: Okay. MR. JONAS: -- promptly, Your Honor, get that before the Court. THE COURT: Okay. Before I let others talk again, I think I may have said this to Attorney Baldiga in the beginning part of this case at a prior hearing. Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 227 of Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 228 of

You know, there's a lot -- obviously, I understand I think -- not as well as all of you do, but I understand what's happened among the parties, between obviously the debtor and PAX, but with other parties now involved, and one of the things I mentioned early on was when we have interim DIP orders in Connecticut, we often don't make a lot of the findings that you're asking -- at last that's -- that are in the April 10 version of this order, okay, because what we do we enter interim orders is we say, the debtor has demonstrated, or someone has demonstrated, or people agree, or whatever the situation may be, that for a period of time, whatever period of time it is, until we have another hearing and whether that's another interim order or a final order, this is what's going to happen. This much money is going to be loaned, this amount of money could be spent, doesn't necessarily have to be. There's some form of a budget that people all understand what's going to be spent. I understand all the issues about the employment of professionals and this process about getting people paid differently, and I understand what you're saying about funding the committee and paying for an examiner, but I want to be clear, and I tried to be clear at the beginning, so if I wasn't, that's my fault. I'm not going to enter an order that makes findings that are binding through the end of this

1 case when it's an interim order.

2 happen because it's -- I don't think it's appropriate, 3 right? I don't think that's appropriate.

4 the bankruptcy code says. 5 I understand why people have asked for that on 6 many occasions, have fought for that, and often the Courts 7 have allowed it.

8 right? 9 We have an individual Chapter 11 debtor who has no 10 income, doesn't have a -- well, maybe he does now have a 11 bank account. I'm sorry. I'm trying to remember what Mr. 12 Kwok testified about.

13 million that comes in. 9 million, actually. 14 I don't know if that's -- I don't know if that's 15 the way things should proceed at this point, that it may be 16 that the parties should discuss this more incrementally to - 17 - because I am not going to make all these findings.

18 don't know why I'd need to make a finding of good cause at 19 this point in time when there -- all we would be doing on an 20 interim basis is -- you know, we're talking about the 21 immediate need for funding. 22 Well, what needs to be funded?

23 expenses don't, because that doesn't -- that's not part of 24 this. So what needs to be funded to keep this estate open? 25 What needs to be funded is the payment of professional fees.

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1 That's -- I mean, and tell me what else, because I

3 MR. JONAS:

4 MS. CLAIBORN: Quarterly fees. 5 THE COURT:

6 MR. JONAS: And U.S. Trustee fees. 7 THE COURT: Yeah. But -- okay.

8 somewhat professional fees, Attorney Claiborn, even though I 9 know they're not, but they're a fee of the estate.

10 an expense of the estate, right? 11 So we have -- we have a lot of issues here.

12 have a lot of findings that I'm being made to -- you know, I 13 have to say -- I'd have to say, you met your burden of proof 14 on all that. I don't know if you want me to do that at this 15 point, number one. 16 Number 2, there's a hearing coming up on a motion 17 to dismiss, which is only -- it's less than a month away, 18 we're going to start that hearing. Okay?

19 issue of the -- in the alternative, the appointment of a 20 trustee, in the alternative, the U.S. Trustee's motion for 21 an appointment of an examiner. 22 I understand, and you've said it and everyone's 23 said it on the debtor's side, that the debtor will pay for 24 the examiner. But I want to know what is examiner going to 25 -- what power does the examiner have?

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1 power. It just has the ability, if there is an examiner, to 2 collect information and prepare a report, right? 3 Not that that's not -- not that that can't be 4 helpful in a case, but I'm not sure that's helpful in this 5 case. We already know what the examiner is going to find, I 6 think, based upon the testimony of Mr. Kwok and apparently - 7 - and I haven't looked -- as I said, I haven't looked at any 8 of the exhibits which is why I didn't know who the 30(b)(6) 9 representative was. 10 MR. JONAS: Uh-huh. 11 THE COURT:

12 estate, other than the loans that could be made, and the 13 fact that Mr. Kwok can continue to live, so that's a good 14 thing. We're not worried about the debtor not being able to 15 live, which often is a situation in this cases.

16 have that issue. 17 But what we do have is we have -- whether or not 18 it's only one creditor, we have a creditor who has asserted 19 certain issues in this case that have to be addressed one 20 way or another, and the long story short is, if we start -- 21 when you say there's \$400 million in claims

22 MR. JONAS: Yes, Your Honor. 23 THE COURT:

24 that PAX's with the judgment and the contempt judgment?

25 mean, so that's half -- half of the claims here are --

1 belong to one creditor.

2 case, so that one creditor has a lot of power, which is 3 different than it would be if we were in a corporate Chapter 4 11 case. 5 So what -- all I'm suggesting to you, all of you 6 today, is I don't even know what -- I mean, I do.

7 at the order Mr. Friedman asked me to look at, and he wants 8 to say something else, and Attorney Claiborn wants to say 9 something else, and of course I'm going to allow that to 10 happen. 11 But if there isn't an agreement on to some kind of 12 form and order, then I'm going to make rulings that may not 13 be what the debtor is looking for, and I don't -- and maybe 14 not be what PAX or the creditor committee is looking for 15 either. 16 But as Mr. -- one thing Mr. Goldman said that is 17 correct is, they're all intertwined, right?

18 happened today is intertwined, and to enter orders other 19 than the -- I would say the Brown Rudnick order, which I 20 would say is more what I would say, routine, versus some of 21 the other orders that I'm being asked to enter, including 22 the payment of professionals on an ongoing basis that is 23 allowed to happen in less time than the bankruptcy code 24 provides, then I think there has to be some understanding 25 that there should be some incremental review and analysis of Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 233 of

what you're asking the Court to do. Now, that may be no problem because you're working on this order, and you may be able to say all those things. But there's a lot of findings I'm being made to find in this order that I'm not sure I'm prepared to make at an interim basis, with everything else that's going on in this case. I have to look at it that way. Whether or not you agree with that, and I don't mean you personally, I don't mean the debtor or -- whether or not anybody agrees with it, I mean, I -- you -- absolutely, we can agree to disagree. But that's what I have to do, right? I have to think about the case as a whole. I think you parties have made very good progress, and I don't think that every single case has to be consensual. That's not what I'm saying. But I'm not sure that I'm going to enter the order that I've looked at that Mr. -- that Friedman has pointed out to me with any kind of binding findings in it, in this case. So while I understand everything everyone has said, or at least I've tried to. I'm not saying I couldn't have made a mistake, but I've tried to, I'm going to still have to look at whatever you all negotiate. MR. JONAS: Absolutely. THE COURT: And I may disagree. And so, if I disagree, we'll have to have -- you know, we'll have some

1 kind of conference and we'll talk about it, but I think that 2 you need to think about that. 3 I did hear -- and, Mr. Friedman, I did hear Mr. 4 Jonas say that a lot of -- not all, but a lot of the issues 5 that you raised, they'll accommodate, which I think is 6 again, progress.

7 agreement completely, I don't know. 8 MR. JONAS:

9 points? 10 THE COURT: Sure. 11 MR. JONAS: First, I'll just say this.

12 about me, Your Honor, I respect Mr. Friedman a great deal, 13 but unfortunately I -- my impression, maybe he'll tell me 14 I'm wrong -- we will never -- there's no way to reach a 15 consensual resolution because there -- 16 THE COURT: On this order, right? 17 MR. JONAS:

18 THE COURT: I think that's right. 19 MR. JONAS:

20 them everything -- all of it specific points, and then he 21 said, well, but I don't want you to lose track, Your Honor, 22 that we're still opposing this. So that's just number one. 23 We can try, and we'll continue to try. 24 Point number 2, Your Honor, is let me apologize 25 because I do remember you early on talking about findings of Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 235 of

fact, and we didn't -- maybe we didn't hear you well enough. I certainly hear you now, and we would -- I welcome the opportunity to take up many of the findings. I have to -- obviously, we have to talk to our DIP lender, but let us take those up. I'm guessing we will be able to streamline and eliminate many of them now having heard the Court better, and I hope when we submit -- and obviously, we'll provide it to all other parties, I hope when we next submit a revised draft, it will be much more something you'd be prepared to sign. Again, we may need another conference. We're happy to do that, but those are my comments, Your Honor. THE COURT: Okay. And that's more than fair, and I -- all I'm suggesting to you is that as, I said a few weeks ago when we were talking about the relief from stay timing and the motion to dismiss timing, that I can't look at this DIP motion as the only motion in the case. I can't. MR. JONAS: Uh-huh. THE COURT: It affects other things. Mr. Goldman, as I said, I keep pointing to Mr. Goldman, but he was right. They're all intertwined. And so, I'm happy to hear what you all -- look at what you all come up with. MR. JONAS: Very good, Your Honor. THE COURT: Okay?

1 MR. JONAS: Thank you. 2 THE COURT: All right. Thank you. Mr. Friedman? 3 MR. FRIEDMAN: Thanks, Mr. Jonas.

4 it. 5 MR. JONAS: Okay. 6 MR. FRIEDMAN: I always do.

7 things to say. First, Your Honor, it's true, we can't tell 8 Golden Spring it has to make a loan, but you can.

9 tell them that this proposed -- I'm sorry, that they can't - 10 - it doesn't have to be a gift. You can.

11 approve this as a loan. 12 The second thing, Your Honor, is yes, PAX has a 13 long history of litigating against Mr. Kwok.

14 history of winning its litigation.

15 claims. 16 It is the only creditor with a liquidated claim 17 that is non-insider as far as I'm aware.

18 point is, just like I said, listen to the small word, we.

19 would say, at the end of Mr. Jonas's remakes he said, he 20 wants to pay for it. Right. He.

21 I just think a tell about ultimately where the money is 22 coming from. Thank you, Your Honor. 23 THE COURT: Thank you. Attorney Claiborn? 24 MS. CLAIBORN:

25 the Court know that I haven't seen a revised draft of the

1 order, so therefore, I don't know whether or not there are 2 other concerns that I would like to bring to the Court's 3 attention. 4 THE COURT:

5 MS. CLAIBORN:

6 THE COURT:

7 and that's why I think we're going to have to have another 8 conference most likely, if there isn't an agreement, and I'm 9 not -- I don't believe there will be an agreement, so I 10 think there has to be another conference. 11 MS. CLAIBORN: Thank you for that opportunity.

12 just wanted to let the Court know that I might have some 13 thoughts. 14 THE COURT: I thank you.

15 do, is when we have an interim order, we have a date.

16 order goes into effect one day, and it expires on a date in 17 the future, and there's a budget that is connected to that. 18 You know, and it may not be a budget in the sense of a cash 19 collateral budget, you know, but how much money is coming in 20 and what could -- what is authorized to be spent during that 21 period of time, and for what. 22 And then that -- then if you want to talk about 23 transparency, that's transparency.

24 amount was approved.

25 items on the -- whatever the -- you don't have to call it a Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 237 of

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budget. You can call it whatever you want to call it. Authorization for payments during interim DIP loan period, then we know what's going on. Then no one is questioning what's happening. And then you get approval, Mr. Jonas, for certain things that apply to that interim period, which is better than not getting approval to anything at all. And that, I could do, but I'm not in a position -- and I -- when I say I, I mean the bank -- the person who happens to be sitting here as the judge in this case, feels it's inappropriate at this point in time, at this point in time, to make findings that will be binding throughout the case. So I think I've made that clear. So the issue is, how much time do we need -- are Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 238 of

we continuing -- we're not -- the evidence is done with regard to the DIP financing motion. Are we continuing the hearing solely to work out what essentially is -- are the terms and conditions of an interim DIP financing order which should have, as part of it, a period of time that this financing would be applicable to, and what amounts would come in through the funding, and I want to say to the estate, but we have an issue here of where the funds are going still, and so I won't quite say that, and what amounts are authorized to be paid or accrued against that loan during that period of time. That's what I think is

appropriate under those -- under these circumstances. So what are the parties thoughts. Are we talking about -- today's what? Wednesday? Are we talking about coming back, you know, Friday? Are we talking about coming back Monday, Tuesday, Wednesday of next week? What are we talking about? MR. GOLDMAN: Your Honor, I know for the committee, I was planning to be at the ABS Spring meeting Thursday and Friday, so I would say -- THE COURT: Meaning tomorrow and the next day? MR. GOLDMAN: Yes. Yes. Yes. THE COURT: Okay. MR. GOLDMAN: And so, any time next week. You know, on this budget concept, so I can give some clarity -- THE COURT: Well, it may not -- I said budget isn't exactly the right word, but it's authorized accruals or payments or whatever you want to call it against what's funded, right? \$400,000 comes in. I'm just pulling a name, it doesn't mean anything. And during -- for the next four weeks, these amount of monies can be accrued against those dollars for these reasons. MR. GOLDMAN: So -- THE COURT: I mean, we don't have to worry about funding Mr. Kwok's life. That's a good thing. But if everything else is going to be about every -- the parties Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 240 of

1 getting paid, then I want to know what it is everybody 2 thinks they're going to get paid for the next four weeks, 3 even if you're not authorized to draw it out yet. 4 MR. GOLDMAN: Yeah.

5 most we could expect to have is an estimate, really. 6 THE COURT: I understand that.

7 not -- a budget is a budget.

8 don't always meet it.

9 that's audited. I'm asking for -- I want to know.

10 know, the order says there's an immediate need for funding. 11 What's the immediate need?

12 and what it is for. 13 I mean, this is not -- this is not a case where 14 you have a company that is producing some form of a product 15 that is generating revenue that continues -- that's not what 16 we have. We all know that.

17 control, or at least oversight by the Court with regard to 18 these issues, right? Otherwise, why am I here?

20 MR. GOLDMAN: Yeah. 21 THE COURT: -- and see how that works out. 22 MR. GOLDMAN:

23 THE COURT: But that's why I'm here, right?

24 make sure that we -- this doesn't go awry, and we also have 25 other motions pending that may -- may completely -- you

1 know, who knows, have the case be dismissed in five weeks. 2 I don't know. That could happen.

3 arguments on that yet. I haven't seen your papers. 4 Nobody's -- nor should you.

5 you're going to file your papers. 6 So I don't know what they're going to say, but I 7 have to -- I have to be -- I think you have to treat it 8 practically and not theoretically. 9 And the practical reality of this case is, from 10 the moment it started, there is opposition and there's 11 strong opposition, and I'm not passing on whether that's 12 warranted or not. It's a reality.

13 there is -- there are all kinds of things that happened 14 before this case came here, which is often the case, but I 15 can't ignore that either. Okay. I can't ignore that. 16 So all I'm suggesting is, you come up with a 17 period of time that there's this first wave of monies come 18 in, whatever it may be.

19 agreement, and then I'll finally have to decide what it's 20 going to be. But then -- and you tell me, and the world, 21 because it's going to be public, what the monies are going 22 to be spent on, even if they're not drawn down during that 23 period of time, right? 24 So anyway, I think that's pretty clear.

25 it's not.

MR. GOLDMAN: So -- no, understood, Your Honor. THE COURT: Okay. MR. FRIEDMAN: Your Honor, so we have a theological objection. It's -- we have practical objections. I'm going to express, actually, a pretty high degree of confidence that we can work out our practical issues, right? The DIP issue is theological to us. We don't believe it should be entered. I also realize bankruptcy exists on your deep rooted beliefs on the one hand, and the nitty-gritty practical on the other. I will work with Mr. Jonas, Mr. Goldman, Ms. Claiborn, to deal with our practical issues where we can compromise and where we can't, but -- THE COURT: Right. I have to rule. I understand. MR. FRIEDMAN: So -- THE COURT: And I'm happy to do that. MR. FRIEDMAN: -- so I guess the question I have is, if we need a further hearing, or really it sounds like a conference, I'm in California next week. Is it doable by Zoom? I'm going to -- THE COURT: Yes. MR. FRIEDMAN: Okay. THE COURT: Yes. MR. FRIEDMAN: Thank you. THE COURT: See, and the problem is, I'm looking

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at an order that is now two weeks old, so it's stale. So I'm not going to just enter an order that somebody presents when there's nobody here to talk to me about it, right? I'm not going to do that. I -- you know, unfortunately, someone's name has to be on that order and I'm going to read the order before I enter it, and I have to make sure that it complies with the bankruptcy code and rules and all those things. So -- but yes, we can absolutely do it. I'm not going to drag you all back in here. We've had the evidentiary hearing, but I do want to see the order before we have a conference, otherwise, I don't think it's a meaningful conference. Okay. MR. FRIEDMAN: Yep. Yep. THE COURT: So you can even all tell me tomorrow. I mean, you know, I don't -- whatever works for you. I'm not trying to stand here and say, you need to tell me right now and we have to make a date on all those things. And I say that, but I should look and see what's on next week, although I don't think it's bad. I don't -- I could be wrong, though, so let me just -- let me just take a five- second look, okay? Tuesday is not good. Wednesday is definitely a possibility without question, except for the middle of the day. Thursday, we have Chapter 13 hearings. We could do it

in the afternoon on Thursday. MR. JONAS: Your Honor. THE COURT: Yes. MR. JONAS: Could I suggest that we just put a placeholder on it? I think you said Wednesday sounded like the best day. THE COURT: Other than between -- MR. JONAS: By Zoom, to -- THE COURT: Yeah. MR. JONAS: -- certainly to accommodate everyone. I think that might make -- and then we'll all work towards that. THE COURT: Yes. MR. JONAS: Obviously try and, you know, report to the Court. Hopefully submit as early in advance, as much in advance of that as possible, submit a form of order, maybe even agreed, who knows, but I think that would be very helpful, Your Honor. THE COURT: All right. Well, on -- that's fine, but I'm going to want the order -- MR. JONAS: Yes. THE COURT: -- if we're going to have a conference on Wednesday, I can do it in the morning or the afternoon, but I can't do it between 12:30 and 2:00 p.m. MR. JONAS: Your Honor, I think to accommodate Mr.

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2 THE COURT: Oh, you're going to be in California. 3 MR. JONAS:

4 THE COURT:

5 MR. JONAS: -- the afternoon will be fine. 6 THE COURT: -- 2:00 p.m.

7 later than 2:00 p.m.? 8 MR. FRIEDMAN: 2:00 p.m. is perfect.

9 Your Honor. 10 THE COURT: All right.

11 ten minutes late, don't worry about it, I'm -- just have to 12 do something with a school, so I could be five or ten 13 minutes late, and if we are -- if you have to hold on the 14 Zoom call, you'll have to hold on the Zoom call, okay? 15 But I would like -- I would like the order by 2:00 16 p.m. the day before.

17 it, right? 18 MR. JONAS:

19 for that. 20 THE COURT: All right.

21 off the rest of that afternoon for now, and hopefully we 22 won't take the all -- but if we do, we do. 23 I mean, so the only thing left on the calendar 24 today that wasn't resolved was -- subject to the submission 25 of revised proposed orders or a scheduling order on the

1 motion to dismiss was this DIP financing motion, which is 2 117, I believe. 3 Yes, so then, 117 is continued.

4 continued to Wednesday -- to May 4th at 2:00 p.m. remotely, 5 via Zoom, okay? You'll have to reach out to the courtroom - 6 - there's a courtroom -- what is the address? I forget. 7 There's an email address that you would have to reach out to 8 to get the Zoom information. Is that Court Connect? 9 Calendar Connect? 10 THE CLERK: Calendar. 11 THE COURT: Calendar Connect.

12 question, Attorney Claiborn? 13 MS. CLAIBORN:

14 back to the Court on the monthly compensation order -- 15 THE COURT: Yes. 16 MS. CLAIBORN:

17 do that now, which is that I have looked at that and the 18 U.S. Trustee is okay with that order that was uploaded. 19 THE COURT: And is that on the docket? 20 MS. CLAIBORN: Yes. 21 THE COURT: What's the -- what number is that?

22 do you know? If you don't know, we can look.

23 saying, I thought maybe you had it at your disposal. 24 MS. CLAIBORN:

25 docketed earlier today.

THE COURT: Okay. UNIDENTIFIED SPEAKER: Your Honor, it's Docket Number 263. THE COURT: 263. Okay. Thank you. All right. So I'll take a look. I've got a few of your orders to take a look at. And, you know, I'm sure they're fine, so we'll - - and if there aren't -- if they aren't for some reason, we'll let you know. But in the meantime, is there anything else that we should be doing today, because I think we've addressed everything, unless I'm forgetting something. MR. JONAS: Nothing further here, Your Honor. THE COURT: Okay. All right. Well, I do appreciate the cooperation of the parties and the progress that has been made. I again want to be clear, I'm not suggesting that everything has to be consented to. That's not how it works. I understand that. But I still appreciate when things -- some issues, and many issues today were resolved upon agreement, which is helpful, very helpful. And I appreciate the parties efforts in trying to resolve these matters. I will take a look at all the orders that we discussed on the record today that were submitted either yesterday or today and try to get those entered tomorrow, and then with regard to the DIP financing motion, that's

1 continued to next week at 2:00 p.m. remotely. Okay? 2 MR. JONAS:

3 THE COURT: Who am I missing? Okay. 4 MR. JONAS:

5 is like -- I guess you said you were just going to consider

7 THE COURT: I took it under advisement. 8 MR. JONAS: Thank you, Your Honor. 9 THE COURT:

10 review the evidence that was submitted today, and I will -- 11 and it will note on the -- it will note on the docket -- 12 should note on the docket that it was taken under 13 advisement. Okay? 14 MR. JONAS: Better -- I'm sorry.

15 comment. 16 THE COURT: Sure. 17 MR. JONAS: I just looked at my calendar.

18 need to do next -- because I'm before Judge Kaplan in the 19 Johnson and Johnson case in Trenton in the morning, I may 20 have to do it remotely, but since it's Zoom it shouldn't

22 THE COURT: Shouldn't matter. That's right. 23 MR. JONAS: -- just wanted to let you know.

24 you. 25 THE COURT:

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1 for you. 2 MR. JONAS: Yes, I'm sure. Thank you. 3 THE COURT: Okay. Okay. All right.

4 further from anyone? 5 All right.

6 matters in the Kwok case today, court is adjourned.

8 I, CHRISTINE FIORE, court-approved transcriber and 9 certified electronic reporter and transcriber, certify that 10 the foregoing is a correct transcript from the official 11 electronic sound recording of the proceedings in the above 12 entitled matter.

5 FOR THE DEBTOR:

Craig answer to Aronsson question under seal 62

14 PAX EXHIBITS:

20 CLOSING ARGUMENT:

22 On Behalf of the United States Trustee 211 23 On Behalf of the Unsecured Creditors 213 24 On Behalf of Golden Springs New York 216

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1 2 UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT 3 BRIDGEPORT DIVISION ------------------------------------------X 4 IN RE: 5 Chapter 11 HO WAN KWOK, 6 Case No. 22-50073(JAM) 7 Debtor. 8 ------------------------------------------X 9 10 DATE: April 8, 2022 11 TIME: 10:17 A.M. 12 13 14 VIDEO-RECORDED DEPOSITION OF CRAIG 15 JALBERT of VERDOLINO & LOWEY, P.C., in the 16 above entitled matter, at the above date 17 and time, held at the offices of O'Melveny 18 & Myers LLP, 7 Times Square, New York, New 19 York 10036, by Lenaya Lynch, a Notary 20 Public and Shorthand Reporter of the State 21 of New York. 22 23 24 25 Page 1 Case 22-50073 Doc 328-1 Filed 05/04/22 Entered 05/04/22 20:28:55 Page 253 of

2 A P P E A R A N C E S: 3 O'MELVENY & MYERS LLP 2 York. My name is Jonathan DiFilippo Attorneys for PACIFIC ALLIANCE ASIA 3 from the firm Veritext and I am the

7 Times Square, 30th Floor 4 videographer. The Court Reporter is

BY: LAURA ARONSSON, ESQ. 5 Lenaya Lynch from the firm, Veritext.

DAVID HARBACH, ESQ. 6 I'm not authorized to administer an MaKENZIE B. RUSSO, ESQ.

BROWN RUDNICK LLP 8 in this action nor am I financially 9 Attorneys for HO WAN KWOK 9 interested in the outcome.

10 New York, New York 10036 10 Counsel and all present in the BY: KENNETH J. AULET, ESQ. 11 room and everyone attending remotely

12 12 will now state their appearances and

13 Attorneys for CREDITOR'S COMMITTEE 13 affiliations for the record. If 850 Main Street 14 there are any objections to the

Bridgeport, Connecticut 06601 15 proceeding, please state them at the 15 BY: IRVE J. GOLDMAN, ESQ. 16 time of your appearance beginning

17 COHN, BIRNBAUM, SHEA P.C. 17 with the noticing attorney.

18 100 Pearl Street, Suite 12 18 MS. ARONSSON: Laura Aronsson, New Haven, Connecticut 06103 19 O'Melveny and Myers for Pacific

Teleconference 20 Alliance Asia Opportunity Fund LP.

ALSO PRESENT: 22 with O'Melveny and Myers for the same

client.

client.

morning. We are going on the record 3 MR. AULET: Kenneth Aulet of

at 10:17 a.m. on April 22nd -- I'm 4 Brown Rudnick, proposed counsel for

sorry, April 8th, 2022. Please note 5 the debtor, Ho Wan Kwok.

that the microphones are sensitive 6 MR. GOLDMAN: Irve Goldman,

and may pick up whispering, private 7 Pullman and Comley, proposed counsel

conversations and cellular 8 for the Creditor's Committee.

interference. Please turn off all 9 THE VIDEOGRAPHER: Will the

cell phones or place them away from 10 Court Reporter please swear in the

Witness?

with the deposition audio. Audio and 12 MR. AULET: There's one person

video recording will continue to take 13 on the line.

place unless all parties agree to go 14 MR. MILTENBERGER: Are we done

off the record. 15 with the people in person? Timothy

This is Media Unit 1 of the 16 Miltenberger for Golden Spring, NY

Limited.

Jalbert in the matter of re: Ho Wan 18 THE VIDEOGRAPHER: Will the

Kwok filed in the United States 19 Court Reporter please swear in the

Witness?

Connecticut, Bridgeport Division, 21 C R A I G J A L B E R T, called as a

Case Number 22-50073. 22 witness, having been first duly sworn by a

24 Notary Public of the State of New York, was examined and testified as follows:

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2 MS. ARONSSON: 2 A. Yes. 3 Q. Please state your name for the 3 Q.

4 record. 4 that you're swearing that all of your 5 A. Craig Jalbert, J-A-L-B-E-R-T. 5 answers are truthful? 6 Q. What is your address? 6 A. Yes. 7 A. Home address? The business 7 Q.

8 address is 124 Washington Street, Suite 8 penalty of perjury? 9 101, Foxboro, Massachusetts 02035. 9 A. Yes. 10 Q. Good morning. We previously 10 Q.

11 met off the record. On the record, my name 11 everything on camera and the Court Reporter 12 is Laura Aronsson and I'm an attorney at 12 is preparing a written record of what we 13 O'Melveny and Myers for Pacific Alliance 13 discuss here today and will later produce a 14 Asia Opportunity Fund. Mr. Jalbert, have 14 copy of that transcript. Do you 15 you ever testified in court before? 15 understand? 16 A. Yes. 16 A. Yes. 17 Q. In what case -- or I'll start 17 Q.

18 how many times? 18 is important that we not talk over one 19 A. 50, 60, 70 something. 19 another. Please wait for me to finish my 20 MR. GOLDMAN: Before we get too 20 question before you answer. I'll try to do 21 far into things, can I just ask -- 21 the same for you. Do you understand? 22 this is a notice of deposition 22 A. Yes. 23 relating to what contested matter? 23 Q.

24 There are a number of motions before 24 audible. A shake of the head is 25 the Court. The notice of deposition 25 insufficient as are statements like uh-huh.

2 doesn't indicate which of the matters 2 Do you understand? 3 it relates to. 3 A. Understood. 4 MS. ARONSSON: Sure. So we 4 Q.

5 have -- we served a 30(b)6 notice of 5 question, please ask me to repeat. 6 deposition which I'll mark as an 6 Otherwise, I'll assume that you do 7 exhibit so that we're all on the same 7 understand the question. Is that okay? 8 page but it relates to the retention 8 A. Yes. 9 of Verdolino and Lowey. 9 Q.

10 MR. GOLDMAN: All right. I 10 me know and we can take one but if there's

just wasn't sure because it's not a question pending, please answer it before

identified on the notice. 12 we break. Are you represented by Counsel 13 MS. ARONSSON: Thank you. 13 today? 14 Q. Sorry. You said 50 or 60 14 A. I think so. 15 times? 15 Q.

16 A. 70, 80, I don't know. I have 16 representing you? 17 not kept -- I've got a list of ten years 17 A. Ken Aulet. 18 that goes back 40 or 50 and I've been doing 18 Q.

19 it for 30. So no idea. 19 question, you should still answer it unless 20 Q. Well, we can talk about some of 20 you don't understand the question or 21 the broad categories of experience you have 21 Counsel instructs you not to answer. Do 22 later but let's start just to go over a few 22 you understand? 23 procedures that I'm sure you're familiar 23 A. Yes. 24 with. Do you understand that you're 24 Q.

25 testifying under oath today? Page 7 25 condition that would impair your ability to

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2 testify accurately or truthfully? 2 been designated to testify about each topic 3 A. No. 3 listed here? 4 Q. Are you taking any medications 4 MR. AULET: Objection. 5 that might interfere with your ability to 5 A. Yes. 6 give accurate or truthful testimony? 6 MR. AULET: He's been 7 A. No. 7 designated as per our responses and 8 Q. Is there any reason why you 8 objections. 9 cannot testify truthfully and accurately 9 MS. ARONSSON: Thank you. 10 today? 10 Q.

11 A. No. 11 subject areas? 12 MS. ARONSSON: Tab one. The 12 A. Yes. 13 Court Reporter is going to be marking 13 Q.

14 what will be Jalbert Exhibit 1. 14 required to testify as to Verdolino and 15 (Whereupon, Notice of 15 Lowey's knowledge about these topics, not 16 Deposition was marked as Jalbert 16 just your own? 17 Exhibit 1 for identification as of 17 A. Yes. 18 this date by the Reporter.) 18 Q.

19 Q. All right, Mr. Jalbert. Do you 19 required to obtain all of the knowledge and 20 recognize this document? 20 information necessary to allow you to fully 21 A. I do. 21 and honestly testify concerning each of 22 Q. What is it? 22 these topics upon Verdolino and Lowey's 23 A. Pacific Alliance Asia 23 behalf? 24 Opportunity Fund LLP's Notice of Deposition 24 MR. AULET: Same objection as 25 of Verdolino and Lowey PC pursuant to Rule 25 before.

2 30(b)(6) of the Federal Rules of Civil 2 A. I did the best I could. 3 Procedure. 3 Q.

4 Q. Is it your understanding that 4 to prepare for this deposition? 5 you are testifying today in connection with 5 A.

6 in re: Ho Wan Kwok? 6 Silverberg, with Counsel, Ken Aulet, I

3 Procedure. 4 Q. Is it your understanding that 5 you are testifying today in connection with 6 in re: Ho Wan Kwok? 7 A. Yes. 8 Q. Can you please turn to Page 6 9 -- 10 A. Excuse me, I just forgot to get 11 my glasses. 12 MS. ARONSSON: Can we go off 13 the record for one minute? 14 THE VIDEOGRAPHER: The time is 15 10:24 a.m. and we are off the record. 16 (Whereupon, an off-the-record 17 discussion was held.) 18 THE VIDEOGRAPHER: The time is 19 10:24 a.m. and we're back on the 20 record. You may proceed. 21 Q. Can you turn to Page 6 to the 22 heading Rule 30(b)(6) deposition topics? 23 You see that? 24 A. Yes. 5 A. I spoke with attorney Ben 6 Silverberg, with Counsel, Ken Aulet, I 7 spoke with my colleagues, Matthew Flynn and 8 Mary Jo Schindler. I reviewed a 9 significant amount of documents, some filed 10 with the Court, some prepared internally. 11 Reviewed e-mails. Covered as much as I 12 could. 13 Q. Did you collect the documents 14 that you prepared or were they provided to 15 you by Counsel? 16 A. The documents that -- are you 17 asking for the documents that we sent to 18 O'Melveny? 19 Q. I'm asking -- taking a step 20 back, just asking about your preparation 21 for today's deposition. 22 A. I just looked at my own 23 documents and my own e-mails on the

- 24 Verdolino and Lowey server.

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Page 14 1 C. JALBERT 2 subject matters of those e-mails? 3 A. It was looking at the -- all of 4 -- not all of them. Many of my e-mails, 5 the SOFA's -- the statement of financial 6 affairs -- the schedules, the global notes, 7 the global notes and specific notes, most 8 of the pleadings to employ professionals, 9 particularly ours, the motion for the DIP 10 financing, many of the objections, not all 11 of them. I'm trying to think if there's 12 anything else. I can't think of anything 13 off the top beyond that -- 14 Q. Thank you. That's helpful. So 15 you mentioned that you spoke to your 16 attorneys, Ben and Ken? 17 A. Yes. 18 Q. When did you speak to them? 19 A. Well, we were delayed a little 20 bit so I had a few minutes this morning 21 with Ken. I spoke with Ben briefly last 22 night. Again, this morning on -- unrelated 23 to the deposition and I had previously 24 spoken to Ken probably one or two times 25 over the last few days, give or take. Page 15 1 C. JALBERT 2 Q. Were each of these interactions 3 over the phone? 4 A. Until today, yes. 5 Q. About how long did you spend 6 preparing with your attorneys in connection 7 with your preparation for this deposition? 8 A. I would have to hazard a guess. 9 I don't have my time records in front of 10 me. 11 Q. Like two hours, ten hours? 12 A. My guess is in the two to four 13 hour range. No more than that. 14 Q. Did you speak to anyone else 15 other than the folks that you mentioned at 16 Verdolino and Lowey and your attorneys 17 regarding this deposition? 18 A. Our IT person, Tim McDonald who 19 assisted in the search -- the electronic 20 search of e-mails and records and worked 21 with the Brown Rudnick IT person to send 22 everything over. Aside from having him try 23 and get the records, we didn't have any 24 discussion of the case facts and 25 circumstances or anything. Page 16 1 C. JALBERT 2 Q. Anyone else besides the people 3 that we've talked about? 4 A. Regarding the -- just regarding 5 the deposition? 6 Q. Yes. 7 A. No. 8 Q. You haven't spoke to the 9 debtor? 10 A. About the deposition? 11 Q. About the deposition. 12 A. No. 13 Q. Have you ever met the debtor? 14 A. Yes. 15 Q. When did you meet the debtor? 16 A. The continued meeting of 342 -- 17 or 341 meeting which was I think Wednesday, 18 the first time I met him. 19 Q. Is that the only time you met 20 the debtor? 21 A. Yes. 22 Q. Outside of the 341 proceeding, 23 did you interact with the debtor? 24 A. No. 25 Q. I just want to cover a little Page 17 1 C. JALBERT 2 bit of your background. Can you talk about 3 your educational history since high school? 4 A. I graduated from Western 5 Connecticut High School in 1979. I went to 6 Boston College. Graduated Boston College 7 with a bachelor of science and degree in 8 accountancy in 1983. I went to work for 9 Arthur Andersen from June of '83 till 10 August 31 of '87. On September 1 of 1987, 11 I started at the precursor of what is now 12 Verdolino and Lowey and I've been there in 13 the 35 years since and during that time, I 14 I've gone to many, many, many professional 15 CPE type courses of all sorts of flavors. 16 Q. What do you mean by CPE? 17 A. A continuing professional 18 education. 19 Q. Is that a required procedure 20 for any type of certification that you 21 have? 22 A. It's -- some of it is required 23 for my certification as a certified 24 insolvency restructuring advisor. The rest 25 are just to maintain my professional

2 capabilities and stay on top of various 2 responsible for this? 3 issues as the years have gone on. 3 A.

4 Q. So you mentioned certified 4 staff. 5 insolvency instructor? 5 Q. What's his name? 6 A. Certified insolvency 6 A. Keith Lowey. 7 restructuring advisor. CIRA. 7 Q.

8 Q. So this is a professional 8 this matter before us? 9 certification? 9 A. No. 10 A. Yes. 10 Q.

11 Q. Do you hold any other 11 engaged by the debtor in the bankruptcy 12 professional certifications besides the 12 context? 13 CIA? 13 A. No. 14 A. CIRA, no. 14 Q.

15 Q. CIRA. I think you said you had 15 Verdolino and Lowey engaged under? 16 a accountant degree from Boston College? 16 A.

17 A. Yes. 17 post confirmation fiduciaries, whatever 18 Q. Do you hold any other graduate 18 they may be called; you said debtors, 19 or any graduate degrees? 19 creditors' committee, creditors, secured 20 A.

21 Q. Are you currently employed at 21 represented, over the years, most every 22 Verdolino and Lowey? 22 kind of party and interest to a bankruptcy 23 A. Yes. 23 that there is. 24 Q. Generally, what services does 24 Q.

25 Verdolino and Lowey offer its clients? Page 18 25 specifically, what experience do you have

2 A. There were three or four -- I 2 in Chapter 11 cases? 3 guess four major buckets. The first and 3 A.

4 biggest is the insolvency arena, 4 11 cases. We've been committee financial 5 underperforming businesses and individuals. 5 advisor, committee accountants, debtor 6 That includes litigation support and 6 financial advisor, debtor accountants, 7 everything related to it. We have a 7 accountants on behalf of secured lenders, 8 full-time 13 or 14 people I think it is 8 accountants on behalf of individual 9 that work in taxation and we also do what 9 creditors. Trying to think -- I mean 10 I'll call high net worth babysitting. We 10 again, we've done -- we've represented 11 have -- and I don't do any of this work. 11 pretty much every constituency so over 12 My partner and others do it but we have 12 time, I've done -- I've represented every 13 very wealthy clients that don't pay their 13 reasonable constituency in a bankruptcy I 14 own bills, that have multiple residences. 14 can remember. 15 Everything comes to us. We act as a family 15 Q.

16 office for a whole -- for a number of 16 and Lowey? 17 people and the last thing we do is federal 17 A. Principal. 18 election reporting for federal congress 18 Q.

19 people and senators and presidential. 19 buckets. Generally, what are your 20 Q. Thank you. 20 responsibilities with respect to Verdolino 21 A. Did I say we have tax 21 and Lowey services?

23 department -- yes, tax department. That's

23 A.

first -- all of my time not spent running 24 Q. You mentioned the high net 24 my own firm is in the bankruptcy insolvency 25 worth baby sitting. Who, at Verdolino, is 25 and the like that spreads over a little bit

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Q.

A.

to taxation. I don't run the department or anything but I certainly interact and then litigation support and the like, you know,

context of a bankruptcy.

support, generally?

but for us, it's -- whether it be business litigation or bankruptcy litigation, to the

the law firm -- we've also been appointed

information in a form that they're looking

generally regarding the engagement? A.

Ben Silverberg. Q. Anyone else at Brown Rudnick? A. I don't remember. Q.

potential engagement? A.

and I think I had someone help me prepare

information about myself and the firm. Q.

like.

Q.

A. expert reports, expert testimony and work at just advising lawyers as they approach

a principal at Verdolino and Lowey? Yes.

25 connection with the engagement?

answer. A.

engaged? Q. Yes. A. No.

Q.

A.

started.

Q.

A.

Q.

Q.

please?

A.

Q.

A.

Q.

was?

A.

3.

Q.

What other roles have you held?

this engagement?

personally and it was an attorney, Steven Pohl at Brown Rudnick. Sorry, I missed what you said. MR. HARBACH: Spell that name.

name P-O-H-L at Brown Rudnick.

Verdolino and Lowey? Me.

Q.

Verdolino and Lowey? A.

Rudnick. Q. Do you speak to anyone else? A.

anything. Q.

been on phone calls with? A.

Melissa Francis. Q.

Mitchell to be? A.

debtor. Q. You mentioned Melissa Francis? A. Also counsel to Mr. Kwok. Q.

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Page 26 1 C. JALBERT 2 Melissa Francis, do you speak to anyone 3 else outside of Verdolino and Lowey 4 regarding this engagement? 5 A. And outside of Brown Rudnick? 6 Q. Outside of Brown Rudnick, yes. 7 A. No one. 8 Q. What about -- what about do you 9 communicate via e-mail with anyone besides 10 Aaron Mitchell, Melissa Francis and Brown 11 Rudnick regarding this engagement? 12 A. I've been on -- I've been CC'd 13 on an e-mail and authored one e-mail to 14 someone outside that group. 15 Q. Who is that person? 16 MR. AULET: Objection. This is 17 the person that we have stated their 18 identity won't be revealed per Golden 19 Springs request. 20 MS. ARONSSON: Are you 21 instructing the Witness not to 22 answer? 23 MR. AULET: I am instructing 24 him not to answer. 25 MS. ARONSSON: Can you just 1 C. JALBERT 2 state -- 3 MR. GOLDMAN: Can you repeat 4 the question? 5 (Whereupon, the referred-to 6 question was read back by the 7 Reporter.) 8 THE WITNESS: That should have 9 been e-mails. I authored one but I 10 was CC'd on e-mails. 11 Q. I understand Mr. Aulet is 12 instructing you not to answer. 13 MS. ARONSSON: Mr. Aulet, do 14 you mind just providing a more 15 detailed objection? 16 MR. AULET: Sure. Based on my 17 conversations with Golden Spring, my 18 understanding is that Golden Spring 19 believes that revealing that 20 individual's name would potentially 21 expose them to harassment and based 22 on my review of the documents at 23 issue, the person's identity is not 24 relevant to the issues at hand in 25 this deposition. Page 28 1 C. JALBERT 2 Q. So I'll just go on record to 3 say that we dispute that contention. 4 MR. GOLDMAN: As do we. Who 5 are you -- who do you fear harassment 6 from? Do you fear harassment from? 7 MR. AULET: So Mr. -- Golden 8 Spring's attorney is on the phone and 9 that question is probably best 10 directed to Golden Springs but my 11 understanding is that -- please, he 12 would like to answer. 13 MR. MILTENBERGER: Tim 14 Miltenberger from Golden Springs. 15 I'm assuming what the Witness is 16 testifying to is the identity of a 17 Golden Spring employee which isn't 18 clear to me from the record but 19 apparently the people at the 20 deposition reached that conclusion. 21 We don't see any relevance in 22 revealing the name of the employees 23 of Golden Spring based on the 24 objection that's filed to the DIP 25 financing motion and we think that 1 C. JALBERT 2 the privacy rights of our employees 3 are paramount to any information that 4 might be gathered from knowing the 5 name of -- rank and file employees of 6 Golden Spring and we oppose 7 disclosing that information. 8 MR. GOLDMAN: That's up to the 9 Judge. It's a totally inappropriate 10 instruction to direct the Witness not 11 to answer. The Witness can answer 12 and you can get a ruling from the 13 Judge as to whether the answer should 14 be stricken or protected or subject 15 to a protective order. It's totally 16 inappropriate to direct the Witness 17 not to answer. 18 MS. ARONSSON: I noted our 19 dispute with Mr. Aulet and I'll just 20 note our dispute with Mr. 21 Miltenberger's reasoning behind the 22 objection here. 23 MR. MILTENBERGER: Thank you. 24 Q. Turning back to the folks we 25 were just talking about, you mentioned

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2 Melissa Francis. Did she represent to you 2 sure I wasn't missing anything. 3 that she was Mr. Kwok's counsel? 3 Q.

4 A. No. 4 Rudnick, did you circulate drafts of that 5 Q. How did you learn about what 5 engagement letter to anyone else? 6 Ms. Melissa Francis -- who Mr. -- strike 6 A.

7 that. How did you learn who Ms. Francis' 7 being on it but I'm pretty sure they then 8 client was? 8 did circulate it with -- at a minimum, Ms. 9 A. From Brown Rudnick. 9 Melissa Francis and probably Aaron Mitchell 10 Q. We've talked about the folks at 10 as well. 11 Verdolino that you communicate with this 11 MS. ARONSSON: Tab 11. The 12 engagement. Do you know of anyone else 12 Court Reporter is going to hand you 13 that Verdolino and Lowey communicates with 13 what is being marked as Jalbert 14 regarding this engagement besides the folks 14 Exhibit 2. This document -- for the 15 that we've talked about? 15 record, this document bears the Bates 16 A. I don't think there were others 16 Number Kwok 00001646. 17 but it is possible that one of my 17 (Whereupon, E-mail Chain was 18 colleagues met Flynn. Might have had 18 marked as Jalbert Exhibit 2 for

19 e-mail contact. You're aware -- because I 19 identification as of this date by the 20 think you objected to -- there's a large 20 Reporter.) 21 number of ordinary course professionals. 21 Q.

22 We needed to get information about 22 what is a post-petition retainer? 23 liabilities to them for the schedules. 23 A.

24 There might have been some information and 24 retainer paid to whoever, after the filing 25 stuff because we needed -- it's possible 25 of a bankruptcy, intended to be a retainer.

2 that he spoke with them but I think really 2 Q.

3 what he did is he got all the information 3 of this document? Take a minute. At the 4 from Aaron Mitchell and Melissa Francis. I 4 top of Page 2, Mr. Silverberg says that 5 don't think he went outside of that but 5 there's no post-petition retainer expected. 6 it's possible. 6 Do you see that? 7 Q. Do you know where Aaron 7 A. Yes. 8 Mitchell and Melissa Francis retrieved 8 Q.

9 their information from? 9 preference about receiving a post-petition 10 A. No. 10 retainer? 11 Q. Did you ask them where they 11 A.

12 retrieved their information from? 12 rather have a retainer but frankly, under 13 A. No. 13 the circumstances, it wasn't expected. 14 Q. Who negotiated -- who, from 14 Q.

15 Verdolino and Lowey, negotiated the 15 why would you prefer to have a 16 engagement letter? 16 post-petition retainer?

17 A. It would be me. I don't know 17 A.

18 that I would call it a negotiation but it 18 the fees. 19 was me that drafted it and prepared it and 19 Q.

20 sent it to Brown Rudnick. 20 received a post-petition retainer in 21 Q. Anyone else involved in 21 connection with this case? 22 drafting that engagement letter? 22 A. I do. 23 A. Well, from a QPC perspective, 23 Q. Did you? 24 I'm sure I had one of my colleagues, Mary 24 A. No. 25 Jo Schindler take a look at it just to make Page 31 25 Q. And why not?

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Page 34 1 C. JALBERT 2 A. I didn't ask for one. 3 Q. Turning back to the e-mail, Mr. 4 Silverberg writes, "big Q is whether it's 5 us retaining you or the client. I would 6 think you're retained by the client as his 7 financial advisor". Do you recall that 8 being a question in connection with this 9 engagement? 10 MR. AULET: Objection to form. 11 A. I don't think I understand your 12 question. I can read the statement and 13 understand but I don't know what you're 14 asking. 15 Q. He says, "big Q", do you 16 understand that to be a big question? 17 A. I understand it might be a 18 question in his mind. I don't know that he 19 intended it to be a question for me or for 20 himself and then he answered it. 21 MS. ARONSSON: Makenzie, can 22 you hand me Tab 12? 23 THE VIDEOGRAPHER: Mr. Jalbert, 24 would you mind moving the water 25 bottle? It's coming up in the frame. Page 35 1 C. JALBERT 2 I apologize. Thank you. 3 THE WITNESS: Sorry about that. 4 THE VIDEOGRAPHER: I appreciate 5 that. 6 MS. ARONSSON: The Court 7 Reporter is going to mark what is 8 going to be Jalbert Exhibit 3. This 9 document is Bates stamped Kwok 10 00001649. 11 (Whereupon, E-mail Chain was 12 marked as Jalbert Exhibit 3 for 13 identification as of this date by the 14 Reporter.) 15 Q. Please take a look at this 16 document. 17 A. Okay. 18 Q. You're responding to Mr. 19 Silverberg's e-mail that we were just 20 speaking about with the big Q is whether 21 it's us retaining you or the client. 22 A. Okay. 23 Q. Turning to your response, you 24 note, "I'd like a post-petition retainer if 25 possible". Do you see that? Page 36 1 C. JALBERT 2 A. Yep. 3 Q. Did you ask for a post-petition 4 retainer in connection with this 5 engagement? 6 A. No. 7 Q. Do you know if Verdolino and 8 Lowey asked for a post-petition retainer in 9 connection with this engagement? 10 A. I do. 11 Q. What's the answer? 12 A. No. 13 Q. You also write, "but I think if 14 we are going to hold the cash, we will need 15 to be employed by the debtor". So does 16 that refresh your recollection about 17 whether it was a question about who was 18 retaining Verdolino and Lowey? 19 A. I don't think I had a question 20 in my mind. I just responded with a 21 comment that supported his previous comment 22 where he said I would think you're retained 23 by the client as his financial advisor. 24 Q. Generally, can you explain your 25 view in connection with the question Page 37 1 C. JALBERT 2 Mr. Silverberg poses about who was 3 retaining Verdolino and Lowey? 4 A. Well, I was pretty sure when he 5 wrote I would think you're going to be 6 retained by the client as his financial 7 advisor, that's -- I made a gratuitous 8 comment or not a gratuitous comment. I 9 made an assenting comment basically saying 10 I think if we're going to hold the cash, we 11 need to be employed by the debtor. So 12 concurring with the decision or the thought 13 that he had. 14 Q. What is the basis for the 15 understanding that you just explained? 16 MR. AULET: Objection to form. 17 A. Of what part? 18 Q. Where, turning to your e-mail, 19 "if we are going to hold the cash, we'll 20 need to be employed by the debtor". What's 21 the basis of that statement? 22 A. Well, my professional judgment. 23 If me, as a principal of Verdolino and 24 Lowey, was going to be the signer on a 25 debtor in possession bank account, it would

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Page 38 1 C. JALBERT make all the sense in the world that that debtor in possession was my client. So I'm concurring effectively with the determination that Mr. Silverberg made in the previous e-mail to this chain. 7 Q. Thank you. Just for my own understanding, what is the difference between being employed by the debtor versus Brown Rudnick? 11 A. Well, if I was employed by Brown Rudnick, I'm not sure I'd go through -- I'm not sure I would have to go through the employment process for the bankruptcy. Would I file a motion to be employed? I don't know. I don't know the answer to that question. It's not something that I thought of beyond this. So -- but if I was right and there wouldn't be an opportunity to file a motion to employ Verdolino and Lowey on behalf of the debtor, I don't know how we would then allow me to be a signatory on the debtor's account. 25 Q. Thank you. That's helpful. 1 C. JALBERT Did you rely on Brown Rudnick in connection with that determination of who would be retaining Verdolino and Lowey? 5 MR. AULET: Objection to form. 6 A. Well, Mr. Silverberg writes in his e-mail, "I would think you're retained by the client as his financial advisor" and the next e-mail, same day, when I got around to it at 6:49 p.m. -- so five hours had elapsed -- I basically concurred with his determination. Who made the decision, I don't know. It's semantics but I think it was clear from this point on, that we were going to be retained by the debtor and not Brown Rudnick. 17 Q. Is Verdolino and Lowey ever retained by a law firm in connection with bankruptcy proceedings? 20 A. We're frequently retained by lawyers in proceedings. I think even including in bankruptcy proceedings for the purposes of the privilege. 24 Q. What do you mean by for purposes of the privilege? Page 40 1 C. JALBERT 2 A. Well, frequently in matters, we -- the firm gets brought in and we do whatever work is intended on that particular engagement. Frequently, it's litigation support. If it's intended that we do an investigation, the lawyer's thinking ahead, look, you're going to do an investigation, we think this is what we're going to find. Then we're going to have to get a expert report to file with a particular court. Then we might need you to go through the process of discovery including records, depositions and the like and then we might need you to testify. In those particular cases, as I understand it, there would be privilege up to a certain point, up until the time I'm declared an expert but in other instances, we get brought in as -- as financial advisor to the attorneys. They want us to do an investigation. They want us to uncover whatever need to be uncovered, whatever the allegations are, whatever the issues are but they might be hiring another firm or 1 C. JALBERT individual to testify as the expert to keep what knowledge we have as privileged. I don't know that that's relevant here. 5 Q. Thank you. Turning back to Exhibit 2 -- 7 MR. MILTENBERGER: I'm sorry to 8 interrupt. I'm being called away to 9 another matter so I'm going to have 10 to drop off now. The record could 11 just note that I'm leaving the 12 deposition. 13 MR. HARBACH: Thank you, Tim. 14 You're welcome to rejoin anytime. 15 MR. MILTENBERGER: Will do, 16 thanks. 17 Q. I'm interested in your e-mail at the top where you write, "my feeling is that in an individual case, the FA" -- financial advisor -- "duties are markedly different than of an operating business case". Can you explain to me the difference between an individual case versus an operating business case? 25 A. So operating business cases

2 have their various size and shapes. They 2 engagement, no one informed you what needed 3 may have affiliated entities, parents, 3 to be done on this case? 4 siblings. It could be multiple debtors. 4 A.

5 They might have employees in various 5 numerous conversations. This is not my 6 countries, various states. They may have 6 first bankruptcy. It's not my 50th 7 payroll taxes un-filed, sales taxes 7 bankruptcy. It's not my 100th bankruptcy. 8 un-filed, depending on the business, bottle 8 I had a fairly good idea of what the issues 9 deposits un-filed and unkept. They 9 were going to be and I took the first pass. 10 probably need a lot more work on budgeting 10 I don't recall whether there were changes 11 and keeping the business operating. Does 11 made after that or not. 12 it have sufficient cash, what are the 13 12 Q.

13 week budgets, the one year budgets. Cash 13 Verdolino and Lowey's work in this case? 14 collateral where it's -- you've got a 14 A. In this case? 15 secured creditor who is frequently -- maybe 15 Q. Yes. 16 not against the debtor but maybe not with 16 A.

17 it either. So -- so there's just -- it's a 17 speak for themselves. So if you want to go 18 totally different beast. In this 18 line by line, put that in front of me. 19 particular case, some individuals have 19 Q. Sure. 20 operating real estate or something like 20 A.

21 that but they rarely have an operating 21 on -- first, my recollection is the SOFA's 22 business that's multi country, multi state 22 and the schedules pretty much 23 with employees and all sorts of reporting 23 simultaneously. I mean they were due the 24 requirements, compliance requirements. 24 same day, same time. So that was first. 25 Q. Is it fair to say the financial 25 Following -- immediately following that, I

2 advisor duties in connection with an 2 believe we worked on everybody's engagement 3 operating business case are more 3 papers to get them filed in the Court and 4 complicated than an individual case? 4 then -- probably while the tail end of that 5 A. In most, yes. 5 was going along, I believe my colleague, 6 Q. Turning away from the exhibit, 6 Matt Flynn, started preparing the monthly 7 who instructed Verdolino and Lowey on the 7 operating report that was due for the end 8 scope of work in this matter? 8 of February, sometime around March 20, 21, 9 A. I don't think anyone instructed 9 22, somewhere around there. Trying to 10 us. 10 think if we've done anything -- oh 11 Q. Because you drafted the 11 assistance in preparing for -- or

13 engagement letter? A.

13 participation in preparing, to a small

14 with counsel. I don't remember the 14 meeting. We attended the first day 341

16 discussions specifically but this is not the first time I've drafted a retention -- 15 16 meeting by telephone. My colleague, Matt Flynn and I, attended the second day of the 17 at least part of the retention papers. 17 341 hearing which was this past Wednesday

19 Obviously, I'm not a lawyer. I don't know all of that goes into retention papers but 18 19 on a -- how do I want to call it -- we

20 as to the duties, typically, I have an 20 observer. We knew we weren't going to be 21 input as to what the duties are. I'm sure 21 participating but we wanted to be around to 22 we took the first stab at it and in review 22 see what took place, meet people and then 23 by Brown Rudnick, they might have made some 23 this deposition. 24 changes. I don't remember how that went. 24 Q.

25 Q. In connection with the 25 the SOFA's and schedules were the first

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2 step. You talked about drafting everyone's 2 Application was marked as Jalbert 3 engagement papers in connection with this 3 Exhibit 4 for identification as of 4 matter. 4 this date by the Reporter.) 5 A. Well, drafting our engagement 5 MS. ARONSSON: For the record, 6 papers. Everyone was focusing on their own 6 this is a document entitled Debtors 7 and I needed help, because I'm not a 7 Application for Authorization to 8 lawyer, on mine. 8 Retain and Employ Verdolino and Lowey 9 Q. Then you talked about Matt 9 PC as Financial Advisor. It was 10 Flynn's responsibilities in connection with 10 filed in this case as Docket 90. 11 the monthly operating report. 11 Q.

12 A. Yes. 12 at this document. 13 Q. Finally, you talked about 13 A.

14 preparing for the 341 hearing and attending 14 trying to point me to? 15 the 341 hearings? 15 Q. Do you recognize this document?

16 A. Meeting, yes. 16 A. Yes. 17 Q. Can you describe a little bit 17 Q. What is it? 18 more your responsibilities in connection 18 A.

19 with those 341 meetings? 19 Authorization to Retain and Employ 20 MR. AULET: I would just 20 Verdolino and Lowey PC as Financial 21 caution the Witness not to disclose 21 Advisor. 22 any work product or conversations 22 Q.

23 with attorneys. 23 document, using the page numbers at the top 24 A. On the first day of the 341 24 of the page, what is this document? 25 meeting, it was just thought that we should 25 A.

2 participate because it was unclear what was 2 in Support of Debtor's Application for 3 going to arise and they didn't know if it 3 Authorization to Retain and Employ 4 would be something that we would need. 4 Verdolino and Lowey PC as Financial 5 Q. Setting aside your 5 Advisor. 6 conversations with your attorneys, what -- 6 Q.

7 did you have any understanding about what 7 affidavit you filed -- 8 might arise during the first day of the 341 8 A. I do. 9 hearing that might require your 9 Q.

10 participation? 10 -- I'm interested in the table at the 11 A. I've attended an awful lot of 11 bottom of the page. 12 341 meetings over my career. Anything can 12 A. Yes. 13 happen at a 341 meeting because it's open 13 Q.

14 to every creditor and god only knows what 14 mentioned folks at Verdolino who were 15 takes place. 15 involved, Matt Flynn -- in this case, Matt 16 Q. Did you anticipate having to 16 Flynn, Mary Jo Schindler and yourself. Is 17 participate or ask questions during the 17 there anyone else involved in this matter 18 341? 18 at Verdolino and Lowey? 19 A. I think we were asked to be on 19 A.

20 the phone. I didn't have a participation 20 IT person who is only involved with -- 21 one way or another. 21 related to the deposition, the search of

22 MS. ARONSSON: The Court 22 our e-mails and the server records and 23 Reporter is going to hand you what is 23 everything and getting it ported over to

25 being marked as Jalbert Exhibit 4.

25 Brown Rudnick to be then sent to you folks. Q.

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2 Lowey? 2 different than any other engagement. You 3 A. Not that I know of. 3 don't know what's going to happen in 4 Q. Turning to this table, is Matt 4 day-to-day and everyone responds as best 5 Flynn also a principal? 5 they can, as efficiently as they can and

6 A. No. 6 whatever the issues are that are ongoing 7 Q. What is Matt Flynn's role? 7 and the crises that materialize. 8 A. A manager. 8 Q.

9 Q. Is Mindy Jo Schindler a 9 role do you anticipate any potential staff 10 principal? 10 to play in this case? 11 A. No. 11 A.

12 Q. What is her role? 12 out. I don't think it's going to happen 13 A. Manager. 13 but if it did and we became -- I became the 14 Q. So in connection with this 14 sole signer on the debtor in possession 15 engagement at Verdolino and Lowey, there's 15 bank account, my firm would probably be -- 16 one principal, two managers and then the IT 16 the bookkeepers would probably keep records 17 person? 17 of the disbursements and the receipts. 18 A. I believe so, yes. 18 They would assist with reporting. I would 19 Q. Do you anticipate other 19 probably review it of course. If, at some 20 Verdolino and Lowey employees to become 20 point in time, we have claim objections, I 21 involved in this matter? 21 don't know what the nature of those 22 A. As the case progresses, 22 objections are going to be, I don't know 23 assuming that we come into the case, yes. 23 how big and how complicated but some of our 24 Q. Generally, what are the duties 24 staff might be involved in claims. The 25 of a principal in connection with a 25 debtor might have to file an income tax

2 bankruptcy case like this? 2 return. I'll be advising them that they 3 A. I think of it as partner, 3 should file an income tax return for the 4 director, managing director, any of those, 4 Estate. So we'll have tax people involved 5 the lead person on the case from the firm. 5 in the preparation of the income taxes and 6 Q. In connection with this matter 6 I would have to go down the list of -- and 7 specifically, what do you expect the 7 be able to predict exactly what's going to

8 principal to be doing? 8 take place but we're very efficient, very 9 A. I assisted in preparation of 9 accustomed. We know all of our fees are 10 the SOFA's and schedules, the global notes, 10 subject to review by every single party and 11 the specific part of the global notes. I 11 interest. So we're -- we use as reasonably 12 assisted with the monthly operating report. 12 low level as we can on every matter and I 13 I participated with the first day hearings 13 can't predict beyond that what's going to 14 -- excuse me, first -- not the first day 14 come up but that staff and bookkeepers get 15 hearing. The first day of the 341 meeting. 15 used for those types of issues. 16 Responding to inquiries from the various 16 Q.

17 lawyers and supporting staff on whatever 17 to my question about staff applies to the 18 roles that they are working on. 18 bookkeepers, to the role of the 19 Q. What do you expect managers to 19 bookkeepers? 20 do in connection with this case? 20 A. No, bookkeepers and staff. 21 A. The same -- the same things. 21 Q.

22 Maybe differing amounts, different types. 22 gave applies to both of those? 23 I'm more review. Depending on what it is, 23 A. You asked what they may do.

25 they might support me. I might support them. It's like this engagement is no 24 25 Q. Right. A.

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2 aren't going to do reporting but they're 2 A. From my firm? 3 going to maintain receipts and 3 Q. Who at V&L? 4 disbursements. A staff person would 4 A.

5 probably work on the form of the -- of a 5 Jo Schindler. 6 financial statement or whatever report 6 Q.

7 that's going to be issued. The staff are 7 preparing these filings? 8 going to work on claims objections. Tax 8 A.

9 professionals are going to work on tax 9 technical question for someone related to 10 returns. 10 the best case but I can't think of anything 11 Q. Are you finished with your 11 else -- anyone else that had any -- that 12 answer? 12 did work on it. 13 A. Yes. 13 Q.

14 Q. You mentioned receipts and 14 SOFA and schedules? 15 disbursements. What sorts of receipts and 15 A.

16 disbursements do you anticipate in this 16 course they worked on them, as did Melissa, 17 case? 17 as did -- that's Melissa Francis. As did 18 A. I would imagine if things were 18 Aaron Mitchell. So it was clearly not all 19 to go the way the debtor planned, there was 19 Verdolino and Lowey. It was -- the whole 20 a proposed DIP financing arrangement where 20 team was involved in the preparation. I 21 money will come into the Estate and then 21 thought you asked me -- and if I 22 would presumably be used to pay various 22 misunderstood, I apologize -- you asked 23 professionals and United States Trustee 23 who, at Verdolino, did and that was myself, 24 fees and whatever other disbursements are 24 Matt Flynn and Mary Jo Schindler. required of the debtor as ordered by the 25 Q.

2 Court or otherwise generally required to 2 Verdolino and Lowey and was then moving on. 3 pay Chapter 11 bills as they become due. I 3 So you mentioned Melissa Francis, Aaron 4 think that's it. 4 Mitchell, Brown Rudnick. Generally, anyone 5 Q. The last item is clerical. 5 else? 6 What sort of duties do you anticipate a 6 A.

7 clerical member of your team to do in this 7 there must have been the existence of help 8 case? 8 from individuals that translated documents 9 A. I don't have anything that I 9 and words from the various professionals to 10 have presupposed for them to do in this 10 the debtor and the debtor. 11 case. 11 Q.

12 Q. Turning back in the document to 12 debtor about this SOFA and schedules? 13 the retention agreement, this is on Page 13 A. No. 14 13. We've talked generally about the 14 Q.

15 engagement -- Verdolino and Lowey's 15 documents. Did you receive those 16 engagement in this case. I want to walk 16 translated documents in connection with 17 through these bullet points on the first 17 your work on the SOFA and schedules? 18 page. The first one reads, "assistance 18 A. No. I don't read Mandarin. 19 with preparation of the statement of 19 Q.

20 financial affairs and the schedules and all 20 documents? 21 support thereto and any amendments". These 21 A. I don't recall seeing them. 22 have been filed, right? 22 MR. AULET: Objection to form. 23 A. Yes. 23 Q.

24 Q. Who was involved in preparing 24 Spring was involved in preparing the SOFA 25 the SOFA and the schedules?

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2 A. I wouldn't know. 2 doing in connection with the SOFA and 3 Q. Do you know what Golden Spring 3 schedule? 4 is? 4 A.

5 A. Yes. 5 anticipated but to the extent facts and 6 Q. What is it? 6 circumstances, at some point in time, 7 A. It's -- as I understand it -- a 7 require a review and possible amendment, I 8 family office in New York City for the 8 think we would have to participate because 9 debtor's son. Exactly how it's run, all 9 we're the ones that know Best Case and have 10 that, I don't have any information. 10 that system but there's nothing 11 Q. Who is the debtor's son? 11 anticipated. It's only if that 12 A. I don't know his name. 12 materializes, we would participate. 13 Debtor's son. 13 Q.

14 Q. Neither you nor anyone at 14 Best Case a couple times. What do you mean 15 Verdolino and Lowey met with or 15 by that? 16 communicated with the debtor about the SOFA 16 A.

17 and schedules? 17 industry uses. I think it's the most 18 MR. AULET: Objection to form. 18 prominent software that supports the 19 A. Correct. 19 preparation of SOFA's and -- SOFA's and the 20 Q. Can you describe what work 20 schedules. I think they're used throughout 21 Verdolino and Lowey did in preparing the 21 the industry by most everybody. 22 SOFA and schedules? 22 Q.

23 A. We participated with several 23 a TurboTax of preparing SOFA's and 24 lengthy phone calls with various people 24 schedules? 25 from Brown Rudnick, not all of whom I'm 25 A. Or QuickBooks or -- you know.

going to remember were on the phone and 1

Q.

3 also with Melissa Francis and Aaron 3 garbage in, garbage out, right? 4 Mitchell. Aaron Mitchell and Melissa 4 MR. AULET: Objection. 5 Francis provided significant levels of 5 A.

6 input of various information. Brown 6 garbage out. 7 Rudnick had been involved in the case 7 Q.

8 before we were. They already had a large 8 point in the retention agreement, it reads, 9 knowledge base so we -- we talked with 9 "assistance with preparation and/or review 10 Brown Rudnick team and Melissa and Aaron on 10 of cash flow and related budget projections 11 the phone and then numerous e-mails. 11 and including advising as to post-filing 12 THE WITNESS: I agree. Hot. 12 finances". Do you see that? 13 MR. HARBACH: Yeah, I tried to 13 A. Yes. 14 keep out the sun. 14 Q.

15 Q. Did Verdolino and Lowey perform 15 Lowey done in connection with this line 16 any investigation to verify information 16 item? 17 obtained from Brown Rudnick, Melissa 17 A. Nothing. 18 Francis or Aaron Mitchell? 18 Q.

19 A. No. 19 Lowey anticipate doing in connection with 20 Q. So is it fair to say you took 20 this line item? 21 their word regarding the representations 21 A.

22 contained in the SOFA and the schedule? 22 in the case and there's a DIP. 23 A. That's fair. 23 Q.

24 Q. Is there any outstanding work 24 projections. Budget projections for who? 25 that Verdolino and Lowey will anticipate Page 59 25 A.

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