Guo Wengui / Miles Guo — bankruptcy case · TRANSCRIPT · ECF #4017

METADATA

Defendant: Guo Wengui / Miles Guo / Ho Wan Kwok
Court: CTB
Case No.: 22-50073
ECF #: 4017
Type: TRANSCRIPT
Filed: 2025-01-30

FULL TEXT

1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT BRIDGEPORT DIVISION IN RE: . Chapter 11 . Case No. 22-50073 (JAM) HO WAN KWOK, et al. . . (Jointly Administered) Debtors. . . . . . . . . . . . . . . . . . . . LUC A. DESPINS, CHAPTER 11 . Adversary Proceeding TRUSTEE, . No. 24-05249 (JAM) . Plaintiff, . . v. . . Courtroom 123 ACA Capital Group . Brien McMahon Federal Building Ltd. et al . 915 Lafayette Boulevard . Bridgeport, Connecticut 06604 Defendant. . . Tuesday, January 28, 2025 . . . . . . . . . . . . . . . 1:03 p.m. TRANSCRIPT OF HEARING BEFORE THE HONORABLE JULIE A. MANNING UNITED STATES BANKRUPTCY JUDGE (APPEARANCES CONTINUED) Audio Operator: Electronically recorded Transcription Company: Reliable The Nemours Building 1007 N. Orange Street, Suite 110 Wilmington, Delaware 19801 Telephone: (302)654-8080 Email: gmatthews@reliable-co.com Proceedings recorded by electronic sound recording, transcript produced by transcription service. Case 22-50073 Doc 4017 Filed 01/30/25 Entered 01/30/25 14:50:55 Page 1 of 85

2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 APPEARANCES: For the Chapter 11 Trustee: Patrick R. Linsey, Esquire NEUBERT PEPE & MONTEITH, P.C. 195 Church Street 13th Floor New Haven, Connecticut 06510 -and- Luc A. Despins, Esquire PAUL HASTINGS, LLP 200 Park Avenue New York, New York 10166 For the U.S. Trustee: Holley L. Claiborn, Esquire OFFICE OF THE UNITED STATES TRUSTEE The Giaimo Federal Building 150 Court Street Room 302 New Haven, Connecticut 06510 For Chapter 11 Trustee: Nicholas A. Bassett PAUL HASTINGS, LLP 2050 M Street NW Washington, DC 20036 -and- Douglass E. Barron PAUL HASTINGS LLP 200 Park Avenue New York, NY 10166 For G Fashion California Michael T. Conway Et al.: LAZARE POTTER GIACOVAS & MOYLE LLP 747 Third Ave. 16th Floor Fifth Floor New York, NY 10017 For G Club Operations Jeffrey M. Sklarz And G Club International GREEN & SKLARZ LLC One Audubon Street 3rd Floor New Haven, CT 06511 Case 22-50073 Doc 4017 Filed 01/30/25 Entered 01/30/25 14:50:55 Page 2 of 85

| | Case 22-50073 |---------|---------------| | | | | | | | 1 | | | 2 | | | 3 | | | 4 | | | 5 | | | 6 | | | 7 | | | 8 | | | 9 10 | | 11 | | | 12 | | | 13 | | | 14 | | | 15 | | | 16 | | | 17 | | | 18 | | | 19 | | | 20 | | | 21 | | | 22 | | | 23 | | | 24 | | | 25 | | | | | | | | | | | | Doc 4017 | Filed 01/30/25 | Entered 01/30/25 14:50:55 | Page 3 of 85 | ----------|-------------------------|------------------------------------------|--------------| | | | 3 | | | | | | (APPEARANCES CONTINUED) | | | | For Defendant Mae Guo: | Stephen M. Kindseth ZEISLER & ZEISLER | | | | 10 Middle Street 15th Floor | | | | Bridgeport, CT 06604 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | Case 22-50073 | Doc 4017 | Filed 01/30/25 | Entered 01/30/25 14:50:55 | Page 4 of 85 | |----|--------------------|----------|--------------------------------|-----------------------------------------------------------------------------------|--------------| | | | | | | 4 | | 1 | INDEX | | | | | | 2 | MOTIONS: | | | | PAGE | | | | | | | | | 3 | | | | | | | 4 | Matter No. 3930 | | | First Interim Fee Application of Chryssafinis | 8 | | 5 | | | | & Polyviou LLC, as Cypriot Law Counsel, for Compensation and Reimbursement of | | | 6 | | | | Expenses for Period from August 15, 2024 Through December 31, 2024, Fee: EUR | | | 7 | | | | 57,975.00, Expenses: EUR 3,980.94. Filed by Georg Alexander Bongartz, Attorney | | | 8 | | | Court's Ruling: | | 9 | | 9 | Matter | | | | | | 10 | No. 114 | | | Motion to Dismiss Adversary Proceeding | 11 | | 11 | | | Court's Ruling: | | - | | 12 | | | | | | | 13 | Matter | | | | | | 14 | No. 116 | | | Motion to Dismiss Adversary Proceeding | 11 | | 15 | | | Court's Ruling: | | - | | 16 | | | | | | | 17 | | | Transcriptionist's Certificate | | | | 18 | 85 | | | | | | 19 | | | | | | | 20 | | | | | | | 21 | | | | | | | 22 | | | | | | | 23 | | | | | | | 24 | | | | | | | 25 | | | | | | | | | | | | | | | | | | | | | | | | | | |

5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (Proceedings commenced at 1:03 p.m.) THE DEPUTY: Case No. 22-50073, Ho Wan Kwok; Adversary No. 24-05249, Despins versus ACA Capital Group Limited, et al; and Adversary No. -- I'm sorry. I thought there were two. That was it. THE COURT: Okay. Thank you. THE DEPUTY: Thank you. THE COURT: All right. Good afternoon. If we could have appearances for the record starting with the Chapter 11 Trustee, please. MR. DESPINS: Good afternoon, Your Honor. And thank you for letting me appear remotely. Luc Despins, Chapter 11 Trustee. By the way, I thought there was also an application for compensation of Cyprus Counsel. Maybe that's off the calendar now, but I thought it was on for this for today. THE COURT: I don't know, but we'll take a look. How's that? MR. DESPINS: Okay. Thank you. THE COURT: Okay. MR. DESPINS: But that shouldn't delay anything because the main event is the other matter for sure. THE COURT: Okay. Thank you. Attorney Bassett? MR. BASSETT: Good afternoon, Your Honor. Nick Bassett from Paul Hastings, counsel to the Chapter 11 Case 22-50073 Doc 4017 Filed 01/30/25 Entered 01/30/25 14:50:55 Page 5 of 85

6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Trustee. I'm joined today by my colleague, Douglass Barron, also from Paul Hastings. THE COURT: Good afternoon. MR. LINSEY: Good afternoon, Your Honor. Patrick Linsey of Neubert, Pepe & Monteith for the Chapter 11 Trustee. THE COURT: Good afternoon. MS. CLAIBORN: Good afternoon. Holly Claiborn for the U.S. Trustee. THE COURT: Good afternoon. Did you think there was an application for compensation? MS. CLAIBORN: Yes. There is one. THE COURT: Oh, it's there. MS. CLAIBORN: Yes. THE COURT: It's there -- MS. CLAIBORN: The main case. THE COURT: -- Trustee Despins, it's the first matter on the calendar. I see it now. Sorry. Attorney Conway? MR. CONWAY: Good afternoon, Your Honor. Michael Conway for moving parties, Defendants G Fashion California; G Fashion Holdco A Limited; G Fashion Holdco B Limited; G Fashion International Limited; G Fashion Media Group Inc.; GFIP, LLC; GF Italy, LLC; GFNY, Inc.; ACA Capital Group, Ltd; Celestial Tide Limited; Hamilton Capital Holding Limited; Case 22-50073 Doc 4017 Filed 01/30/25 Entered 01/30/25 14:50:55 Page 6 of 85

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Hamilton Investment Management Limited; Hamilton Opportunity Fund, SBC; Himalaya Currency Clearing Party, LTD; Himalaya International Clearing Limited; Himalaya International Financial Group Limited; Himalaya International Payments Limited; Himalaya International Reserves Limited; Major Leed International Limited; and William Jay. THE COURT: Thank you. Are those parties, do you have their signatures all on the motion to dismiss, on the motions to dismiss? MR. CONWAY: Yes. They're all placed on the motion to -- THE COURT: I was just thinking for the courtroom deputy to make sure that they have all the addresses, and I'm sorry. The names of the parties and your -- you appearing as counsel for those parties. MR. CONVWAY: Yes. We -- they all appear on the first page of our motion papers and on my notice of appearance. THE COURT: Okay. Thank you. MR. SKLARZ: Good afternoon, Your Honor. Jeffrey Sklarz for G Club Operations LLC and G Club International Limited. THE COURT: Good afternoon. MR. KINDSETH: Good afternoon, Your Honor. Steven Kindseth for the Defendant Mae Guo.

THE COURT: Good afternoon.

2 3 4 5 All right. The first matter on the calendar is the fee application of the counsel in Cyprus. So did you want to take that up first, Attorney Bassett or Trustee Despins?

6 7 8 9 10 11 12 MR. DESPINS: Sure. I can, Your Honor. Briefly, this was filed at Docket No. 3930, and they're seeking compensation for a period of almost six months, five months. And the total amount of the compensation is 57,975 Euros. And again, as I said, that's for the period from August 15th through December 31st. And, also, there's a reimbursement application for expenses of 3980 Euros.

13 14 15 16 17 18 19 20 There were no objection filed and U.S. Trustee filed a statement of no objection at Docket No. 3998. Out of full disclosure, Your Honor, the U.S. Trustee requested that the CP law firm file an updated invoice reflecting more precise and additional time and expense, basically more detail. And that additional detail was filed on January 22nd at Docket No. 3993. And as a result of that, the U.S. Trustee has no objection.

21 22 THE COURT: Okay. Thank you very much. Attorney Claiborn?

23 24 MS. CLAIBORN: Yes, Your Honor. That's correct. The statement of no objection is Docket No. 3998.

THE COURT: Thank you. Does anyone else wish to

1 2 3 be heard on the first interim fee application of Cypress Counsel? All right. Hearing nothing, then I or nothing further.

4 5 6 7 8 9 10 11 I have reviewed the application and the amount sought by counsel for the period of August 15, 2024, through December 31st, 2024. And it appears that the fees and expenses sought are reasonable and necessary under the circumstances of the case. No one has filed any written objection to the application for compensation, and no one is participating in this hearing today that is objecting to the compensation sought.

12 13 14 15 16 17 The Office of the United States Trustee has filed a statement of no objection. And Trustee Despins, I'm looking at the order that was submitted with the application. After the more specific filing by counsel, was there any need to revise this order? I don't see it, but I could have missed something. So --

18 19 20 MR. DESPINS: I don't think so, unless Attorney Claiborne feels it's important to do so, I don't think that's necessary.

MS. CLAIBORN: No, Your Honor.

22 23 24 25 THE COURT: Okay. Thank you. Then the only thing I'd ask the courtroom deputy to do is on the proposed order, which appears at page 15 and 16 of ECF 3930, to add today's hearing date of January 28, 2025, please.

| | 10 | |----|-------------------------------------------------------------------| | 1 | THE DEPUTY: Okay. | | 2 | THE COURT: And then and for all the reasons that | | 3 | we've just stated on the record, the first interim | | 4 | application for compensation is granted, and the proposed | | 5 | order we'll enter. All right. That takes care of the | | 6 | application for compensation. | | 7 | Now we have the two motions to dismiss. So give | | 8 | me -- if you would, everyone just give me one moment, please. | | 9 | So, Attorney Conway, your motion to dismiss | | 10 | appears first. You ready to proceed? | | 11 | MR. CONWAY: I am, Your Honor. | | 12 | THE COURT: Go right ahead, | | 13 | MR. BASSETT: Your Honor, just in terms of | | 14 | process, the way that we handled the briefing was Attorney | | 15 | Conway filed a motion to dismiss on behalf of his clients, | | 16 | Attorney Sklarz on behalf of his, and then we responded with | | 17 | one omnibus opposition. And then there were two replies. So | | 18 | if it's amenable to the Court, I think it would be, it would | | 19 | make sense to have opening argument on both motions, then I | | 20 | can do one argument responding to both motions, and then they | | 21 | could have an opportunity to do any reply. | | 22 | THE COURT: That's fine if Attorney Sklarz and | | 23 | Attorney Conway have no opposition. | | 24 | MR. CONWAY: Fine, Your Honor. | | 25 | MR. SKLARZ: Makes sense to me, Your Honor. | | | |

Case 22-50073 Doc 4017 Filed 01/30/25 Entered 01/30/25 14:50:55 Page 11 of 85

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Okay. Great. Then go right ahead and proceed, Attorney Conway. MR. CONWAY: Thank you, Your Honor. And I'll try to be brief because the more I talk, the more likely I am to cough, and I don't want to do that. THE COURT: There are waters on the table for you if you need one. At least, there usually are. But, yeah, I think there are. Thank you. MR. CONWAY: So, Your Honor, I'd like to start - obviously, you've read the papers, and you've seen some of these issues, most of these issues before. I want to start by just focusing on the big picture. The big picture here is that there's an allegation of alter ego claims. We all know that alter ego claims were designed for a completely different purpose. They're designed to go after situations where a Debtor puts their own assets into a vehicle whereby they can defraud their creditors and still reap the benefits of those assets, whether they be money or otherwise. Here, we don't have that. Each time the Trustee is asked, what are the allegations that he used his assets for any of these things, the response is the same. That's not the way he did business. But that doesn't get us any closer. From the day I got here, Mr. Bassett actually, the

1 2 3 4 5 6 7 first day I was in this case, gave me the indictment, the criminal indictment against the Debtor and said, look at all the reasons why he's a bad guy. I've gone through now for over, it seems like a couple years now, the criminal complaints, indictments, and allegations. And the one thing I have not found in anything -- and they rely heavily on the criminal indictments for their case.

8 9 10 11 12 13 14 15 16 I've not found anything in any criminal pleading that shows that Mr. Kwok put his own assets into a vehicle. What we see is that he's accused of taking other people's assets, and that's not what we're supposed to be dealing with here. It goes straight to the heart of the standing issue, which I'm not going to go into in a lot of detail, but Your Honor understands the argument that a Trustee is not supposed to go after individual claims of various here defrauded, socalled creditors.

17 18 19 20 21 22 Rather, he can go after general claims that are claims where in the first instance alter ego liability was designed to go -- to protect, where a Debtor takes his assets and puts them out of the reach of creditors, and every creditor has a right to go after those assets. And that's where the Trustee has standing.

23 24 25 The Trustee never has standing when the assets that are at issue might be recoverable by a limited group of creditors, and they're as here, a whole slew of limited

1 2 3 4 5 6 7 8 groups of creditors. They might have different claims if they were defrauded, using that term for the purposes of this argument, because they were induced to put money into Hamilton, or they were defrauded by putting money into Himalaya, or one of the many other entities that are at issue here. None of those creditors has the same claim as the others, though. And the Trustee cannot show standing because they're not general claims.

9 10 11 12 13 14 Your Honor's familiar with the case law. The Second Circuit's made it clear that where they're general, there's standing. Where they're individual, there's no standing. Alter ego does not create a right on the part of a Trustee unless he can show that all the creditors are similarly situated.

15 16 17 18 19 Now, that said, Your Honor, we have here a situation where, just big picture, as I said, alter ego should never have been brought. This is really just a criminal conspiracy pled as an alter ego action. That's not what alter ego's for.

20 21 22 23 24 But getting to the nitty gritty here, we have to prove or they have to prove that there's jurisdiction. Jurisdiction requires showing that there's some sort of contact with the United States for the foreign Defendants, and they have not proved that.

What we heard was, well, there we've alleged

1 2 3 4 5 control. And I think that, Mr. Bassett wants to show a PowerPoint. He sent one to me earlier today, which I thought was remarkable. Because what it does, it spends dozens and dozens of pages showing how they put allegations in the complaint about control.

6 7 8 9 10 What they don't do is say how there was control. There are no factual allegations. There are general allegations that say, well, because somebody worked for Mr. Jay, and that someone was somehow affiliated with the Debtor at one in time, there must be control.

11 12 13 14 15 16 17 18 19 20 There's no allegation of how there's control, and that's what you need to prove jurisdiction. But in this case, it has to go a little farther. You have to show that it would be fair, and the Second Circuit, you know, in its most recent iteration of this, the Palladium case, which is in our papers, has made it clear that even if you showed Mr. Kwok was 100 percent owner of the stock in one of these companies, and he somehow was involved on the board, that would still not be sufficient, absent a showing that there's some contact between these entities in the United States.

21 22 23 24 25 So we think that there's a fundamental, you know, lack of jurisdictional arguments, standing arguments, and then you get to the issue of whether there are sufficient factual allegations to meet the Iqbal-Twombly standard.

Again, there are -- there are claims here that

| 1 | have absolutely zero support. There are claims here that | |----|-----------------------------------------------------------------| | 2 | that say, well, because we know that Mr. Kwok derived a | | 3 | benefit from Hamilton vehicle -- in this case, as you're | | 4 | aware, I represent Taurus. They may say, well, because he | | 5 | got some benefit with respect to the Taurus vehicle, Hamilton | | 6 | must be guilty of being an alter ego. That's not sufficient | | 7 | You have to show exactly what the allegations of ownership, | | 8 | control, some sort of participation in the business | | 9 | operations of Hamilton and not just the benefit accruing at | | 10 | the end of the day. | | 11 | We don't have the allegations we need to respond | | 12 | to under Iqbal-Twombly. I guess, again, I'm doing pretty | | 13 | well here. I haven't started coughing yet, so I'm not going | | 14 | to push my luck. But I got to say, there were some claims | | 15 | here. You got the claims against Celestial Tide, Major | | 16 | League, and William Jay. | | 17 | They aren't even claims, Your Honor. We | | 18 | articulated in the motion papers that while there are | | 19 | allegations that referred to them, and they're in the | | 20 | caption, they don't even have claims against them in the | | 21 | complaint. And we pointed out that the case law says that in | | 22 | that situation, the claims have to be dismissed against those | | 23 | entities. The response was, well, no. There's | | 24 | participation. Therefore, they shouldn't be dismissed. | | 25 | Well, you still don't have any claims. They have |

1 2 3 4 5 6 not addressed the case law that says if you don't have claims, you have to dismiss. And so we've, you know, we've pointed out the various legal bases in our papers. We've pointed out, I think, the lack of any sort of factual underpinnings for jurisdiction or for, frankly, surviving Iqbal-Twombly.

7 8 9 10 11 12 13 But I think that I want to bring you back to -- I don't know how to characterize it, a plea. You know, this is not the way the bankruptcy law is supposed to be used. The alter ego theory is meant to be used in a situation where the Debtor's money has been used to -- moved or his assets have been moved in a way that harms creditors, generally, as the entire estate. We're not here to try and augment the estate.

14 15 16 17 18 19 20 21 22 23 24 25 The Trustee is not -- was not engaged to augment the estate at the cost of others. He has to follow the law, and the law here would not -- would simply not support this theory that all these purportedly defrauded folks out there were convinced to put their money in a vehicle, a third party entity now considered an alter ego vehicle. They lost control of that money, and now they're being told, well, they're going to you're going to lose it again because we're not going to let the DOJ forfeit that money and give it back to you. No. It belongs to all of Mr. Kwok's creditors. That's not what alter ego is for. It's for going after Mr. Kwok's assets, not these punitive victims' assets.

17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 If you have any questions, Your Honor, I'm happy to answer them, but I want to sit down before I start coughing. THE COURT: Thank you. I don't have any questions at the moment. Thank you. MR. CONWAY: Thank you. MR. SKLARZ: Good afternoon, Your Honor. Jeffrey Sklarz for G Club Operations and G Club International. The case should be dismissed for three primary reasons as we set forth in our briefing. First, the Trustee cannot use a reverse veil piercing theory to obtain what amounts to substantive consolidation of only the assets of G Club and G Club International into the Debtor's estate. Neither Puerto Rico nor English law recognize the remedy and the claim the Trustee seeks to pursue. The Trustee has no standing to pursue it. And more importantly, as Attorney Conway alluded to, the allegations invert the remedy here. The allegations of the complaint, as set forth in the 60-odd-page document that was emailed to us this morning, say that Mr. Kwok stole from G Club and G Club International, brought that into his estate. The Trustee has liquidated many of those assets, such as the Mahwah Mansion, a bunch of cars, and tons of cash. And now the Trustee wants to go back to G Club and say, give us more. Case 22-50073 Doc 4017 Filed 01/30/25 Entered 01/30/25 14:50:55 Page 17 of 85

| 1 | Mr. Kwok, according to the allegations, is a | |----|---------------------------------------------------------------| | 2 | converter and a thief and a fraudster, and he stole from G | | 3 | Club. That doesn't make him the owner of G Club. The | | 4 | Government in their -- in the indictment, on its website, the | | 5 | Department of Justice has said the G Club customers were | | 6 | defrauded. The Trustee says, let's defraud them again. | | 7 | That is not what the law permits. Under the | | 8 | Trustee's theory, the creditors of G Club will be left out in | | 9 | the cold and have their money stolen twice. This Court | | 10 | should not allow that. | | 11 | Second, the Trustee has filed a redacted and | | 12 | sealed complaint. As I've argued previously before Your | | 13 | Honor, we have the First Amendment. Congress passed | | 14 | Bankruptcy Code Section 107, and our district has adopted | | 15 | Section Rule 5(e), which sets forth a very specific method | | 16 | requiring evidence, evidentiary hearings, offers of proof, | | 17 | rights to be heard that have to be complied with to file | | 18 | things under seal. That was not complied with. The | | 19 | complaint is the epitome of a judicial document, and that was | | 20 | not done. | | 21 | And finally, as to G Club International, according | | 22 | to their own affidavit of service, they weren't served. So | | 23 | there's no personal jurisdiction. The case should be | | 24 | dismissed. | | 25 | Turning first to the issue of the reverse veil | | | |

1 2 3 4 5 6 piercing claims. We spent a lot of time on the elements of the cause of action and whatnot a couple of weeks ago. I'll speak specifically to Puerto Rican and English law. So Puerto Rico, there is not a lot of law on it, but what law there is discusses the imposition of personal liability for a debt, not the merger of estates.

7 8 9 10 11 12 13 There's no substantive consolidation methodology. For example, in the Situ case, which is 124 F.Supp.3d. 34 - and these are all cited in our brief at page 36. In certain circumstances, the corporate veil may be pierced, and the individual liability imposed upon the individuals for which the corporate entity served merely as a corporate ego. That is vicarious liability.

14 15 16 17 18 D.A.Co., Supreme Court of Puerto Rico, in 132 DPR 905 at a page that is unclear from the ruling, but I believe because they're all translated from Spanish, the page number doesn't carry over properly. But -- and I can provide the Court with my Lexis version.

19 20 21 22 23 24 But it says according to the trial court, the clause justifies personal liability ruling against Acosta Lespier because he stated therein that the stock of the resulting corporation was free from liens and encumbrances even though he knew that the corporation -- I apologize. Wrong quote. Same case.

Consequently, absent additional evidence, it was

20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 not proper to pierce the corporate veil and impose personal liability on Acosta Lespier for D.A.Co.'s order against Luis Acosta Construction. Again, vicarious liability imposing personal liability for a corporate debt. Now, here, we're imposing corporate liability for personal debt because it's reverse veil piercing, but the concept is the same. Similarly, in US v Jg-24, 331 F.Supp.2d. 14, at page 116 -- I'm sorry, 115 -- a person who is the alter ego of a corporation or the individual behind the corporate veil when pierced is also personally liable for the corporation's liabilities. Again, this is not a situation where the Court is saying merge the assets. Ignore the liabilities. Just merge the assets. To the contrary, it's saying vicarious liability. So the cause of action the Trustee pursues does not exist here. English common law is even, more stringent. It requires the pleading that the remedy, and it views it as a remedy rather than a cause of action, deprives the controller

21 22 23 24 25 of the benefit in the Prest versus Petrodel Resources Limited case, which is again cited in our brief, page 18, paragraph 35, 4 All ER 673, the Court may then pierce the corporate veil for the purpose and only the purpose of depriving the company or its controller of the advantage that they

| | 21 | |----|------------------------------------------------------------------| | 1 | otherwise would -- that they otherwise have obtained by the | | 2 | company's separate legal personality. | | 3 | Here, the controller would be Kwok. Depriving him | | 4 | would mean that the Kwok's estate has to repay all of the | | 5 | money he stole from G Club. So give back the money for the | | 6 | Mahwah Mansion. Give back all of the money that that was | | 7 | stolen. We're good with that. | | 8 | Kwok was a converter. Kwok was a thief, according | | 9 | to the Trustee's allegations. Kwok stole money from G Club's | | 10 | customers. Kwok enriched himself according to the Trustee, | | 11 | and therefore has augmented and increased his estate and | | 12 | permitted the millions and millions of dollars that is | | 13 | currently in the Kwok estate. That is G Club's money. They | | 14 | should not get more. | | 15 | The Trustee does not even address this element of | | 16 | the English cause of action in his brief. It is just | | 17 | ignored. But wait. There's more. | | 18 | In the UK Supreme Court in 02/2021 in a case | | 19 | called, Hurst Properties Limited versus Rosendale, quoted -- | | 20 | there was a quotation basically doubting whether piercing the | | 21 | corporate veil is even a thing under English law. It hasn't | | 22 | been decided on by the UK Supreme Court. And, again, as | | 23 | Attorney Conway pointed out, that is the situation here. | | 24 | This is really the Trustee trying to pretend he is | | 25 | the Department of Justice. The Department of Justice has | | | |

1 2 3 4 5 6 7 8 9 forfeited over \$200 million of G Club's assets. For years now, G Club has cooperated with the Government and provided information and helped with the problem that was created here. The Government is the proper entity to ensure that the alleged victims of Mr. Kwok, who are the G Club members, the G Club customers, the G Club creditors, are compensated. Nothing in the Trustee's complaint explains how they're going to be addressed. They don't exist. They just lose, lose, and lose again.

10 11 12 13 14 Now, how do they lose, lose, lose again? First, the complaint does not allege any particularized harm to Mr. Kwok's creditors. Who are they? I've been now involved in this case for two years. I'm still not quite sure who Mr. Kwok's actual creditors are other than Pax.

15 16 17 18 19 20 21 22 23 24 The complaint claims, by virtue of Kwok's actions, he stole money from G Club and used -- which were used to (inaudible) his complaint. In paragraph 75(a) of the amended complaint, the Debtor arranged for money solicited in the name of G Club to be transited in ways to renovate his Mahwah Mansion. Kwok arranged to solicit money to be invested in Hamilton -- in the various Hamilton entities in paragraph 77. Also in paragraph 77(g), the Debtor just stole money from G Club International. In paragraph 79, the U.S. Government alleged that G Club was used by the Debtor to

fraudulently obtain more than \$250 million, which the

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Government has since forfeited for the benefit of the victims, not for the benefit of the Trustee. The Debtor, according to the Trustee in paragraph 78, there were a number of offshore accounts set up and that he arranged to have money moved offshore. What does this tell us? The allegations are, as I said, Mr. Kwok is alleged in the complaint to have stolen money for his own benefit, and that helped his estate have more money. Same allegations with respect to G Club International, or similar. Basically, money was transited through G Club International for the benefit of Kwok. He stole it. Paragraph 72 and 73 and 92 are all examples of that. Also in paragraph 75, G Club International, money was used to buy a luxury car. Paragraph 75(c), another luxury car. Paragraph 65 and 75(d) through (e), money was used to repair a yacht. None of this benefited G Club. None of this benefited G Club International, but the Trustee has all those assets, benefited the Trustee, benefited Kwok. And this dovetails into one issue that I touched on during my argument the other day or a couple weeks ago, which is a standing argument. Under Nordlicht, which I'm sure the Trustee will speak much about and I'll speak about, as well, the Trustee derives the ability to pursue an alter ego claim, as Attorney

1 2 3 4 5 Conway said, if it's a generalized claim under 541. He doesn't derive it under 544. 544 is strong-arm -- 544 is a strong-arm power. So that lets him avoid liens. We're not avoiding liens here. We're pursuing a cause of action that is that a property of the Debtor.

6 7 8 9 10 11 12 13 Wagoner (phonetic) teaches, as we all know, that the Trustee stands in the shoes of the Debtor when it brings Debtor-related claims, Debtor-derived claims. According to the complaint, Kwok is a thief, a fraudster, and really and just a general -- generally committed all sorts of wrongs. He's been convicted of certain wrongs. So how can the Trustee get around in pari delicto? Nothing spoken to that. Just ignored.

14 15 16 17 18 19 20 21 22 23 24 If the Trustee stands in the shoes of the thief, he's the thief for purposes of the claim. Kwok's creditors have gotten the benefit of much of the money stolen, and the Trustee should not be permitted to invert the law to use alter ego to say, since I'm a big thief, I get more. That's essentially the argument. I am a thief. I am controlling these entities, so I get all of it to the detriment of G Club's actual creditors, who the government has recognized or owed over \$200 million, who the Trustee pleads are owed over \$200 million but makes no consideration for under their pleading.

Again, going back to the standard, you have to

25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 show harm to actual creditors of the estate. You have to show, under English law, how the deprivation of the controller, Mr. Kwok, is going to help the people harmed, which are G Club's creditors. Turning to Nordlicht. Convoluted case, but really, in a sense, simple. There, Mark Nordlicht, the Debtor, was sued in state court, files bankruptcy. After a bunch of fighting, the Debtor's wife makes a proposal to purchase the Trustee's claims for payment. The Stadtmauers, who were the plaintiffs in state court, object. The district court describes an alter ego claim as this: a claim to recover assets that were wrongfully taken from the estate by a scheme that injures all prospective creditors, 115 F. 4th at page 103. There's no allegations regarding any harm to creditors of the Kwok Estate. Everything in the complaint says we were helped. Also, Nordlicht goes on to say at page 105, general claims are for the harm due to the -- done to the estate. What harm? Again, an alter ego claim, if it is a general claim, and we argue in our papers why it is not, but I won't

22 23 24 25 belabor that point here, has to be because, as Attorney Conway said, the Debtor has placed assets that are truly his beyond the reach of his direct creditors in some other entity.

1 2 3 Here, G Club's assets have been used by Kwok and taken into his estate and thus available for his creditors, and the Trustee has liquidated many of those.

4 5 6 7 8 9 I'll also touch just very briefly on the issue of law of the case. Essentially, understanding that the law and the facts don't match up in any way here, the Trustee tries to get around that by saying that this court has already held, entered judgment that various entities are alter egos of Kwok.

10 11 12 13 14 15 16 17 I'm not aware of any such ruling, but if there was, no summons was served on G Club. They were never served in. So well, the case couldn't possibly apply. We briefed this primarily on page 15 and 16 of our brief. In the PCH, Associates case, which is a Second Circuit case, the law of the case doctrine only applies to rulings on the merits "in later stages of the same lawsuit" or in "different lawsuits between the same parties".

18 19 20 21 22 23 G Club has never been a party to a lawsuit other than this one. I believe there's a couple of others that it's a party to, but I'm appearing counsel in all of them. There's been no case against G Club that I'm aware of that's been served on G Club to which a judgment is entered. So law of the case couldn't apply.

24 25 Just turning briefly to Count 3, which is a claim for equitable ownership. That is not a standalone cause of

1 2 3 4 5 6 action. In Highland Opportunity Master Fund versus Citibank 270 F. Supp. 3d. 716 to page 733 and 734, Court addresses this. Importantly, however, the theory is not an alternative to veil piercing, but rather recognition that veil piercing can apply to someone who's not a legal owner of a corporation if he exercises sufficient control.

7 8 9 10 11 12 13 14 15 Court goes on as the Second Circuit made clear in Freeman, and that refers to Freeman versus Complex Computing Company 119 F. 3d. 1044. The party seeking to apply the theory must still show the "equitable owner" committed a fraud or other wrong that resulted in unjust loss or injury. So that's not a standalone cause of action. They may be trying to make an argument for a nominee or something else, but whatever they're making, it's not a cause of action.

16 17 18 19 20 21 22 23 24 Turning next to the issue of redaction and sealing. While I made this argument before, it's a little different in this context because the Trustee retorts, why don't you just sign a protective order letting you see the rest of the complaint? Simple answer, the First Amendment says I don't have to. The Bankruptcy Code says I don't have to, and you didn't follow the procedures under our district. There's no question a complaint is a judicial document. The Second Circuit held that in Bernstein versus

Bernstein, Litowitz, Berger and Grossmann, 814 F. 3d. 132 at

1 2 3 4 5 page 140. "A complaint is obviously a judicial document that is both relevant to the performance of the judicial function and useful in the judicial process." And that cites the earlier Second Circuit case of Amodeo 44 F. 3d. Pinpoint cite is 145.

6 7 8 9 10 11 Court goes on to say, a complaint which initiates judicial proceedings is the cornerstone of every case. The very architecture of the lawsuit and access to the complaint is almost always necessary if the public is to understand the Court's decision. Again, this isn't about me. This isn't about them.

12 13 14 15 16 17 18 19 This is about the sanctity of the Court, the First Amendment, Section 107, and adherence to the constitutional doctrine of open courts. There's no explanation given as to why whatever information is withheld was withheld. That violates Local Rule 5(e). There's no burden on my clients to sign anything or give away any rights. And no matter how much it may inconvenience or upset the Trustee, can't -- it can't do otherwise.

20 21 22 23 The complaint -- thus, the complaint has to be dismissed because it relies on secret allegations, and there's no constitutional or statutory authority to permit that.

24 25 And finally, Your Honor, G Club International was not properly served. As we state in our papers, mainly in

| 1 | our reply at page 2 and 3, nothing in the affidavit of | |----|-----------------------------------------------------------------| | 2 | service, which is ECF 54-6 in this case, says that G Club was | | 3 | served. There's a statement by the agent saying, I served | | 4 | the agent for service. See Exhibit B for what I served. | | 5 | There's nothing that relates to G Club International Exhibit | | 6 | B. | | 7 | It is the plaintiff's burden to prove service. | | 8 | They've offered no evidence to prove service. So the case | | 9 | against G Club International must be dismissed for | | 10 | ineffective service of process. For these reasons, Your | | 11 | Honor, the Court should dismiss the amended complaint as | | 12 | against G Club and G Club International. Thank you. | | 13 | THE COURT: Thank you. | | 14 | Attorney Bassett? | | 15 | MR. BASSETT: Your Honor, may I approach? | | 16 | THE COURT: Yes. Thank you. | | 17 | MR. BASSETT: Again, for the record, Nick Bassett | | 18 | from Paul Hastings on behalf of the Chapter 11 Trustee. Your | | 19 | Honor, as Attorney Conway alluded to, this morning, my | | 20 | colleague sent counsel copies of a chart, which I would like | | 21 | to use potentially as a demonstrative today. And I'll tell | | 22 | the Court what it is. | | 23 | Basically, you know, in the briefing and through | | 24 | some of the discussion today, there's obviously been a lot of | | 25 | argument by the parties, by the Defendants, as to the | | | |

| 1 | sufficiency of the Trustee's allegations with respect to | |----|-----------------------------------------------------------------| | 2 | particular defendants in the complaint. We have put together | | 3 | a chart that doesn't contain any new argument or any new | | 4 | information. Simply separates all the allegations of the | | 5 | complaint as to each defendant into one, two, or three pages, | | 6 | just listing out what is pled against each defendant, which, | | 7 | A, we think is helpful for the Court, and, B, would | | 8 | substantially cut down on my need to spend time going through | | 9 | specific allegations in the complaint as to 19 different | | 10 | defendants. | | 11 | So with the Court's permission, I'd like -- | | 12 | THE COURT: Is that on the docket? | | 13 | MR. BASSETT: It's not on the docket, but I have | | 14 | hard copies to provide to the Court. And we could email a | | 15 | copy to them. | | 16 | THE COURT: Oh, do you have any opposition to us | | 17 | looking at hard copies of the chart, Attorney Conway or | | 18 | Attorney Sklarz? | | 19 | MR. CONWAY: Your Honor, I don't disagree that | | 20 | anything that would be helpful is useful. I just would say, | | 21 | we're going to object to supplementing the record as long as | | 22 | it's being used as demonstrative and not -- | | 23 | THE COURT: Well, it would only be used as | | 24 | demonstrative. The only reason I asked if it was on the | | 25 | docket was to project it if we had it, but I can look at the | | | |

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 hard copy. It will only be used as for demonstrative purposes. I'm not admitting it into evidence. MR. CONWAY: And, Your Honor, I would agree with Mr. Bassett, that anything that you can look at that references paragraphs is going to be useful. So if it's not part of the record, we don't object. THE COURT: Thank you. Attorney Sklarz? MR. SKLARZ: Subject to the same reservations, no. THE COURT: And do you both have a copy already? MR. SKLARZ: We do. MR. CONWAY: I don't have a -- THE COURT: I'm the -- I do not. But if we're going to use it, I would like a copy. Thank you. MR. BASSETT: May I approach, Your Honor? THE COURT: Yes. Thank you. Yeah. Here. Why don't you guys take that? Thank you. All right. Thank you. All right. I have what Attorney Bassett has handed to me and Attorney Conway and Sklarz have, as well, which is a summary chart of Defendants and allegations in the complaint. Is that correct, Attorney Bassett? MR. BASSETT: That's correct, Your Honor. THE COURT: All right. Go right ahead. MR. BASSETT: Thank you, Your Honor. So I have a fairly lengthy outline prepared to go through, you know, most of the key arguments set forth in the Defendant's briefing.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 I think the comments today by the defense counsel were somewhat streamlined, so I'll try my best to streamline my remarks as well. I do want to start off by just responding to some of the thematic points that both counsel just raised. THE COURT: May I stop you before you get started? MR. BASSETT: Yes, Your Honor. THE COURT: Just so Attorney Conway and Attorney Sklarz, and you, as well, Attorney Bassett. Obviously, I'm going to look at allegations in the complaint at some point, when we're talking about motions to dismiss. So even though there may be some discussion through a chart of different allegations, I'm not going to be relying on the chart. I'm going to be looking at the complaint. So I just wanted to make that clear because I agree with you. This is only for demonstration. That's -- but there are going to be points when, obviously, the Court has to look at the allegations in the complaint. So that's all I wanted to say for the record. Unless you either of you have

19 any questions.

MR. CONWAY: No, Your Honor. Okay.

MR. SKLARZ: No, Your Honor.

22 23 THE COURT: All right. Thank you, both. Sorry, Attorney Bassett. I just wanted to make that point.

24 25 MR. BASSETT: Of course, Your Honor. So I think what I heard, at least, from counsel to the movants was

1 2 3 4 5 6 really an effort to ignore or turn a blind eye to what the relevant law is on alter ego. And in the case of the entities in our complaint governed by English law, the bare Trustee doctrine that we rely on, and also an attempt to, frankly, completely mischaracterize or misunderstand the relief that we are seeking in the complaint.

7 8 9 10 11 Attorney Conway said that alter ego relief is just simply not available and not designed to deal with the situation where the Debtor did not transfer assets to the alleged alter ego entities. Two quick responses to that, Your Honor.

12 13 14 15 16 17 First, that's factually not true because that's absolutely what he did and what we allege that he did. Our complaint is full of allegations of how the Debtor used his other shell companies to pass money to the alter egos, and then to use the alter egos, in turn, to pass money to other shell companies.

18 19 20 21 22 23 24 25 Again, we went over this at the last hearing on the omnibus motion to dismiss by the Avoidance Action Defendants at length. Mr. Kwok did not operate in a way where he had all of these assets and bank accounts that he then transferred to shell companies. He conducted his affairs completely through these shell companies, and he funded them from one pocket to the other. That's exactly what he did.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Number two, Attorney Conway's argument is irrelevant. That's not the standard. The standard under alter ego law and the bare trustee doctrine under English law is whether or not essentially the alleged owner of the entity exercised dominion and control over the entity such that it used it as an instrumentality of himself, and then used that to commit some sort of fraud or other injustice. We've alleged all of that, and I'll go through particular allegations at length in the complaint. That's the standard and we satisfied it at the motion to dismiss stage. Now, Attorney Sklarz, I guess, made a similar point that he referenced several times about how he doesn't think an alter ego claim is available where there are allegations in the criminal indictment, which are paired in our complaint, as to how Mr. Kwok used the alter ego entities to defraud people. Your Honor, I have no idea how that is possibly inconsistent with the alter ego theories that we are asserting in our complaint. If anything, it supports those theories.

20 21 22 23 24 25 To give you an example if you look at entities like Lamp Capital, which the Court is already adjudged to be an alter ego, or Golden Spring, which the Court has also adjudged to be an alter ego, according to Attorney Sklarz, because the Debtor used those entities funds as a slush fund to pay his personal expenses, for example, to buy luxury

## Case 22-50073 Doc 4017 Filed 01/30/25 Entered 01/30/25 14:50:55 Page 35 of 85

| 1 | homes or automobiles or whatever he did with those funds, | |----|-----------------------------------------------------------------| | 2 | that somehow there cannot also be an alter ego claim | | 3 | demonstrating that those entities were mere alter egos of Mr. | | 4 | Kwok and that all their assets are therefore his. | | 5 | That's not at all the way it works. In fact, one | | 6 | proves the other. He used these entities as | | 7 | instrumentalities to carry on business for his own personal | | 8 | purposes, to fund his own personal expenses and those of his | | 9 | family members. And the fact that he defrauded people in the | | 10 | process is not at all inconsistent with the theory that | | 11 | ultimately these entities that he used to do that were | | 12 | entities that he dominated and controlled and that were his | | 13 | alter egos. | | 14 | Going back to my outline, and I'll address all of | | 15 | the arguments that, at least all the arguments that I think | | 16 | need to be addressed that were raised by counsel. I do want | | 17 | to start again by talking a little further about the relevant | | 18 | standard that applies for today's hearing. And today's | | 19 | hearing, to be very clear, is on a motion to dismiss under | | 20 | Rule 12(b)(6). | | 21 | I want to talk about the standard that applies, | | 22 | and I want to talk about how we've satisfied that standard. | | 23 | Now, in the papers, Your Honor, I think, the movants do two | | 24 | things. They try to turn the standard that applies on a | | 25 | motion to dismiss on its head for several reasons, holding |

1 2 the Trustee to a far higher burden than actually exists under relevant law.

3 4 5 6 7 8 9 They also, Your Honor, fail to appreciate and understand and take into account the context within which the Trustee's claims arise. And that context is the history of this Chapter 11 case, the history of the other findings this court has already made, and the demonstrated history of Mr. Kwok using shell companies to hold his assets and conduct his affairs.

10 11 12 13 14 15 16 17 As to the standard that applies, Your Honor, as the Court, of course, knows, on a motion to dismiss, the Court must take all the Trustee's factual allegations as true. And the Trustee with those allegations taken as true need only plead plausible claims for relief. A motion to dismiss is absolutely not, as the Court has recognized on multiple occasions, the time to decide disputed issues of fact.

18 19 20 21 22 In fact, where you have claims, such as alter ego claims, that are highly fact specific, it is almost never appropriate to resolve those claims on a motion to dismiss. I'll give the Court a case cite from the Southern District Of New York that drives this point home perfectly.

23 24 25 Sphere Digital versus Armstrong. The cite for that case, Your Honor, is 2020 Westlaw 6064156. That's SDNY, October 2020. Court is an alter ego case where the plaintiff

1 2 3 4 5 6 7 8 9 10 11 12 13 pled alter ego claims. The Court said, "As should be obvious, whether Armstrong and traffic space can be considered the alter egos of office space presents questions of fact that cannot be resolved on this motion, a motion to dismiss. Alter ego and veil piercing are not amenable to resolution on a motion to dismiss because the nature and extent of the dominion and control exercised by defendants over their subsidiary is a question of fact, not subject to resolution on a motion to dismiss. The Court in that case denied a motion to dismiss, where the plaintiff had only pled that the alter ego in question had the same principal, shared office space, and that it paid the debts of the alleged donor. Those three

14 things, that was it. The claim succeeded.

15 16 17 18 19 The Court further noted, that at the pleading stage "a complaint need not, and often cannot, plead every single factor that might play into an alter ego analysis. As long as there are some plausible allegations of dominion and control, the claim can survive a motion to dismiss".

20 21 22 Your Honor, as I will highlight just a few of the allegations in this lengthy chart, momentarily, we have blown that standard out of the water. It's not a close call.

23 24 25 Defendants do a few things to try to sidestep the real standard that applies. One, they contend that Rule 9(b) applies; it does not. The Court has already recognized that

1 2 3 the Trustee is not required to plead fraud in connection with his alter ego claims, against fraud or any other injustice. Courts are clear on that. 9(b) does not apply.

4 5 6 7 8 9 10 11 12 In addition, there are times where the Defendants claim that the Trustee's allegations pled on information and belief, which there are few, should somehow be disregarded. Again, no support for that. We cited a case in Footnote 53 of our brief, and there are many other cases to the effect of especially in a situation where the relevant facts are not within the control of the Plaintiff, but rather third parties such as here, the Defendants, that it is appropriate to plead on information and belief.

13 14 15 16 17 The other point, Your Honor, that I mentioned that the Defendants, I think, ignore, and simply -- and at a minimum, fail to account for in their briefing is, again, the context that we are operating under here. The Court knows the background.

18 19 20 21 22 23 24 25 The Court knows the findings it's already made as to other alter egos of Mr. Kwok. There's a well-established record in this Court and others about how Mr. Kwok operated his affairs and how he held his assets. The Court already recognized the relevance of this type of pattern and practice in its decision with respect to the alter ego finding for the HCHK entities. This is at, page 17 of the decision in that adversary proceeding, which is adversary proceeding 23-05013.

1 2 3 4 5 I won't quote the Court's language back to Your Honor, but the Court recognizes one of the, I think, six or seven factors supporting the relief in that case, the welldocumented, demonstrated history of the Debtor using shell companies to conduct his operations.

6 7 8 9 10 11 12 13 14 That, Your Honor, is highly informative as to the allegations in the complaint. These entities, the 19 entities that are subject to the motion to dismiss today are but additional entities that Mr. Kwok used in his ever evolving, and sprawling web of dozens, if not hundreds, of companies throughout the world. That's the way he operated. We've shown that in the past, we're showing it again in this complaint. He did not hold assets himself, he kept them in shell companies that he then used to serve his own purposes.

15 16 17 18 19 20 21 22 23 And to the extent that there are fewer relatively allegations as to some of the entities in this complaint, the reason for that, Your Honor, is because these entities were often used interchangeably with others. And not necessarily, you know, had in -- it may may have been created for a moment in time, and then used as part of a, you know, cog in a broader machine. I think that's a consequence of having as many entities as Mr. Kwok did in his worldwide shell game, Your Honor.

24 25 I want to talk now briefly about the applicable law, and I'll try to address some of Attorney Sklarz's

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 comments in the process, and then after addressing the applicable law highlight just a few of the relevant allegations as to some of the entities at issue. Starting with the applicable law, Your Honor, I don't think there's really much of a dispute as to the law that applies to what I will call the domestic entities. That's the four G Fashion entities incorporated in Delaware, a G fashion entity incorporated in California, and G Club operations in Puerto Rico. And I'll get to Attorney Sklarz's comments in a minute, but I think it's generally understood by the parties that, generally speaking, to plead an alter ego claim under the laws of those jurisdictions one must, as I mentioned at the outset, demonstrate that there was dominion and control over the entity in question and that dominion and control has been used to perpetrate a fraud or some other form of injustice. And courts in all these jurisdictions apply a holistic analysis where there are factors, but it's not a situation where every factor needs to be satisfied. Now Attorney Sklarz spent some time talking about an issue that we already have been over in detail, specifically at the last hearing before Your Honor in the avoidance actions on the omnibus motion to dismiss. I'm not going to re-argue all of that and belabor the point. Attorney Sklarz was not, at least as I understand

1 2 3 4 5 it, arguing with the Trustee's ability to, or the Trustee having sufficiently pled claims for alter ego relief under Puerto Rico law. He was taking issue with the remedy that the Trustee is seeking, namely ownership of all the assets of the entity.

6 7 8 9 10 11 12 13 As to that issue, as we discussed at the last hearing, Your Honor, the Trustee's position, which is supported by a number of cases that we discussed at length last time, is that this is a federal law question. There are cases, and if memory serves, one of them was the, I think, the Star Mountain case that we cited, talks about and explicitly says that alter ego claims, Your Honor, in bankruptcy take on a different character.

14 15 16 17 18 19 20 21 22 23 24 Whatever they may be outside of bankruptcy, whether there may be some jurisdictions where there's the vicarious theory of liability as opposed to the identity theory in bankruptcy, the result is that when a trustee brings an alter ego claim in conjunction with Section 541 of the Bankruptcy Code to try to bring the assets of that alter ego into the estate, that's exactly what happens. There's case law for that, Your Honor, that applies just the same to Puerto Rico law, applies just the same to English law, and therefore, we think that the relief that we're seeking is fully supported.

The other point I would make, Your Honor, is that

1 2 3 4 5 6 7 8 as a general matter, and I don't have case cites for Your Honor handy, but I know this from having worked a lot with Puerto Rico law and other cases, Puerto Rico generally follows Delaware law on corporate issues. And to that end, we cited a number of cases to Your Honor talking about how, in any case, Delaware law follows the identity theory even outside of bankruptcy. So for both of those reasons, the relief that we are seeking is appropriate.

9 10 11 12 13 14 15 16 17 18 As to as to English law, Your Honor, I do want to spend a little time on this because I think it was the subject of some discussion by Attorney Sklarz, and also a good amount of discussion in the briefing. And I want to be clear about something, the claim that we are alleging as to the entities governed by English law, and to avoid any doubt, this is all of the non-domestic entities. So it's ACA Capital Group, which is incorporated in Hong Kong. It's the three Hamilton entities incorporated in the Cayman Islands, the United Kingdom, and the BVI, respectively.

19 20 21 22 23 24 25 It is the five Himalaya entities, four of which are incorporated in the BVI, but one of which is incorporated in Australia. It's G Club International, which is incorporated in the BVI, and then there's three foreign G Fashion entities, all incorporated in the BVI. Your Honor, it's either agreed in the case law or explained in the Trustee's brief that all these jurisdictions -- Cayman

1 2 3 4 Islands, BVI, Hong Kong, and Australia -- either in the case of all but Australia, actually follow English law, or in the case of Australia, English law is persuasive. So these principles apply to all of his entities.

5 6 7 8 9 And the principle, Your Honor, that we plead in the complaint, and the basis for our claim, is that these - it's not an alter ego claim, Your Honor, as Attorney Sklarz seems to think. That's at least not how we pled it as to the foreign entities.

10 11 12 13 14 15 16 17 18 19 20 21 The claim that we have pled in our complaint is a claim that these entities are nominally holding up -- that the owner of the owner of the entities that are alleged to be the Debtor's alter egos are nominally holding those entities and their assets for Mr. Kwok as bare trustee. That's the doctrine that is recognized in the Prest case that we cite and discuss at length in our briefing and that other courts in the United Kingdom have relied upon to basically achieve a similar result to alter ego, and in particular, a result where assets nominally owned by others are, in fact, for equitable purposes, held to be owned by the person who actually has control over those assets.

22 23 24 25 Now, Attorney Conway and I believe Attorney Sklarz talk in their briefing -- they cite to a Skystream case, from a UK court, where they say that the creation of this sort of bare trust relationship requires three certainties. And then

1 2 3 4 they say that what this requires is that the plaintiff has to plead, with some sort of direct evidence, that the individual allegedly controlling the entity expressly sought to have the entity created, to hold his assets in trust.

5 6 7 8 And they said that we don't have that evidence. We don't have an allegation that Mr. Kwok expressly said in an email, or otherwise, that he wanted a particular entity to be created to hold his assets in trust.

9 10 11 12 13 14 That, Your Honor, is not a correct interpretation of the law. And even the Skystream case that they cite makes that clear. What the Court observed in that case and it also in the Prest case, which I will discuss, is that this necessary intention to establish the existence of a bare trust relationship can "be inferred from conduct".

15 16 17 18 19 20 21 And in that case, the Court, which was operating in an appellate capacity, reviewed the evidence and said that -- the facts in that case, where a bare trustee relationship was found, was "a classic case in which there was a good deal to be said on each side regarding the primary facts and what inferences should be drawn from the primary facts and circumstances".

22 23 24 25 The Court went on to then discuss how the trial judge in that case appropriately weighed the evidence and came to a determination that based on the evidence and the inferences the Court drew from that evidence that there was,

1 in fact, a bare Trustee relationship created.

2 3 4 5 6 7 8 Your Honor, that's highly instructive here for a couple of reasons. One, again, as I said, it demonstrates that just as with alter ego case law in the United States the relevant dominion and control and the relevant intention to create a bare trustee relationship can be inferred from the facts and circumstances which we have pled an abundance of in the complaint.

9 10 11 12 13 14 It also is important, Your Honor, because it stresses, again, the posture that we are in. Even English courts, UK courts recognize, as do courts in the United States, that these types of fact-intensive issues are best resolved by a trial judge weighing the facts and circumstances, not in this motion to dismiss setting.

15 16 17 18 19 I also want to focus the Court on the Prest case that we spend a lot of time citing because I just want to emphasize a couple of passages from that case and also how the facts are similar and apply to the claims that the Trustee has brought here.

20 21 22 23 24 25 First of all, in the Prest case, the Court, again, similar to the Skystream case, noted that the bare trustee claim is a highly fact-specific issue. And then the Court went on to say that as to that issue, it is not possible to give general guidance going beyond the ordinary principles and presumptions of equity. Again, highly consistent with

1 2 3 4 5 6 how this court evaluates all the legal claims under U.S. law, and how this court exercises its jurisdiction in bankruptcy cases focusing on the equities. And I will not belabor the equities here, because we've done that many, many times. And I think the Court understands how we see the equities with respect to Mr. Kwok's shell game.

7 8 9 10 Now, the facts in Prest, Your Honor. I want to spend a couple of times just highlighting some of the findings that the Court made there to support the bare trustee relationship that it ultimately found to exist.

11 12 13 14 15 This is a husband and wife case, as Attorney Sklarz, I think, or, I think he mentioned, and the point being that the wife in the relationship had alleged that the husband had created some shell companies to hold his assets. She wanted those assets brought into the marital estate.

16 17 18 19 20 21 22 The Court noted, among other things, that the - the lead shell company that the husband created in an offshore jurisdiction to hold property was an entity that he "used to act as a channel for funding his personal purchases". The Court also observed that the husband had exercised managerial control over the company, even though he was not the nominal owner of the company.

23 24 25 In fact, in that case, Your Honor, nominal ownership of the companies was not even established. There wasn't enough information available because the husband had

1 2 3 4 5 been obstructing discovery efforts, which is an issue that, of course, we have seen a lot of in this case. And the Court, instead, had to just cut through the complexities as a direct quote, and look at the practical reality of the circumstances.

6 7 8 9 The Court also found that the husband "treated the company's cash balances and property as his own, and drew on them as he see as he saw fit". Again, it's exactly what we've alleged here.

10 11 12 13 14 15 The Court in that case found that the husband used the assets of the shell companies to "fund his family's personal expenditures, including the substantial legal costs incurred in these proceedings". Again, thematic with what we've seen in this case, with Mr. Kwok using shell companies to fund his personal expenses including legal expenses.

16 17 18 19 20 21 22 23 24 25 Your Honor, finally and I think this is critical, because it goes back to a point I made before. The UK Court in Prest observed, as part of its bare trustee finding, and relied on the demonstrated history of the husband's conduct. The Court noted "a consistent pattern can be discerned by which the husband caused properties to be acquired with funds provided by himself, by companies under his control, nominally funded by PRLR, but in fact, funded by himself". Your Honor, obviously, the facts of our case are different, but the analysis undertaken by the Prest court,

1 2 3 4 5 the analysis that applies under English Law is directly applicable here. The same types of indicia of control that indicate that the alter ego entities were, in fact, held in bear trust for the Debtor are just as present here as they were in the Prest case.

6 7 8 9 10 Your Honor, I want to move on to a couple of the other legal arguments that I will -- actually, before I do that, Your Honor, I do want to and I'll try to be -- I'll try to be brief, but I did want to make use of the chart that we provided to the Court.

11 12 13 14 15 16 Again, I promise I will not go through all 19 entities. But I do think it is important, because if you look at the briefing that was submitted to Your Honor, there is an attempt to severely mischaracterize and minimize the extent of the allegations that the Trustee has alleged with respect to the entities at issue in the complaint.

17 18 19 20 21 22 23 If you look at, for example, Hamilton Opportunity Fund, which is the first entity in the chart, and again, these are -- and I hear Your Honor loud and clear, obviously the complaint is controlling, not this chart. But what we've done here is we've cited to the complaint, and to use this as a demonstrative just to kind of list out the allegations that we have.

24 25 Then again, this is just by way of example. Your Honor, the nominal owner of Hamilton Opportunity Fund is

1 2 3 4 5 6 7 8 9 William G. There are extensive allegations in the complaint about how William G is the Debtor's agent. There are also allegations in the complaint about how William G used Hamilton Opportunity Fund and the other Hamilton entities to assist in managing the Himalaya exchange entities. There's extensive allegations in the complaint about how there were other individuals under Mr. G's direction who helped the Debtor exercise control over the Hamilton entities, including Hamilton Opportunity Fund.

10 11 12 13 One of those individuals is David Fallon, whom as this Court knows, is an individual whom counsel for Taurus Fund, Mr. Conway, stated that he had taken directions from in litigation in this case.

14 15 16 17 18 19 20 21 22 23 24 The Debtor used Hamilton Opportunity Fund to hold a majority share of GETTR USA, which the complaint alleges is controlled by the Debtor. The Debtor used "Hamilton" to pay his employees. I put Hamilton in quotes because Jesse Brown, who testified in the Debtor's criminal trial, said that he was hired by Yvette Wang, initially to serve as an employee of GTV Media Group, and was initially paid by GTV Media, or by Guo Media and GTV, and then later, his salary was all of a sudden paid by "the London entity Hamilton". And he said that while the name of the entity paying him changed, nothing changed about his work for the Debtor.

Why is that significant, Your Honor? Because it

1 2 3 4 5 shows the interchangeability of these entities, the fact that Mr. Kwok decided to pay somebody through one entity and then later changed that through another, even though there was no substantive distinction between the work that they were doing.

6 7 8 9 10 11 12 13 14 There are also allegations in the complaint about how the U.S. Government alleged that Hamilton Opportunity Fund is among the interrelated and overlapping entities that form the G Enterprise. The Debtor, this is sort of the Fifth Amendment, when asked about his control, over the agents who nominally exercise control over the Hamilton Opportunity Fund. There's all kinds of evidence in the chart here, Your Honor, over the next page about how the Debtor used Hamilton Opportunity Fund as a source of funding.

15 16 17 18 19 20 21 22 He directed that funds raised through G Club memberships be sent to Hamilton Opportunity Fund. He insisted on emptying G Club's bank accounts to send funds to the Foundation, which refers to Hamilton Opportunity Fund. He arranged from funds to be transferred from his other adjudged alter egos to Hamilton Opportunity Fund, that includes millions of dollars from the HCHK entities to Hamilton Opportunity Fund.

23 24 25 We allege that Hamilton Opportunity Fund has no source of funding independent from the Debtor. We also allege how Hamilton Opportunity Fund was used to further the

1 2 Debtor's personal interests, including to fund his purchase and renovation of the Mahwah Mansion.

3 4 5 6 7 8 9 He also transferred, as alleged in the complaint, \$30 million to a bank account in Switzerland. Again, Your Honor, I could go on and on. This is one example. I'm not going to belabor by going through all of the entities in this chart, but the entities of -- or the allegations that we have pled concerning the Debtor's ownership and control of the alleged alter egos is extensive.

10 11 12 13 14 And for all the reasons that I discussed at the outset, it's fully consistent with what alter ego law is designed to do. And it's fully consistent with the elements that the Trustee needs to plead in order to prevail at the motion to dismiss stage of this litigation.

15 16 17 18 19 20 21 22 Your Honor, I want to spend the balance of my time just briefly addressing some of the other arguments that Attorney Sklarz has raised. First, on the issue of standing. This is another argument that we have discussed now numerous times, so I'm not going to belabor it. The Court has now decided on, I think, six, maybe seven different occasions, I think on three different occasions in the Lamp Capital adversary proceeding alone.

23 24 25 And then in on three other occasions including HCHK, HKUSA, and Greenwich Land, the Court has decided that the Trustee has standing to pursue alter ego claims under

1 2 3 4 Section 544(a) of the Bankruptcy Code. The Court reached that conclusion after analyzing case law, including from other judges in this Bankruptcy Court, and also from the Second Circuit.

5 6 7 8 The Court recognized that Section 544(a), in fact, allows a trustee to bring claims that assert generalized harm on behalf of all creditors of a debtor. It's exactly the type of claim that the Trustee is asserting here.

9 10 11 12 13 14 15 16 As we have discussed in the past and I believe Attorney Kindseth was part of this argument, the Nordlicht case has since come out after the Court issued those prior decisions. The Nordlicht case, Your Honor, puts any end to the question of whether or not the Trustee has standing to bring these claims. It also puts any end to the question of whether or not the in pari delicto and alter ego doc -- or and Wagoner doctrines apply, which they do not.

17 18 19 20 21 22 23 24 25 The Nordlicht case, Your Honor, is virtually on all fours. I read a quote from Footnote 14 of that decision the last time we were discussing it, Your Honor. I won't recite it again, but it is eerie how similar the factual allegations made, in the alter ego claim in that case are to those at issue here. All allegations about how a Debtor pretended to be destitute, having tucked all of his assets and conducted all of his affairs through shell companies. Exactly what we have here.

1 2 3 4 5 6 7 And what the Court held was that under Section 541 of the Bankruptcy Code, the Trustee has the ability, and in fact, the sole ability, to pursue claims that assert generalized harm on behalf of creditors, including specifically the alter ego claims in that case. And that's exactly the type of claims that we are asserting here. I frankly don't quite follow or understand the

8 9 10 11 12 13 argument raised by Attorney Conway, and I think parroted by Attorney Sklarz, that somehow the claims we are asserting are particular to individual creditors. This is not a situation like the Picard (phonetic) case, where there was an attempt to claw back funds through an alter ego claim that would then be used to pay certain creditors. That's not it at all.

14 15 16 All of Mr. Kwok's creditors were equally harmed by the Debtor's use of the alter ego entities in question to hide his assets.

17 18 19 20 21 22 23 24 25 But for the creation of all these shell companies by the Debtor to hide his assets, those assets would instead be property of the estate. And it need not be the case, as Attorney Conway suggested, that the Debtor had to have taken assets that were in his name in his bank account and transferred them to the shell companies the point is he dominated and controlled the shell companies from their inception to collect money, to conduct his affairs. And therefore all of their assets are really assets that the

54 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Debtor, Mr. Kwok, should have had as part of his estate from the beginning. On the question of in pari delicto and Wagoner, Your Honor, the Court has already dealt with this. And I want to find -- I want to find the reference because I think it's important. So Your Honor -- and Your Honor, as you may recall, in your decision in the HKUSA adversary proceeding, this was, again, before the Nordlicht case had been issued by the Second Circuit, the Court noted in the course of it of your analysis as to Section 544 that the law was a little different in some other jurisdictions, namely the Third Circuit. And particularly, what the Court recognized in referencing the In Re Amoro (phonetic) case in the Third Circuit was that the Third Circuit had already issued decisions that were similar to the forthcoming Nordlicht decision by the Second Circuit. And what Your Honor observed was that because of that, because there was already this law in other circuits where a trustee could assert claims under Section 541 that are claims that assert the rights of creditors generally,

23 24 25 that that would be a different path to getting around in pari delicto and Wagoner. The Court said, quote, in the HKUSA decision because of this law in the Third Circuit, in that

1 2 3 circuit there is a "different basis in the Third Circuit for largely the same result as under PepsiCo in the Second Circuit".

4 5 6 7 8 9 10 11 Court reached the same conclusion in the Hudson - in the motion to dismiss decision in the Hudson Diamond and Leading Shine adversary proceeding, after again summarizing the Amoro case in the Third Circuit, the Court said, "Therefore, in the Third Circuit, bankruptcy trustees can bring alter ego and beneficial ownership claims under Section 541 as generalized claims of creditors, not as claims of the Debtor, which would also avoid the Wagoner Doctrine."

12 13 14 15 16 17 18 19 Again, the Court has already decided this correctly. Because these are claims asserted on behalf of creditors generally, they are inherently not subject to in pari delicto or the Wagoner doctrine. And we've cited a case to Your Honor, which is in our briefing, and I've raised it previously, that addresses this head on. And this is the In Re Harmon case from the Northern District of Georgia Bankruptcy Court in 2015.

20 21 22 23 24 25 The Court concluded in that case that in pari delicto is not applicable here. As discussed above, binding Eleventh Circuit precedent informs that the Trustee has authority under Section 541 to bring alter ego claims, which could be brought by the Debtor's creditors. Therefore, the defenses do not apply.

1 2 3 4 5 6 7 8 9 10 Your Honor, as to personal jurisdiction, briefly, I don't think I, at least, haven't heard in the briefing or today any real basis to disagree with the Second Circuit authorities we have cited for the proposition that where a plaintiff has pled alter ego claims against defendants, those alter ego claims themselves, assuming they're well-pled, which for all the reasons I have discussed in our complaint they are, those alter ego claims are sufficient to provide a basis for exercising jurisdiction over the alleged alter ego, and that makes perfect sense.

11 12 13 14 15 16 17 18 If somebody like Mr. Kwok who is resident in the United States is using an entity located elsewhere as a mere instrumentality or extension of himself, then by definition that mere instrumentality or extension is also located in the United States and also subject to jurisdiction here. Those cases are -- they're legion, there are many of them, and I don't think I've heard any basis for this court to disagree with them.

19 20 21 22 23 24 25 As to William G, which is not discussed, Your Honor, he's pled as a -- well, I do want to address Attorney Conway's argument briefly as to William G, Celestial Tide and Major Leed, which is his -- the comment he made was that these entities don't belong in the complaint because the Trustee has pled no claims against him. Not true, Your Honor. And, again, this is also an issue that the Court has

1 addressed in the past on multiple occasions.

2 3 4 5 6 7 8 9 These entities like other entities that have come up before the Court in motions to dismiss in this case are named in the complaint because they are nominal owners of alleged shell companies -- of alleged alter egos. We have named them because it would be nice to have a judgment against those parties to the extent that we need to, for example, use that judgment to compel the nominal owner to transfer shares in a company to the estate, et cetera.

10 11 12 13 14 15 16 17 I frankly don't think that we need that judgment in order to get the relief because we will have a judgment against the alleged alter egos, but that's why these parties have been named because they are nominal owners, and therefore they are defendants to the counts where we seek a declaratory judgment as to the Trustee's ownership of these entities, and where we seek, you know, ultimately turnover of their assets. That's why they're named in the complaint.

18 19 20 21 22 23 24 25 And as to whether or not Mr. G is subject to personal jurisdiction, I'll refer the Court to our papers, in in particular to the complaint. But to put it succinctly, we believe we have specific jurisdiction over Mr. G. There - the complaint is replete with allegations as to Mr. Kwok's relationship with Mr. G. The fact that Mr. G, when acting as the Debtor's agent and helping him to manage these shell companies for Mr. Kwok's benefit, traveled to the United

1 2 3 4 5 States repeatedly. He directed other agents of the Debtor in the United States, including Jesse Brown, who testified at the criminal trial. He helped facilitate, as the Court well knows, the security deposit for the Lady Mae yacht before this court.

6 7 8 9 10 There are a number of different contacts that we have pled that relate specifically to the allegations of control and alter ego set forth in the complaint, which therefore establishes specific personal jurisdiction over Mr. G.

11 12 13 14 15 16 Last two arguments that I'll briefly address Your Honor are, the issue of service of G Club International, and the issue of whether the complaints were properly filed under seal. On the service question, Your Honor, I really don't, frankly, believe this argument merits any discussion, but since it has been asserted, I feel compelled to address it.

17 18 19 20 21 22 23 24 I'm frankly mystified by the assertion that there's no evidence to support that G Club International is properly served. Your Honor, the parties agree that under the Hague Convention and under BVI law, that a BVI entity can be served by leaving process at the place of its registered agent. And we also agree that service is complete upon that happening, regardless of whether or not the registered agent signs to accept service.

Here, we have filed on the docket at Docket No.

1 2 3 4 5 54-5, a certificate of service from Attorney Lindsey, attaching documentation from the process server at the Trustee's counsel in the BVI who effected service on G Club International. This certificate of service, specifically, on page

6 7 8 9 10 11 12 2, certifies that counsel for the Trustee in the British Virgin Islands, Harney, Westwood, and Riegels, caused the Defendants, including G Club International, to be served with the documents -- the served documents which is a defined term including the complaints -- by personal service on their registered agents listed below and as indicated in Exhibit A attached hereto.

13 14 15 16 17 18 19 Listed below, you have G Club International Limited, indicating that its registered agent was FH Corporate Services Limited with an address below that. If you look at Exhibit A, Your Honor, on page 6 of the documents, with respect to G Club International, there's a statement that the documents were left at FH Corporate Services Limited on Monday, May 10th, 2024.

20 21 22 23 24 25 However, FH Corporate Services Limited refused to accept service on behalf of any of the companies. In any event, hard copies of the documents were left at the company's registered agent address. The email from FH Corporate Services Limited is appended as Schedule B. And then, that's plain as day, Your Honor. The

1 2 3 4 5 6 certificate of service describes exactly what happened. The documents were left with the registered agent. If you go to Exhibit B, which contains the email, Attorney Sklar says that there is no email on there, which is just not true. If you look at page -- page numbers are obscured on the copy that I have, but it would be the fifth-to-last page of Exhibit B.

7 8 9 10 There's an email from an individual at Forbes Hare, which is FH Corporate Services Limited, explaining to the Trustee's counsel who served the complaint that they do not have instructions to accept service.

11 12 13 14 15 16 17 So again, the facts are clearly laid out in the certificate of service. The documents were served at the registered agent, in accordance with BVI law, they said, We're not accepting service. But as I just said, under BVI law, that's irrelevant. Service is complete upon mailing. There's there should be zero dispute on this issue, it's a manufactured issue that does not exist.

18 19 20 21 22 Another manufactured issue and the last issue I will address with the Court, Your Honor, is the question of whether or not the complaints should be dismissed because they were, according to Attorney Sklarz, improperly filed under seal.

23 24 25 To be very clear, the Trustee filed a motion to have the complaint -- the amended complaint sealed in this case. That motion was granted by the Court in this adversary

1 2 3 4 5 6 7 proceeding without objection by Attorney Sklarz. He has not sought to overturn that. He's not sought reconsideration. That motion was based on the existing protective order that the Court already entered in the larger Chapter 11 case. The point of that protective order, of course, is to allow parties who are producing information to the Trustee to do so on a confidential basis.

8 9 10 11 12 13 14 15 16 17 That protective order requires the Trustee to maintain the confidentiality of the information that he received. It requires the Trustee to file that information under seal to the extent he files it on the docket of this case. Attorney Sklarz has every right, as he acknowledges, to simply sign the protective order to get access to that information. Every other defendant in this case has done so. In fact, there's an awkward situation where one of Attorney Sklarz's clients, Aaron Mitchell, has signed the protective order.

18 19 20 21 22 23 So, Attorney Sklarz's client, in one case, can get the information, but Attorney Sklarz cannot. Your Honor, he's not cited any other case dealing with circumstances like this. He's not suggested, much less cited, authority for the fact that it's improper for a court to enter a protective order like the one it issued here.

24 25 All of that, setting all that aside, I don't even understand the point of the argument, Your Honor, because it

1 2 3 4 5 6 7 8 9 cannot be that the result, even if Attorney Sklarz is right, is that the Trustee's claims against him have to be dismissed. And I assume he would say with prejudice. That makes zero sense. Even if he's correct, the remedy would be unsealing the complaint. It wouldn't be dismissing the case. And to be -- also, to be very clear, the Trustee has no desire to maintain the confidentiality of information that other parties have marked confidential. He's simply doing what he has been asked to do.

10 11 12 13 14 15 16 17 18 19 And if there ever comes to be a point where that information should be unsealed and a motion needs to be filed for that purpose, the Trustee would file the motion, and parties would have the opportunity to come in and object and say that they want it to remain confidential. Maybe an issue that we'd have to deal with some privileged information potentially. I'm not sure if that's indicated by the complaint or not. We would deal with that. Bottom line, Your Honor, is that in any world dismissal would not be the remedy.

20 21 22 23 24 25 With that, Your Honor, I will conclude my remarks. I apologize for the lengthy comments, but there were a lot of issues raised in the briefing and a lot of issues raised today. In summary, we have more than met the standard that applies at this stage of the case, particularly for highly fact-specific claims. And we think all of the arguments that

| 1 | have been raised by the Defendants are ones that should be | |----|-----------------------------------------------------------------| | 2 | rejected by the Court. Thank you, Your Honor. | | 3 | THE COURT: Thank you. | | 4 | Attorney Conway, would you like to respond? | | 5 | MR. CONWAY: Yes. Thank you, Your Honor. I want | | 6 | to start with what seems like an issue that shouldn't have | | 7 | been raised, but it was. And it's just because the record is | | 8 | now muddled again with facts that are not facts and in this | | 9 | case, these things seem to snowball into later proceedings. | | 10 | It has never been the case that, I have stated to | | 11 | this court that Mr. Fallon has given me instructions in | | 12 | connection with representing the Taurus Fund. That, in fact, | | 13 | is false. I would not breach my obligation not to disclose | | 14 | privileged conversations. | | 15 | I did respond to Your Honor's question on Day 1 of | | 16 | my representation in this case who signed my retention | | 17 | agreement, and I said it was David Fallon. I say that only | | 18 | because tomorrow it'll be -- it'll be quoted in a newspaper | | 19 | that Mr. Fallon's instructing Mr. Conway. That's just not | | 20 | true. | | 21 | Now, we started with the issue of English law. I | | 22 | think that one of the things that we want to make clear is | | 23 | that this bare trustee issue has a starting point. The | | 24 | starting point, even the cases cited by the Trustee and | | 25 | certainly the cases cited by our clients, are that there is | | | |

1 2 3 4 5 6 an intent to set up a trust for a specific individual or entity, and in this case we're talking about Mr. Kwok that doesn't exist for any of these companies. There has to be a starting point where there's an intention, not something that comes later, where Mr. Kwok decides he's going to take advantage of something that's been set up.

7 8 9 10 11 12 13 14 And the easiest way to really illustrate this is using counsel's chart. If we go to page 5 -- I'm sorry, 4, where he talks about the Hamilton Capital Holdings Defendant, that's a UK entity and obviously would be controlled by UK law. Who was the trust set up for? William Jay. according to this. According to the complaint, William Jay is the nominal owner. It was the Hamilton Capital Holdings set up for him.

15 16 17 18 19 How is the Debtor in any way implicated by this? Are there facts in the complaint that say that there was a nominal trust, a bare trust set up for his benefit? No. It's all for the benefit, according to the complaint, of Mr. Jay. And Mr. Jay is, without support, the agent of Mr. Kwok.

20 21 22 23 24 25 While it is an allegation unsupported that he's a financial adviser to Mr. Kwok, there's nothing in the complaint that suggests that this bare trust situation, which was according to the complaint, set up for someone other than Mr. Kwok, is, in fact, something that was set up for Mr. Kwok. It's the opposite. Their own allegations, rebut their

| 1 | theory here. | |---|--------------| |---|--------------|

2 3 4 5 6 And the same is true for all of these entities, even the ones that are not foreign entities, the domestic entities, as well, they're not set up for Mr. Kwok. The allegation, essentially, is that he's coming around later and taking advantage of these entities.

7 8 9 10 11 12 13 14 15 16 Now, the point that counsel makes that Nordlicht is eerily similar struck me as worthy of comment. It's not eerily similar. It's exactly the opposite of what we have here. In Nordlicht, as we pointed out in the papers, we have an asset or assets transferred from the Debtor to a trust. The assets are being asked to be brought back to the Debtor by the Trustee, the exact opposite of what we have here. Here, we have assets that were set up or fraudulently obtained from somebody else, and they want -- the Trustee wants to bring them into the Debtor's estate.

17 18 19 20 Nordlicht is a case relating to general claims. This is a case relating to individual claims. And Mr. Bassett has stated again today -- he stated this in the past, too. He says he doesn't understand this issue.

21 22 23 24 25 How can anybody say these are individual claims? What does that even mean? What it means is -- and this is one of the problems with having a case with, you know, 30 some odd defendants saying they're all the same facts. You've got to take these one at a time. And what's easiest

1 2 3 4 5 for me anyway to use, Mr. Sklarz's client because G Club, as we all know from our years in this case, is made up of a bunch of individual members. And so it's easy to think about who really got harmed with respect to G Club. It was certainly not the Debtor.

6 7 8 9 10 11 12 13 14 15 So what we have here is a claim, ultimately, at the end of the day -- and the Trustee has, at various times, said to Your Honor, we'll extend the claim bar date and let them come in and make claims, and that'll resolve all problems. Here's why it doesn't work, Your Honor. If we focus just on G Club and say it's \$200 million comes into the estate because the Trustee wants to augment the estate with that money, now you've got G Club's members making a claim against those assets, but you've got every single creditor of the Debtor claiming against those assets as well.

16 17 18 19 20 21 This is what Mr. Bassett doesn't claims he doesn't understand. How can these be individual claims? That's how. Those assets are not the property of every creditor of the estate. They're assets which would belong to the creditors who were defrauded in the first place and put that money into G Club and then into Hamilton or wherever.

22 23 24 25 But the fact is that if somebody got in an auto accident with Mr. Kwok and can make a claim against those assets, that's not what the -- that's not what the law is supposed to address here. The standing issue is clear. If

1 2 3 4 5 6 7 it's general claims where the assets started in the hand of Mr. Kwok, sure, the Trustee has standing to go after it. If it's individual claims where only those G Club members can go after those assets, then it's not appropriate for the Trustee to do it. And it's not acceptable to just say I don't understand that argument, and therefore it's not a good argument.

8 9 10 11 12 13 14 15 16 Now, Mr. Bassett also said that it's not appropriate to resolve facts on a motion to dismiss. I agree. But we're not trying to resolve facts. What we're saying here, there are no facts. There are conclusions to say that, Mr. G is an agent of the Debtor. Okay. That's a conclusion. Why is he an agent? Why is there control? We have no facts that support any of these conclusions. And that is appropriate to decide on a motion to dismiss. It's not too soon.

17 18 19 20 21 22 23 24 25 The idea that that there is no right to argue jurisdiction in an alter ego case, well, that flies in the face of the Second Circuit's Palladium opinion, which is an alter ego case where the Court does address jurisdiction issues and does also address other aspects of the same claim -- same arguments we're making here, but they do focus on jurisdiction. It's not true to say that if it's an alter ego case, you don't have a jurisdiction defense because you're a foreign defendant. There still has to be some showing that

| 1 | there is a constitutional basis to bring these folks into the | |----|------------------------------------------------------------------| | 2 | United States, and we haven't seen that alleged here. | | 3 | I think I got one more point I wanted to address | | 4 | that was made. Well, I guess it's just part and parcel of | | 5 | one that I've already discussed. And that is that Mr. | | 6 | Bassett made it very clear what he wants to do in this case. | | 7 | He does not want to recover monies and then give | | 8 | it back to the creditors who were defrauded, whether it be G | | 9 | Club or otherwise. What he wants to do is he wants to bring | | 10 | them in, augment the estate for the benefit of everybody, and | | 11 | he claims that's what you're supposed to be able to do. | | 12 | That's what makes it a general claim, but that's not the | | 13 | case. That's not what general claims or individual claims | | 14 | refers to. | | 15 | He's not -- it's not a matter of saying what he's | | 16 | doing here I want to take all this money and give it to | | 17 | somebody else. We're not Robinhood. We're supposed to give | | 18 | the money back to the people who are defrauded and that, as | | 19 | Mr. Sklarz said earlier, that's the job of the Department of | | 20 | Justice in this case. That's not our job. Thank you, Your | | 21 | Honor. | | 22 | THE COURT: thank you | | 23 | MR. SKLARZ: Thank you, Your Honor. Jeffrey | | 24 | Sklarz for G Club and G Club International. I'll work from | | 25 | the end to the beginning. With respect to the ceiling | | | |

69 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 argument, whatever Attorney Bassett said has absolutely no bearing on the existence of Local Rule 5(e). That is the rule that has to be complied with. By way of background, as Your Honor may recall, many years ago, Judge Mark Kravitz took a particular interest in this district in open courtrooms and constitutional right to observe proceedings and dockets. Therefore, our district, for better or worse, has a very lengthy process, highly specific and detailed as to how documents -- judicial documents are sealed and how courtrooms are sealed. It's embodied in a rule. That rule is written down to be followed, and it wasn't. It is not on me to just do something because the Trustee wants it done. The Trustee does not have a roving commission to do whatever he wants. He is an officer of the Court and needs to comply with the rules. With respect to the service of process issue, I am looking at exhibit or the document 54-5, and I'm not -- THE COURT: In your adversary proceeding?

20 21 22 MR. SKLARZ: In my adversary. Yeah. In the ACA. THE COURT: Yep. I just want to make sure clear for the record. Yeah.

23 24 MR. SKLARZ: There are a bunch of -- so the reference --

THE COURT: Tell me the ACF number again, please.

| Case 22-50073 Doc 4017 Filed 01/30/25 Entered 01/30/25 14:50:55 Page 70 of 85 | |-------------------------------------------------------------------------------------------| | 70 | | MR. SKLARZ: I just want to -- I'm looking at 54- | | 5, but I just want to make sure I'm looking at the right one. | | There's a lot of them. | | MR. BASSETT: You want my copy? | | MR. SKLARZ: That would be easier. Thank you. So | | on 54-5, page 6 of that document, although it's hard to see, | | that's where the statement from the process server is. Then | | further on, there are a number of letters from Harneys. One | | is to -- this is Schedule B. One is to Conyers Trust. | | Another is to Conyers Trust. A third is to Conyers Trust. | | I'm sorry. Relates to Himalaya, Himalaya, Himalaya, Wise, | | Himalaya. Nothing related to G Club International. | | So whatever -- so the email from the FH person | | says, we're not authorized to accept service. There's | | nothing related to G Club in that document. Your Honor will | | review it, and you'll either agree with me or perhaps I | | didn't read so well. But that's set forth in our briefing. | | Now, there was discussion today, and this mirrors | | the discussion we had a couple weeks ago regarding the | | differences between alter ego and substantive consolidation. | | And, apparently, according to the Trustee, there's a special | | -- the Erie doctrine just doesn't apply anymore, and state | | law rights and remedies exercised under Section 541 of the | | code are subsumed in some federal common law. | | Well, Erie teaches us that federal common law | | |

1 2 3 4 doesn't exist except to the extent of a federal statute. Now the Bankruptcy Code is a federal statute, but the remedy of alter ego is not a bankruptcy remedy. It's a state law, common law remedy.

5 6 7 8 9 10 So to say that there's somehow this special remedy that attaches when you bring an alter ego in the Bankruptcy Code is just wrong. Now, a couple of weeks ago, essentially, what the Trustee said is, hey. This really is the same remedy as substantive consolidation, but we don't want to follow auto style. Your Honor should just not permit that.

11 12 13 14 15 16 17 Alter ego is a specific remedy designed under state law, and under Puerto Rican law in particular, it is a vicarious liability. In other words, if there is liability, the creditor can go after the assets of the alter ego. It is not substantive consolidation. But again -- and I pointed this out last time -- what he asked for isn't even substantive consolidation.

18 19 20 21 22 23 24 25 It's give us the assets, ignore the liabilities. And Attorney Conway stole my thunder, but I'll repeat it anyway. There's no explanation of how any of the direct Kwok creditors, people who filed proofs of claim, people who allege that they were somehow owed money by Kwok get G Club assets. Going to their chart on page 37, 2(d), the U.S. Government alleged GCO, which stands for G Club Operations, was used by the Debtor and his co-conspirators to

1 2 3 4 fraudulently obtain more than 250 million in victim funds. The victims are the people who placed their money with G Club. They didn't place their money with Kwok. They didn't give their money to Kwok.

5 6 7 8 9 10 11 So the remedy is to take the money set aside by the Government to go back to the victims of G Club and put it in put it in the Bankruptcy Court for distribution to people who aren't the victims of G Club, that cannot possibly be a recognized remedy. It is -- it would be stealing from the feet the people who've already been stolen from. It goes on, including the funds used to purchase the Mahwah Mansion.

12 13 14 15 The Trustee, I believe, has either sold or is selling the Mahwah Mansion for the benefit of the Kwok creditors. Should G Club now sue the estate for conversion? Because that's what it sounds like.

16 17 18 19 20 21 22 23 24 Now, I am absolutely baffled by the Trustee's discussion of Nordlicht. The case says it's being decided under 541(a), not under 544. The case doesn't mention anything about in pari delicto or cite Wagoner. Under 541, the Trustee is imbued with the attributes of the Debtor. Nordlicht is a simple case. Is whatever the Trustee is trying to settle, settleable under 9019? That's it. It doesn't discuss any of the Wagoner issues. It doesn't discuss any of the in pari delicto issues.

Now, turning to the British -- the English common

| 1 | law, the English law issues, Prest and Skystream. First of | |----|-------------------------------------------------------------------| | 2 | all, and again, there was no discussion either in the | | 3 | complaint by the Trustee or in those cases concerning the | | 4 | capital structure of the entity that was claimed to be the | | 5 | alter ego. In Prest, it was this total shell entity. | | 6 | G Club is not -- the Trustee doesn't argue G Club | | 7 | was a mere shell. It had members. They reference in the | | 8 | Government citation. There's 8000 plus members of G Club. | | 9 | It had its own capital structure. It had a whole staff. All | | 10 | of that is discussed in the complaint. | | 11 | To the contrary, we're not arguing a factual | | 12 | dispute here. This is a motion to dismiss. Assume it's all | | 13 | true. We assume it's all true. G Club was defrauded by Mr. | | 14 | Kwok. That's all the complaint alleges. G Club's money was | | 15 | stolen. | | 16 | There was no -- and, again, and please, as you'll | | 17 | recall, Your Honor, in my opening statement, I said there's | | 18 | two -- there's an element that is different under English | | 19 | law, whether you call it a bare trustee or alter ego, | | 20 | whatever you want to call it, the claim must explain how the | | 21 | controller is being deprived of the benefit. | | 22 | Here, a -- there's none of that in the complaint, | | 23 | number one, because the controller, Mr. Kwok, obtained the | | 24 | benefit. He's not -- he hasn't -- depriving him of the | | 25 | benefit would require the return of all of this money and | | | |

74 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 property to G Club, and certainly, that's not what the Trustee is looking for. And then, finally, Your Honor, Puerto Rico requires allegations of fraud, and that's the Alturas case, 132 DPR at 927, cited in our briefing. So we do believe Rule 9 should apply. Rule 9(b) should apply. So taking the allegations is true, and again, referring back to page 37 and I suppose page 40, which is G Club International, who -- the inequitable purpose at all relevant times, Debtor was indebted to one or more of the creditors. Who? What creditors of G Club or G Club International were they indebted to? Again, the Trustee acts as if they filed bankruptcy petitions for G Club or G Club International. They haven't. G Club is a -- G Club, as alleged by the Trustee, is a victim of the fraud. This case must be dismissed because a victim of the fraud should not be defrauded again. Thank you, Your Honor. THE COURT: Thank you. MR. BASSETT: Your Honor, may I have just a couple of minutes to respond to -- THE COURT: Just a couple of minutes. Yes. I do have something else I have to do this afternoon. So -- MR. BASSETT: I'll be very brief, Your Honor. I'll just respond to arguments that were made very quickly.

1 2 3 4 5 So, Attorney Conway took exception to the reference to him having taken instructions from David Fallon. Your Honor, all I did was describe, basically, verbatim, what we've alleged in paragraph 122 of our complaint. At this stage, allegations are taken as true.

6 7 8 9 If he wants to dispute that factually later, he can. The transcript says what it says, but all I was doing was citing the complaint. I was not misrepresenting anything.

10 11 12 13 14 15 16 Now, Attorney Conway also said that, you know, I can't just stand up here and say I don't understand his arguments. I understand his arguments, Your Honor. The point is that his arguments are meritless. And the argument that he's making that's meritless is this argument that that, you know, the real victims here are victims of G Club and all these other entities that were defrauded by the Debtor.

17 18 19 20 21 22 23 24 Your Honor, first of all, they don't represent victims of Mr. Kwok's crime. And I think the Court should be very concerned about the fact that they're standing here trying to get these assets back because, really, these are going to go back to Mr. Kwok and others associated with him. But setting that aside, there is no merit at all to the idea that one could not use an alter ego to defraud people. And then, if one is defrauded by an alter ego,

25 right, if there are victims of G Club who were defrauded by

1 2 3 4 5 6 Mr. Kwok, and defrauded by, say, G Club or any of these other entities that Mr. Kwok used in this fraudulent scheme, they would then have claims against the estate. If they dealt with an alter ego and were defrauded by an alter ego, that alter ego, by definition, under law, is Mr. Kwok. It's an extension of Mr. Kwok.

7 8 9 10 11 So those victims, to the extent they are victims, to the extent they have claims, would have claims against the alter ego, which as a result of the alter ego ruling, has become property of the estate. There's zero inconsistency in those theories.

12 13 14 15 16 17 And when they talk about who the victims are and who was harmed, to go to Mr. -- to go to Attorney Sklarz's comments at the end, who was harmed? It's not -- he says we haven't identified, you know, a particular victim of G Club who was harmed by the alter ego relationship. That is completely misunderstanding the point.

18 19 20 21 22 23 24 25 The people who were harmed by Mr. Kwok's shell game, where he takes all of his assets and hides them in other entities, are Mr. Kwok's creditors. There are over a thousand proofs of claim in this case. It is those people who were harmed by the fact that Mr. Kwok took his assets and never owned title to them himself. Instead, kept them at purported arm's length in shell companies. Those are the people who were harmed.

| 1 | If they had it their way, Mr. Kwok could get away | |----|-----------------------------------------------------------------| | 2 | with filing for bankruptcy, despite being a billionaire, | | 3 | listing on his schedule zero assets, and all of his thousands | | 4 | of creditors would have no recourse. That's obviously not | | 5 | the way the Bankruptcy Code should work. | | 6 | Attorney Conway said we haven't put any | | 7 | allegations as to the Debtor's control over William G in the | | 8 | complaint. Your Honor, we have three pages of allegations at | | 9 | paragraph 55(b) of the complaint. | | 10 | As to Nordlicht, Your Honor, I'm not going to go | | 11 | back to it. Nordlicht did not itself admittedly -- I'm not | | 12 | going to go back to name detail. It did not itself | | 13 | admittedly talk about in pari delicto or Wagoner. What it | | 14 | did talk about was how, under Section 541(a) of the | | 15 | Bankruptcy Code, the Trustee can assert claims that belong to | | 16 | creditors. | | 17 | An extension of that, as the Court recognized, | | 18 | consistent with the same law in the Third Circuit, and as the | | 19 | Harmon Court held, is that obviously, in pari delicto and | | 20 | Wagoner don't apply because those are creditor claims. | | 21 | They're not claims that became property of the estate because | | 22 | they were claims that could have been asserted by the Debtor | | 23 | himself. | | 24 | Your Honor, the last point I wanted to make was | | 25 | just by way of clarification. As I said, the theory that the | | | |

1 2 3 4 5 6 7 8 9 Trustee is pursuing under English law as to the entities at issue in the complaint is a bare trustee theory that I described at some length. I do want to be clear that the same -- that an alter ego theory does exist under UK law - under English law, rather. And it's actually discussed in the same Prest case that we cite. The Court in that case decided to go with the bare trustee theory and not the alter ego theory. But it has very similar allegations involved in a very similar underlying principle of equity. And the reason I mentioned that, Your Honor, is

10 11 12 13 because the Trustee need not have plead an alter ego theory specifically against all of those English law governed entities to use that as a basis for personal jurisdiction.

14 15 16 17 18 19 20 21 22 23 24 In the Second Circuit case that we cite, the Platinum, I believe, case -- I don't have it in front of me - - the Second Circuit's case that we cite, for the alter ego theory of jurisdiction was exactly the same. The plaintiff in that case did not, in fact, even allege an alter ego claim substantively against the defendants and alleged other claims. But the Court, nevertheless, recognized that the theory of alter ego jurisdiction could exist and could be used to exercise personal jurisdiction. I just wanted to make that clear, that that's still the basis that the Trustee is seeking to assert jurisdiction over those entities.

With that, Your Honor, I'll conclude my remarks

79 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 unless the Court has any questions. THE COURT: I have no questions. Thank you. MR. CONWAY: Your Honor, there was one point made that was new in that I just -- if I get one sentence. THE COURT: What was it, Attorney Conway? MR. CONWAY: Mr. Bassett said -- I'll just leave it here if it's okay. THE COURT: Yeah. That's fine. MR. CONWAY: Mr. Bassett said that when they - when Mr. Kwok defrauded folks and the assets came into his so-called shell companies, title basically transferred to Mr. Kwok and therefore became asset of the estate. I just want to point out that the law in this circuit is very clear that title to assets of a crime or fraud do not transfer to the person or entity that commits the crime. MR. BASSETT: Your Honor, that's not an issue that's been briefed, and I disagree entirely with that proposition. THE COURT: Okay. Thank you. Attorney Sklarz, you look like you're going to stand up. Briefly, I assume. MR. SKLARZ: Very. Attorney Bassett, just picking up on that, said Kwok kept his assets in the alter egos. As I've said and as they plead, let's just look at the chart, page 37. As to my clients, there is no allegation that the Case 22-50073 Doc 4017 Filed 01/30/25 Entered 01/30/25 14:50:55 Page 79 of 85

1 2 3 4 money in G Club or G Club International came from Kwok creditors. The Government even says it came from the customers we call members of G Club, owe hundreds of millions of dollars.

5 6 7 8 9 10 The claim that that somehow belongs to Kwok by virtue of him committing the fraud is absurd. I mean, it doesn't -- it doesn't transmutate into Kwok money because he facilitated the fraud. It is still the -- it is still owned by the customers who gave it to G Club for a service. So I can't speak as to all defendants. I can speak as to two.

11 12 13 14 15 And as to those two defendants, the allegations of the complaint, which we have to take as true because this is a motion to dismiss, do not say that Kwok put any money, any assets, any of his stuff in G Club. He took it out. It augmented the estate. It didn't diminish it. Thank you.

16 17 18 19 20 THE COURT: Okay. Thank you. All right. With regard to the two motions to dismiss, obviously, I've heard a lot of argument today. There are a lot of different issues that have been raised, and there are, there is a need to look at the law again and to look at the complaints.

21 22 23 So I'm going to take both of those motions under advisement. Is there anything else that we I need to address this afternoon?

24 25 MR. BASSETT: Your Honor, we had one housekeeping matter. It should be quick. Then I can let the Trustee jump

| 1 | in as well as necessary. But as I believe the Court is | |----|-----------------------------------------------------------------| | 2 | aware, and I apologize, I don't have the docket reference | | 3 | handy, but the Trustee filed recently another motion to | | 4 | extend the statute of limitations deadline for avoidance | | 5 | actions. And the Court has scheduled a hearing on that | | 6 | motion for February 11th, I believe. And the Court noted in | | 7 | that order scheduling a hearing that it would be a non | | 8 | evidentiary hearing. I just wanted to find -- | | 9 | THE COURT: Well, I don't know if the Court noted | | 10 | that. I think the notice of hearing might have noticed that | | 11 | -- might have said that. | | 12 | MR. BASSETT: Okay. | | 13 | THE COURT: Because it's most likely our notice of | | 14 | hearing that we use as a form. But you're -- you are | | 15 | suggesting -- not suggesting. You're saying that that's what | | 16 | the notice of hearing said, and you would like there to be | | 17 | evidence? Is that what you're saying or you believe there | | 18 | may be a need? | | 19 | MR. BASSETT: Yes. That's exactly right, Your | | 20 | Honor. I apologize for, you know, mischaracterizing. | | 21 | THE COURT: No. No. I'm sure that's what the | | 22 | notice says. I'm sure it's the notice of hearing that we | | 23 | use. And, you know, I don't always remember what every | | 24 | notice of hearing says. | | 25 | So you could be completely correct that it's -- |

| 1 | and you probably are, that it says it's a non-evidentiary | |----|------------------------------------------------------------------| | 2 | hearing. I think because -- I think it would say that | | 3 | because it would -- was it titled motion for extension of | | 4 | time? What is it? Is it -- it's another extension motion. | | 5 | Right? | | 6 | So it would probably be thought of to be a non | | 7 | evidentiary issue. So I'll take a look at that. | | 8 | MR. BASSETT: Okay. And, yeah, just to be clear, | | 9 | Your Honor, I believe, at the prior hearings on the previous | | 10 | iterations of that motion, we typically have supplemented the | | 11 | record with some testimony from the Trustee as to the need | | 12 | for the extension. I think we would likely do that again | | 13 | here, and we can, you know, file something formal with the | | 14 | Court to review. | | 15 | THE COURT: That was filed in the main case. | | 16 | Correct? I mean, it's a main case pleading. | | 17 | MR. BASSETT: That's correct, Your Honor. | | 18 | THE COURT: So just if you give me a moment, | | 19 | please. Because if that's the issue, then we'll we need to | | 20 | rectify it sooner as opposed to later. Right? Did you have | | 21 | some kind of time frame on when you had to make service or on | | 22 | that? I don't recall. Let me take a look. | | 23 | Yeah. Okay. The notice of hearing was issued | | 24 | yesterday, it looks like, on the second supplemental motion | | 25 | to extend deadline to file avoidance actions. That's what |

83 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you're speaking about, Attorney Bassett? MR. BASSETT: That's correct. I believe it's ECF 4009. THE COURT: 4009. All right. Let me look at what it says. Yeah. This is our typical or what I would say usual notice of hearing. So let me see what it says. All right. There's no date by which service of this notice of hearing had to be made because I'm it would have been served on all parties via CMECF and on the creditors' committee, and all the parties that have already brought issues before the Court. So I understand. I see the language you're talking about. So, it does say unless otherwise ordered by the Court. So let me take a look at it, and we'll figure out whether we issue an amended notice of hearing or some order saying that it may - it may be an evidentiary hearing. MR. BASSETT: Understood, Your Honor. THE COURT: But the objections to the motion have to be filed on or before February 7th. So let me take a look at that this afternoon. We'll do something about it. MR. BASSETT: Thank you. THE COURT: I have to attend to something first, and then I will look at that notice of hearing. But that is the form of a notice of hearing. So if there are -- I would suggest if you think of it in the future, if you or any other Case 22-50073 Doc 4017 Filed 01/30/25 Entered 01/30/25 14:50:55 Page 83 of 85

| 1 | party is asking for the Court to set some kind of a hearing | |----|-------------------------------------------------------------------| | 2 | and you believe it should be evidentiary, you should say that | | 3 | somehow. I mean, I know that some people in state court, | | 4 | there's a process for that, you know, on a form. But you | | 5 | could ask that. Okay? That would be helpful because the | | 6 | clerk's office isn't going to always have the time to analyze | | 7 | whether or not something should be an evidentiary hearing. | | 8 | MR. BASSETT: Understood, Your Honor. | | 9 | THE COURT: Okay? | | 10 | MR. BASSETT: Thank you very much. | | 11 | THE COURT: All right. Thank you. All right. Is | | 12 | there anything further we need to address this afternoon? | | 13 | MR. DESPINS: Not from my perspective, Your Honor. | | 14 | Thank you. | | 15 | THE COURT: Okay. Thank you. All right. Thank | | 16 | you for your all for your papers and your arguments. And as | | 17 | I noted, I will go back and review everything. | | 18 | We'll take those two motions under advisement, and | | 19 | we'll rule accordingly. And since that's the last matter on | | 20 | today's calendar, court is adjourned. Thank you. Thank you. | | 21 | (Proceedings concluded at 3:14 p.m.) | | 22 | | | 23 | | | 24 | | | 25 | | | | | | | |

| Case 22-50073 | | Doc 4017 | Filed 01/30/25 | Entered 01/30/25 14:50:55 | | Page 85 of 85 | |---------------|------------------------------------------------------------|----------|----------------|---------------------------|--|------------------| | | | | | | | 85 | | 1 | CERTIFICATION | | | | | | | 2 | I certify that the foregoing is a correct | | | | | | | 3 | transcript from the electronic sound recording of the | | | | | | | 4 | proceedings in the above-entitled matter to the best of my | | | | | | | 5 | knowledge and ability. | | | | | | | 6 | | | | | | | | 7 | /s/ Wendy K. Sawyer | | | | | January 29, 2025 | | 8 | WENDY K. SAWYER, CDLT | | | | | | | 9 | Certified Court Transcriptionist | | | | | | | 10 | For Reliable | | | | | | | 11 | | | | | | | | 12 | | | | | | | | 13 | | | | | | | | 14 | | | | | | | | 15 | | | | | | | | 16 | | | | | | | | 17 | | | | | | | | 18 | | | | | | | | 19 | | | | | | | | 20 | | | | | | | | 21 | | | | | | | | 22 | | | | | | | | 23 | | | | | | | | 24 | | | | | | | | 25 | | | | | | | | | | | | | | | | | | | | | | |