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UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF VIRGINIA IN RE: . . COMMONWEALTH . BIOTECHNOLOGIES, INC., . . Debtor. . . . . . . . . . . . . . .. . COMMONWEALTH . BIOTECHNOLOGIES, INC. . . Plaintiff, . . v. . . FORNOVA PHARMWORLD, INC. . . Defendant. . . . . . . . . . . . . . .. Case No. 11-30381 (KRH)

Adv. No. 12-03038 (KRH)

701 East Broad Street Richmond, VA 23219 June 14, 2012 10:08 a.m.

TRANSCRIPT OF MOTION HEARING BEFORE HONORABLE KEVIN R. HUENNEKENS UNITED STATES BANKRUPTCY COURT JUDGE APPEARANCES: For the Debtor: Tavenner & Beran, PLC By: LYNN L. TAVENNER, ESQ. 20 North Eighth Street, Second Floor Richmond, VA 23219 Phillips & Fleckenstein By: KEITH L. PHILLIPS, ESQ. 311 South Boulevard Richmond, VA 23220 Office of the U.S. Trustee By: ROBERT B. VAN ARSDALE, ESQ. 701 East Broad Street, Suite 4304 Richmond, VA 23219

For the Official Committee of Unsecured Creditors: For the Trustee:

Proceedings recorded by electronic sound recording, transcript produced by transcription service ______________________________________________________________ J&J COURT TRANSCRIBERS, INC. 268 Evergreen Avenue Hamilton, New Jersey 08619 E-mail: jjcourt@jjcourt.com (609) 586-2311 Fax No. (609) 587-3599

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2 APPEARANCES (Contd): For Fornova Pharmworld: ANDREW CHIEN, Pro Se 665 Ellsworth Avenue New Haven, CT 06511 ---

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3 1 COURTROOM DEPUTY: Matter of Commonwealth

2 Biotechnologies, Inc. appearing on matters as set out on 3 todays docket. 4 5 6 MS. TAVENNER: THE COURT: Good morning, Your Honor.

Good morning, Ms. Tavenner. For the record Lynn Tavenner of the

MS. TAVENNER:

7 law firm of Tavenner & Beran appearing on behalf of the debtor 8 Commonwealth Biotechnologies, Inc. With me today, Your Honor,

9 is Dr. Richard Freer at counsel table who is the debtors 10 designee, representative, and the CEO of the company. 11 Also, Your Honor, in the courtroom with -- attendance

12 with Dr. Freer is Mr. James Causey as well as Mr. Samuel Sears 13 who are other members of the executive committee with respect 14 to Commonwealth Biotech. They had already arranged to be down

15 here today for trial and came down to meet the Court and to 16 work on other business with Dr. Freer. 17 introduce them. 18 19 20 motions. THE COURT: Very good. Welcome to the court. So I did want to

MS. TAVENNER:

Your Honor, were here today on three As a

They all involve similar and overlapping facts.

21 result I would like to provide just a little factual backdrop 22 before we get into the substance of the pleadings themselves. 23 24 THE COURT: You may. Your Honor, Commonwealth Biotech or

MS. TAVENNER:

25 CBI as we refer to it, filed this Chapter 11 case on January

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4 1 20th of 2011. Prior to that filing CBI was extremely cash poor In fact its liquidity issues had become

2 but it was asset rich.

3 such a problem that traditional financing had gone away long 4 before the Chapter 11 was filed. 5 CBI, a public company, had resorted to increased

6 infusions in various forms from certain investors or 7 shareholders. Two issues related to that were in existence on

8 the filing date. 9 The first was a lawsuit that was filed here in the

10 Eastern District of Virginia in the United States District 11 Court before Judge Payne by an entity called Fornova 12 Pharmaworld US, Inc. 13 Number 3:10CV840. 14 In that motion the plaintiff, Fornova Pharmaworld US, That case is still pending, its Case

15 was seeking a money judgment in the amount of $500,000 related 16 to a convertible instrument that had been executed prior to the 17 bankruptcy filing. 18 Once that action was instituted CBI hired counsel,

19 the law firm of Kaufman & Canoles, and was preparing to address 20 the litigation. Ultimately the lawsuit was transferred to

21 Judge Gibney but it is still pending on the Courts docket. 22 Once the bankruptcy was filed the debtors counsel,

23 the litigation counsel Kaufman & Canoles, and the then 24 plaintiffs counsel Morrison Foerster, filed a pleading with 25 Judge Gibney saying, Your Honor, in essence a bankruptcy has

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5 1 been filed, attached is a notice of the case, we believe that 2 the automatic stay of Section 362 is in effect. And then Judge

3 Gibney responded by saying please continue to provide me status 4 reports. That has continued to date from the defendant

5 debtors perspective. 6 In September, actually August of 2011 the plaintiffs

7 counsel Morrison Foerster filed a motion with the District 8 Court requesting approval to withdraw as counsel in that case. 9 In its motion the attorneys told Judge Gibney, Your Honor, we 10 have just lost all contact with our client, we have attempted 11 to comply with the Courts rules with regard to motion to 12 withdraw, we have advised them through the channels that we 13 know of to speak with them, to contact them, that were filing 14 this motion, but thats all we can do. As a result Judge

15 Gibney set the motion for hearing, called a hearing, allowed 16 Morrison Foerster to withdraw as counsel. So since September

17 of 2011 that matter has remained on the Courts docket without 18 counsel of record for the plaintiff Fornova Pharmaworld US, 19 Inc. 20 I tell you that information because I believe it does

21 relate to issues that we will discuss later in this matter this 22 morning. That was one issue that had taken place prior to the

23 bankruptcy filing. 24 The second issue was also related to liquidity issues

25 and it was the notice of a foreclosure sale by what weve

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6 1 referred to in prior hearings as the pipe investors. This

2 foreclosure in effect was with regard to the debtors major 3 asset which was the real property housing the medical 4 laboratory in Chesterfield, Virginia that the debtor at the 5 time of the filing was leasing out to a third party. 6 Despite the fact that the debtor already had the

7 property listed for sale and had identified several interested 8 buyers, the pipe investors knowing that they easily could 9 recognize the amount that they believe they were due, noticed 10 the foreclosure and refused to negotiate in any way. As a

11 result CBI at that point determined that the best alternative 12 was to file a Chapter 11 bankruptcy. 13 foreclosure sale was stopped. 14 As Your Honor knows the pipe investors were quickly That occurred and the

15 satisfied through the sale through this Court under a 363 sale 16 of the debtors ownership interest in a research facility in 17 Mimotopes, Australia. The real estate then was ultimately sold

18 as well to an entity related to its tenant Bosch Laboratories. 19 As a result of that then the debtors secured creditor was paid 20 in full. 21 So today, Your Honor, the debtor CBI stands before

22 you having realized substantial value for many of its assets 23 and with only one identified remaining asset, the value in its 24 corporate shell. The debtor also, Your Honor, now has a bank

25 account in excess of $1.25 million.

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7 1 The unsecured creditors who are represented by Mr.

2 Keith Phillips who is here today, are looking at potentially a 3 full recovery, something that rarely happens in a Chapter 11 4 these days. Understandably they would like to move this They

5 reorganization process along as quickly as possible. 6 would like to get paid sooner rather than later. 7 Honor, the debtor would like to oblige.

And, Your

In fact the debtor

8 would like nothing more than to complete this reorganization as 9 soon as possible. 10 Dr. Freer and the entire executive committee have

11 worked tirelessly on the debtors behalf, but they would like 12 some finality as well. 13 Now theres just this one little hurdle. There are

14 several parties in serious discussions with the debtor about 15 some type of transaction that would recognize the shells 16 value. 17 Unfortunately some of them have determined that the

18 pending litigation with the Fornova Pharmworld, Inc. and 19 related issues needs some additional finality before the 20 interested parties can move forward and then before a payout 21 could ultimately be made to creditors. 22 Now, Your Honor, throughout this case another

23 important fact is that the debtor and others have experienced 24 inquiries from someone known as Mr. Andrew Chien. He appeared

25 at the first meeting of creditors appearing on behalf of

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8 1 several entities. 2 BB&T. He sparred with Mr. Hauser the attorney for

He has appeared in connection with the Mimotopes sale on He has appeared in this

3 behalf of the ultimate purchaser.

4 court, both in person and through numerous filings on behalf of 5 entities that I will loosely identify as Fornova. And I

6 loosely identify them because the defendant in the adversary 7 thats pending before you is Fornova Pharmworld while the 8 plaintiff that is in the United States District Court is 9 another entity known as Fornova Pharmaworld with some other 10 little differences in its name as well. Mr. Chien has appeared

11 on behalf of both of them and perhaps others because weve seen 12 different names throughout the day. I really dont know. All

13 I can say is what has been represented.

Sometimes he doesnt

14 identify any affiliation with any type of entity and just 15 appears on his own behalf. 16 Now many of his pleadings have been procedurally

17 improper, even contained defamatory statements about many 18 people including Dr. Freer, my law firm, myself, my law 19 partner. In fact this Court has recently issued two orders

20 striking many of his pleadings from the records in this case 21 and related adversary proceeding. 22 In one of those orders Your Honor directed the Court

23 to serve a copy of that order on Fornova through the Hague 24 Convention. Now, Your Honor, we have begun that process. But there is a huge time We

25 are having transcriptions done.

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9 1 factor involved with that and I can tell Your Honor that in 2 conjunction with another case that Im involved in before this 3 Court we have been involved in service through the Hague 4 Convention on a Chinese entity and we are ten months into it 5 and havent even heard back that there has been service made. 6 So were extremely concerned with regard to the time factor. 7 Now notwithstanding that Your Honor has entered

8 orders telling Mr. Chien that he cant file pleadings on behalf 9 of corporate entities, notwithstanding that the clerks office 10 has issued deficiencies and mandates to Mr. Chien telling him 11 not to do that, it appears that he is continuing undaunted 12 perhaps under the cloak of just filing things on behalf of 13 himself or as trustee. 14 I wouldnt venture to tell the Court what the But I do note for the record

15 pleadings say, I just dont know.

16 that I did see that three more were docketed yesterday and I am 17 hopeful that the Court will advise and hopefully deal with 18 them, but those are not before Your Honor today with respect to 19 dealing with striking or anything like that. 20 you. 21 I just advise

I dont know if youve had an opportunity to see them. THE COURT: You can assume Ive read all of the

22 papers in this case. 23 MS. TAVENNER: Thank you, Your Honor. I can tell you

24 that much of the debtors time at this point is spent in 25 dealing with Mr. Chien, his various filings, and addressing

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10 1 issues that he just pulls out of the air with respect to the 2 adversary proceeding and the finalization of the reorganization 3 itself. Its been very difficult. Its taking a lot of time.

4 The creditors committee really would like for us to do anything 5 that we can to speed it up. 6 that fact. 7 So, Your Honor, thats really the backdrop for We just wanted to apprise the Court of where We really want to help them in

8 todays hearings.

9 we were and how we got to where we are today and hopefully that 10 will help in the underlying substance of the motions. 11 The first motion, Your Honor, that I would like to

12 take up if Your Honor please is the debtors motion for order 13 directing manner of service of complaint, summons, and related 14 documents pursuant to Rule 4(f)(3) of the Federal Rules of 15 Civil Procedure. 16 17 THE COURT: You may proceed on that motion. Thank you, Your Honor. In conjunction

MS. TAVENNER:

18 with that motion, Your Honor, it is filed in the underlying 19 adversary proceeding 12-3038 which is Commonwealth 20 Biotechnologies, Inc. against Fornova Pharmworld, Inc. 21 Your Honor, in conjunction with that, the facts

22 leading up to this motion, notice to file proofs of claim was 23 provided to all requisite parties including an entity called 24 Fornova Pharmaworld US, the plaintiff upstairs, back when this 25 case was filed.

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11 1 Notice was provided at the address listed in the This entity This entity,

2 convertible note to an address in Beijing, China. 3 was listed on Schedule F as a disputed creditor.

4 the plaintiff upstairs, did not file a proof of claim. 5 Instead a claim was filed by an entity called Fornova

6 Pharmworld, Inc., Claim Number 18-1, it was filed on May 16th, 7 2011. This entity, Your Honor, is included nowhere on the The claim is signed by Mr. Andrew

8 debtors books and records.

9 Chien who has represented that he is authorized to speak on 10 behalf of that claimant as trustee. Though to date, Your

11 Honor, no documentation has been provided to this Court or to 12 me or to the debtor to backup that fact. 13 word. 14 The debtor then after consultation with the committee All we have is his

15 initiated this adversary proceeding 12-3038 which first and 16 foremost objects to the claim of an entity that the debtor does 17 not believe it owes any money to. 18 In addition, Your Honor, its an entity that the

19 debtor has been able to locate no evidence even is in 20 existence, not in Virginia, not in the United States, not in 21 the British Virgin Islands, not in China, not anywhere that we 22 have looked. 23 Now we have heard that perhaps this entity is one and

24 the same with Fornova Pharmaworld US, the plaintiff in the 25 District Court action, but we have been able to find nothing to

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12 1 substantiate that. So as a result, Your Honor, we did serve

2 the complaint in a manner that included every possible known 3 address that we could find. 4 And, Your Honor, I refer you to the motion itself, It sets out in detail every address to whom the It includes Bill Guo, the chief

5 Paragraph 4.

6 complaint was served.

7 executive officer of another entity, Venture Pharm 8 Laboratories, Limited; it includes Mr. Andrew Chien, the 9 alleged trustee; it includes Fornova Pharmaworld US at various 10 addresses; it includes again Mr. Chien at a different address; 11 it also includes the person who we could find in the District 12 Court records upstairs as being affiliated with the purported 13 convertible note, we served her as well. Nowhere in those

14 pleadings in the District Court did we find any reference to 15 Mr. Chien. 16 And finally, Your Honor, it does also show that we

17 served Fornova Pharmaworld at a British Virgin Islands address 18 because the best that we could find is that there is a British 19 Virgin Islands entity that has a similar name but not the name 20 of the claimant. So, Your Honor, we did the best that we could

21 with regard to service and -22 23 right? 24 25 MS. TAVENNER: THE COURT: Yes, Your Honor. THE COURT: And that was Fornova Pharmaworld USA,

Thank you.

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13 1 MS. TAVENNER: Once we did that we promptly received

2 the beginning of filings in this adversary from Mr. Chien, 3 pleadings that ultimately have been struck by this Court. 4 in conjunction with those pleadings conversations we have 5 learned that he believes that the two entities are one and the 6 same, but still no documentation. 7 All of the addresses that we used were addresses that So at But

8 Dr. Freer was able to identify as potential addresses.

9 the time of the Courts initial pre-trial conference on March 10 20th of this year, the Court recognized we have an entity who 11 is attempting to be represented by someone other than an 12 attorney. Its not allowed. You had lengthy discussion with Its noted on the Courts

13 Mr. Chien with regard to that. 14 docket.

Your Honor ultimately entered an order to that effect. To date no counsel

15 You told Mr. Chien you need to get counsel. 16 has appeared. 17

Instead Mr. Chien has been filing additional But upon the

18 pleadings purportedly on behalf of himself.

19 debtors motion to strike the Court has entered an order 20 striking those pleadings. The Court also has struck a

21 subsequent pleading filed on April 24th. 22 But, Your Honor, notwithstanding the striking of the

23 pleadings, the deficiency mandate issued by the clerk, the 24 Courts specific instructions orally to Mr. Chien, the Courts 25 specific instructions by order, Mr. Chien continues to take

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14 1 action on behalf of the entity. Mr. Chien continues to contact And just yesterday

2 Mr. Phillips, counsel for the committee. 3 hes been filing additional pleadings. 4

Now those pleadings talk about things related to the He now believes hes entitled to a vote

5 reorganization itself.

6 on the plan, sometimes hes asking for a conversion to 7, 7 sometimes hes asking for payment to be made directly to him. 8 Hes asking for a lot of things. 9 But, Your Honor, that begs the issue of you have

10 directed the debtor to serve process in conjunction with this 11 adversary case. You have directed that it now be done in You did that by order.

12 conjunction with the Hague Convention.

13 In addition to this you wanted us to serve that order as well. 14 And as I said, Your Honor, we have begun that

15 process, but we have grave concerns that that is really going 16 to hold up the process to such a degree that were not sure how 17 this case will ever be finalized because we have no 18 understanding that even if we go through that process that I 19 wont be standing here 18 months from now saying, Your Honor, 20 we did all that, it didnt work, can we please now try another 21 method. 22 So were trying to dispense with that if you will,

23 Your Honor, and based upon the Federal Rules of Civil Procedure 24 were asking you to authorize today an alternative method of 25 service. Because, Your Honor, it appears that the defendant or

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15 1 Fornova PharmaWorld US, Inc., I dont know who it is, but 2 someone is attempting to abuse the judicial process. 3 We believe its inequitable at this point to make the

4 estate, which includes the unsecured creditors, to wait 5 numerous months for service to be attempted pursuant to the 6 Hague Convention. 7 several reasons. 8 One, Fornova Pharmaworld US, Inc., which Mr. Chien And we believe thats inequitable for

9 has asserted is one and the same with the defendant, has 10 already subjected itself to the jurisdiction of this Court 11 through the United States District Court when it filed its 12 lawsuit 3:10CV840 and then thereafter failed to maintain 13 contact with its lawyers. 14 In addition, Your Honor, its inequitable because

15 notice of the bankruptcy case and the need to file a claim was 16 served on all requisite parties at all known addresses and we 17 know that they got that notice because they filed in the 18 District Court action a joint status report saying a bankruptcy 19 has been filed. Its really of no mention that they chose not

20 to file a claim in this case. 21 Now because of the inequities that are in this case,

22 Your Honor, we are respectfully requesting today that the Court 23 grant pursuant to Rule 4(f)(3) that service of the complaint, 24 an alias summons which we would request to be issued, and a 25 pre-trial order as well as the Courts order entered on May 1,

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16 1 2012 be served in the following manner. By e-mail to the

2 address Fornova9@hotmail.com, to the address 3 Fornova9@gmail.com, and to the address Bill@venturepharm.net. 4 We also would request that we be authorized to serve

5 as well by first-class mail to those original service addresses 6 identified in Paragraph 4 of the motion, as well as by 7 first-class mail to Overseas Management Company Trust BVI 8 Limited which is the registered agent that we could locate for 9 the entity Fornova Pharmaworld US, Inc. 10 Your Honor, we suggest to the Court that Rule 4(f)

11 provides that this type of alternative service is certainly 12 appropriate in circumstances such as this. 4(f) sets forth

13 three different ways to serve entities that are located outside 14 of the United States and the third one says, by other means not 15 prohibited by international agreement as the Court orders. 16 And we would suggest that under that provision you

17 certainly have the authority and that that is at this point the 18 best option for serving the complaint package and the order 19 that I identify. 20 21 to this. Your Honor, I do -- I have read many cases relating There has been suggestion that well, you know, we do We want to make sure we dont go

22 have this Hague Convention. 23 awry of that. 24

Well, Your Honor, first and foremost Im not even

25 sure that with respect to the defendant itself that the Hague

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17 1 Convention even applies because the Hague Convention only 2 applies if you have a good service address. 3 that. 4 So I would submit that we dont even have to worry But even if, you know, Your Honor has already We dont have

5 about that.

6 suggested that we use that, even if that were an available 7 means if the Hague Convention did apply, Rule 4(f)(3) provides 8 that we still can use another alternative method and thats 9 what we are doing here today, Your Honor, requesting the same. 10 There is ample case authority to suggest that its I would suggest -- tell Your

11 appropriate in this instance.

12 Honor that e-mail service was first used or first authorized by 13 a bankruptcy court down in Atlanta, Georgia. 14 more and more prevalent. 15 The case that we cited from the Ninth Circuit, Rio It now has become

16 Properties, suggests that it is entirely appropriate in 17 circumstances such as this, that it is not a method of 18 extraordinary relief. 19 of mechanism. It doesnt have to be a last resort type

Its something thats always available if the

20 circumstances justify. 21 I also would suggest to the Court that the United

22 States District Court here in the Eastern District has 23 authorized alternative service under this section in the case 24 of FMAC Loan Receivables against Dagra. And, Your Honor, in

25 that instance the Court said the most appropriate focus for

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18 1 alternative service is that the Court ensures that 2 constitutional notions of due process have been taken care of. 3 4 THE COURT: I am very familiar with that case. I know you are, Your Honor. And I

MS. TAVENNER:

5 thought it was the best case that we could put in here to show 6 that this is another instance where the defendant, there could 7 be no question the defendant knows that this matter is pending. 8 And just like in the Dagra case, the rules were

9 attempted to be used in a manner to have the case dismissed on 10 a procedural grounds even though the defendant certainly knew 11 that the case had been filed, he even had a lawyer that was 12 showing up and arguing the matter. 13 So, Your Honor, in this instance we would suggest

14 that alternative service is reasonably calculated to apprise 15 the requisite parties of the proceeding and a trial on the 16 same. 17 We also would suggest that the specific e-mails that

18 we have suggested are ones that Dr. Freer can attest to if you 19 would like for him to call him to the stand. I will represent

20 to you and proffer that he would testify that he has identified 21 these e-mails as e-mails where he has communicated with the 22 Fornova Pharmaworld US entity in the past. 23 ones that he can find. 24 Your Honor, and we would suggest again that the Those are the best

25 constitutional due process really is not an issue in this case

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19 1 given that Fornova US is a plaintiff pending in this court and 2 the Hague Convention may not even be, even though its been 3 suggested, may not even be one that should be utilized in this 4 case, but weve tried. 5 For all these reasons, Your Honor, we would

6 respectfully request that you reconsider having us serve that 7 order through the Hague Convention as well as the other process 8 in this adversary proceeding and allow us to move forward to 9 use Rule 4(f)(3) to serve the defendant and the related Fornova 10 entity that you directed us to serve through the e-mail and 11 mail channels that we have outlined in the motion. 12 THE COURT: All right, Ms. Tavenner, before you cede

13 the podium -14 15 16 17 MS. TAVENNER: THE COURT: Yes.

-- I do have one question -Yes, Your Honor.

MS. TAVENNER: THE COURT:

-- that I wanted to ask and that is in

18 the three methods that you have suggested that the Court 19 approve as alternative service in this case, would that include 20 the address that was listed on the proof of claim that was 21 filed in this case for the entity Fornova? 22 23 24 25 MS. TAVENNER: THE COURT: Yes, Your Honor, it does. That was my question.

Very good. Okay.

MS. TAVENNER: THE COURT:

Thank you.

All right.

Id like to hear

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20 1 from counsel for the unsecured creditors committee. 2 3 Phillips. 4 creditors. 5 case. MR. PHILLIPS: Good morning, Your Honor, Im Keith

Im here on behalf of the committee of unsecured Your Honor, we support the debtors motion in this

The committee actually supports any means by which this

6 adversary proceeding may be resolved promptly. 7 We are very concerned about the delays and the If the Court has been reviewing the

8 associated expenses.

9 monthly operating reports it can see that funds are being 10 expended in administrative expenses which is diminishing the 11 pool of funds available to the unsecured creditors and were 12 very concerned that that may result in something less than the 13 hundred percent distribution which weve been hoping for 14 throughout this case. 15 16 concern. 17 MR. PHILLIPS: Thank you, Your Honor. The committee THE COURT: I can assure you the Court shares your

18 itself has not heard from any individual on behalf of a Fornova 19 entity other than Mr. Chien. The committee, at least one

20 member of the committee has some familiarity with the Hague 21 Convention and has expressed the same concerns that counsel is 22 expressing today and the delays that may result from attempting 23 to serve under that -- by that means. 24 As a result, Your Honor, the committee would support

25 any means by which this matter may be resolved quickly

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21 1 including service as has been suggested by Ms. Tavenner or by 2 any other means which the Court deems appropriate. 3 THE COURT: All right. Thank you very much. Id

4 like to hear from the Office of the U.S. Trustee. 5 6 Trustee. MR. PHILLIPS: Robert Van Arsdale for the U.S.

Your Honor, in reviewing this matter we have no

7 objection to the relief thats being requested on behalf of the 8 debtor. 9 Ill also just tell the Court that we are concerned

10 with the activities of Mr. Chien during this and at some point 11 well have to consider what other actions may be necessary 12 because I think its gone way past what we would have expected 13 given the Courts earlier admonitions. 14 THE COURT: All right. Thank you. Does any other

15 party wish to be heard in connection with the debtors motion 16 for an order directing the manner and service of complaint and 17 summons and related documents pursuant to Rule 4(f)(3) of the 18 Federal Rules of Civil Procedure or wish to examine the 19 proffered witness? 20 All right, Ms. Tavenner, there being no objection. The Court finds that the The Court is well

21 The Court has reviewed your motion.

22 relief you are requesting is appropriate.

23 aware of the Hague Convention and knows the problems and delays 24 that are involved in doing that and the Court -- the reference 25 in the Courts prior order was more directed at making sure

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22 1 that we had constitutional due process addressed than it was 2 utilizing that specific procedure. 3 As you point out in the memorandum, Rule 4(f)(3) is a

4 perfectly fitting alternative that the Court can fashion the 5 relief. 6 case. Thats what Judge Hudson did in the FMAC (phonetic)

And as he said in that case whats important are the

7 constitutional limits of due process and as long as there is 8 actual notice and were assured of that, that that is, you 9 know, the outward bound. 10 In this case the fact that counsel for the entity

11 that was suing the debtor in this case in the District Court 12 acknowledged the bankruptcy petition in this case and had 13 actual notice of the bankruptcy and then an entity filed or 14 purported to file a proof of claim on that exact same claim, 15 you know, tells the Court that theres already been notice in 16 this case. 17 But adhering to the belt and suspenders approach,

18 what the Court is going to do is authorize the service as 19 youve requested in your motion and that it be done in the 20 three manners, both by e-mail, first-class service to the 21 original addressees and then as well as to the Overseas 22 Management Company Trust BVI Limited as the registered agent 23 for Fornova entity in the British Virgin Islands. 24 And that being accomplished I think that there can be So the Court

25 absolutely no concern about service in this case.

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23 1 will authorize that. The Court will vacate that portion of its

2 prior order that required you to go through the Hague 3 Convention and so that you know you dont have to do both of 4 those. 5 6 MS. TAVENNER: THE COURT: Thank you.

This will be the alternative that the

7 Court is authorizing and then you may dispense with concluding 8 those efforts unless you decide that you want to on your own, 9 of course you can do that, but youre not going to be required 10 by this Court to do it. 11 So that will be vacated.

And I also for the record am accepting the proffered

12 testimony of Dr. Freer as you had put it on the record here 13 this morning as no party wish to cross-examine him on any of 14 those factual issues. 15 ruling? 16 MS. TAVENNER: Your Honor, I did want to state that Any questions regarding the Courts

17 we are taking action to ensure that we serve as much as we can. 18 With respect to the e-mail addresses, Dr. Freer reminded me 19 when I sat down and as consistent with the e-mails that are 20 attached to our pleading, that he actually only corresponded at 21 one e-mail address. The other addresses were suggested as

22 potentially appropriate or inappropriate, but were using them 23 all. 24 THE COURT: Very good. And that will be satisfactory The Court thinks its

25 as far as the Courts concerned.

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24 1 disingenuous for an entity to file a claim in this court and 2 then suggest that they cannot be found in order to deal with 3 that proof of claim. That probably in and of itself is But

4 equitable grounds for disallowing the proof of claim.

5 well go through the process and make sure that weve gotten 6 the matter sufficiently addressed. 7 MS. TAVENNER: Certainly, Your Honor. The next

8 motion that I would ask the Court to consider then is the 9 motion to continue the actual trial that was scheduled for 10 today. 11 THE COURT: The Court has already entered an order to

12 that effect. 13 14 MS. TAVENNER: THE COURT: Yes.

The Court did continue the trial

15 scheduled for today and it was my hope in getting that order 16 entered that the gentlemen that flew in today for the trial 17 might be able to avoid having to be inconvenienced in that 18 regard. 19 But in any event what I would like to do today on

20 that motion is to set a new trial date and entertain your 21 request for the entry of a new pre-trial order that can be 22 served along with an alias summons pursuant to the just 23 preceding motion. 24 MS. TAVENNER: And, Your Honor, we are hopeful that

25 when we serve that that we can actually say this is the trial

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25 1 date as well. 2 THE COURT: Thats what I was anticipating so that we As I mentioned to Mr. Phillips the

3 dont have further delay.

4 Court is quite concerned about allowing administrative expenses 5 to continue to erode the estate in this case. I would like to

6 see the unsecured creditors receive as much as they can. 7 MS. TAVENNER: Absolutely, Your Honor. We would like

8 to move it forward as quickly as possible.

To that end, Your

9 Honor, we have tried to look at a time frame that would ensure 10 that we have -- that we effect appropriate service or notice if 11 you will with regard to this matter and believe that that could 12 certainly be accomplished and the clerks office would have the 13 timing to issue a new alias summons with all of the requisite 14 information if we could have a trial date in September? 15 THE COURT: You may. Lets find a date in September

16 that works. 17

September 11?

You need to consult with Dr. Freer? Your Honor, is that

MS. TAVENNER:

Yes, Your Honor.

18 -- that day is now clear on your docket? 19 20 THE COURT: According to my calendar it is. Okay. I have another matter that was September 11th.

MS. TAVENNER:

21 on here that I think has been removed. 22 23 24 THE COURT:

I think it was your matter -Yes, and its removed. Thats why I

MS. TAVENNER: THE COURT:

-- that was removed.

25 thought that --

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26 1 2 3 right. 4 5 6 7 8 trial. 9 10 MS. TAVENNER: THE COURT: Thank you, Your Honor. MS. TAVENNER: THE COURT: What time? MS. TAVENNER: THE COURT: Yes, I am available. All

-- you might be available that day.

At 10:00. Perfect.

MS. TAVENNER: THE COURT:

And that will be set down for a one-day

And what the Court will do is it will

11 issue its normal pre-trial order or do we need to have anything 12 special because I had already entered a pre-trial order in this 13 case. Ill probably amend the original pre-trial order to

14 change the trial date and adjust some of the other dates 15 accordingly. 16 MS. TAVENNER: I dont think, Your Honor, from the We do

17 debtor/plaintiffs perspective we need anything special. 18 need to have the dates changed. We did make our initial

19 disclosures and send them the best way that we could, but we 20 have done nothing else not knowing who the adversary was. 21 THE COURT: All right. Well I will certainly

22 entertain other motions by the parties to expedite discovery as 23 such things need to be done if there is actually an answer by 24 an attorney on behalf of the defendant in this case that is 25 filed and so well make sure that no one is prejudiced with

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27 1 regard to the trial date but the trial date will be firm. 2 MS. TAVENNER: Thank you. We appreciate that. From

3 the debtor/plaintiffs perspective we have volumes of documents 4 and were ready to go today, but obviously an answer may make 5 us need to rethink if we need some type of additional 6 discovery. 7 8 THE COURT: All right. So we appreciate that. The final

MS. TAVENNER:

9 matter thats on the docket today, Your Honor, is the debtors 10 motion for a 2004 examination. Your Honor, that is Docket

11 Number 184 filed in the main case, its a motion for 12 examination of Andrew Chien under Rule 2004 of the Federal 13 Rules of Bankruptcy Procedure. 14 Your Honor, I dont believe that I need to go back

15 and recite all of the various circumstances that have gotten us 16 here today. However, the debtor is certainly in need of a

17 mechanism to move forward with its reorganization plan and to 18 ensure that claims are paid to the appropriate creditors. 19 We need information at this point from Mr. Chien to

20 complete this case based upon representations that he has made 21 to this Court and to other parties. We are uncertain at this

22 point as to exactly who he represents, in what capacity he 23 might represent them, and what authority he has to act on their 24 behalf and to potentially ultimately receive any type of 25 distribution that he is now seeking on their behalf.

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28 1 Your Honor, Rule 2004 of the Bankruptcy Code of

2 Bankruptcy Rules could not -- this is the perfect use for it. 3 This is not a fishing expedition. We know definitely what we

4 need and we know from whom we need it and its a pretty simple 5 process. We need him to answer under oath as to his ability to

6 actually file the claim thats now before the Court and to 7 participate in this bankruptcy case. 8 Your Honor said that you have already reviewed the Just a brief review of them

9 pleadings that came in yesterday.

10 shows that he now is looking for even additional seat at the 11 table if you will with respect to this case. And the debtor in

12 exercise of its fiduciary duties in this case cannot go forward 13 without having additional information with regard to what his 14 real connection is to this debtor. 15 Because of that, Your Honor, we are seeking a motion

16 for a 2004 examination and we have identified the specific 17 categories of information that we are seeking from him. 18 all that were looking for, Your Honor. 19 THE COURT: All right. Thank you. Mr. Chien, this Thats

20 motion for examination is directed to you individually and so 21 the Court can hear you on that in your capacity there and I 22 will allow you to address the Court in that capacity. 23 24 6. MR. CHIEN: I already answered that for the Question I already

Everything in my own possession is Fornova.

25 answered no, I dont have any possession with the Fornova.

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29 1 Okay. 2 The additional 1, 2, 3, 4, 5, 7, I rejected because

3 I cannot disclose my client information without authorization 4 from my client. 5 That is my answer. All right. And I reviewed the response The Court treats your

THE COURT:

6 that you had filed on your own behalf.

7 answers of rejected as really meaning objected to and the Court 8 understand that. 9 The Court understands you are claiming some sort of a Of course the Rules of Privilege under the

10 rule of privilege.

11 Federal Rules of Evidence are very clear and they apply in very 12 limited situations, to a husband and wife, to an attorney and a 13 client, and to a minister and a penitent. There is no

14 attorney/client or any other kind of privilege that you in your 15 individual capacity would be able to assert. 16 Now what I do think if you wanted to is if youre

17 concerned about some confidential information being made public 18 you could file a motion for a protective order and I will ask 19 you today would you like me to issue a protective order to keep 20 information that you would be required to disclose 21 confidential? 22 23 24 MR. CHIEN: THE COURT: MR. CHIEN: No. No? Do you understand what I asked you? But before you

Yeah, I understand.

25 issues another kind of order I first must ask of your Court

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30 1 what kind of (indiscernible) I have. 2 3 THE COURT: MR. CHIEN: If I dont have a --

What kind of what you have, sir? I dont have any (indiscernible) why I

4 must handle all my client information. 5 THE COURT: Because you filed a document that You have

6 purports to be a proof of claim in this court, sir.

7 to be able to tell the debtor what your capacity is in order to 8 -- whether we could allow that. 9 proof of claim? 10 MR. CHIEN: No. But I already submitted Okay. Do you wish to withdraw the

11 supplementary information regarding Fornova and BVI. 12 You just not look for the name.

For the name variation, CBI

13 also missed the US (indiscernible), so the only variation is 14 the Pharm or Pharma. 15 Because, you know, English for the Chinese people is

16 a secondary language that Pharm had a or no a certainly is 17 the same Chinese translation. 18 an a is not a big deal. 19 mail in BVI. 20 21 to that. Therefore in the middle missing

I already have a BVI submitted an e-

Only one company have Fornovas name. Yes, but youre going to have to testify So that we actually have

THE COURT:

Thats the problem.

22 testimony and thats what Ms. Tavenner is asking is that you 23 submit to an examination under oath where you state those 24 things on the record so then she has that available to her. 25 And shes entitled to know not only what, you know, your

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31 1 capacity is on behalf of this entity, what the entity is, why 2 its filing a claim in this case -3 4 MR. CHIEN: THE COURT: Okay. -- what is the claimants asserting.

5 Those are all things that have to come out if you want me to 6 entertain a claim or if Fornova wants me to entertain a claim. 7 8 order. 9 MR. CHIEN: Okay. You can issue the protective

I will do that. THE COURT: All right. Im going to treat then your Id

10 motion or your response as a motion for protective order. 11 now like to hear from Mr. Van Arsdale. 12 13 MR. CHIEN: Okay.

MR. VAN ARSDALE:

Robert Van Arsdale for the U.S.

14 Trustee, Your Honor.

I would like to be excluded from the

15 protective order so that I will have the same information that 16 the trustee -- or that Ms. Tavenner would have in this case as 17 we go forward. 18 19 THE COURT: You want to be included or excluded? I would like to be -- I would not

MR. VAN ARSDALE:

20 like to be barred from being in attendance at the 2004 -21 22 23 24 there. 25 MR. VAN ARSDALE: Yes, sir, I just -THE COURT: Well I would --- by the --

MR. VAN ARSDALE: THE COURT:

-- I would assume you would want to be

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32 1 2 3 THE COURT: Okay. Very good. Thats it. So what Im going to do then

MR. VAN ARSDALE: THE COURT:

All right.

4 is Im going to grant the motion for the examination as youve 5 requested it with one caveat. 6 order in this case. I am going to want a protective

You know, Ms. Tavenner, the types of

7 protective orders that I enter -8 9 MS. TAVENNER: THE COURT: Yes.

-- which would be just the standard thing

10 that makes it so that the documents would be kept confidential. 11 Anything thats provided to the Court would be under seal 12 unless I decide to unseal it because I dont think its 13 confidential. And you can always file a motion to that effect.

14 Mr. Chien can file a motion on his own behalf to that regard as 15 well. 16 But for the time being were going to preserve I want the

17 confidentiality of whatever Mr. Chien provides.

18 protective order to cover Mr. Van Arsdale, I want it to cover 19 Mr. Chien, I want it to cover you and your client, and Id like 20 it to cover the counsel for the unsecured creditors committee. 21 Is there anybody else that needs to have any participation? 22 23 24 25 MR. PHILLIPS: THE COURT: The rest of the executive committee. All right.

That would be the client.

MS. TAVENNER: THE COURT:

I think that covers it, Your Honor.

And then each person that would have

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33 1 access to the information will be bound to keep it confidential 2 and cannot disclose it to anyone for any purpose other than 3 these bankruptcy proceedings. And the Court will certainly

4 keep it confidential as well and if the Court later decides to 5 unseal it or to disclose it, that will be subject to 6 everybodys right to be able to argue about it. 7 MS. TAVENNER: Certainly. We will prepare that

8 order, Your Honor, and tender it in conjunction with the 2004 9 order. 10 THE COURT: Thank you. Again, it should be a

11 separate order I would assume. 12 13 MS. TAVENNER: THE COURT: Yes. Now with

But thats what I would like.

14 regard -- I also will ask you to submit the order on the first 15 motion that you argued -16 17 MS. TAVENNER: THE COURT: Yes, Your Honor.

-- with regard to substituted service so The Court will

18 that the Court can consider that order as well.

19 enter its pre-trial order itself with regard to the second 20 motion. 21 today? 22 23 Honor. 24 MS. TAVENNER: Thank you. THE COURT: Okay. Very good. Mr. Chien, the Court I think that covers it for today, Your Is there anything else that we need to consider here

25 is aware of the two pleadings that you have purported to file

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34 1 in this case as trustee for Fornova. The Court is very

2 concerned that the filing of those pleadings violates the terms 3 of the Courts order of April 30 in this case. 4 The Court is going to be issuing a subsequent show

5 cause order for you to address the Courts concerns in those 6 regards. But I want you to know that I thought my order of the

7 20th was perfectly clear that you needed to have counsel in 8 this case to represent Fornova and that you could not file 9 pleadings on its behalf. 10 MR. CHIEN: Yeah, but let me ask a question that

11 (indiscernible) I cannot on behalf of Fornova to file any 12 pleading, I understand that. But my filing requires a

13 (indiscernible) vote, so that means unsecured creditor 14 committee (indiscernible) sent vote information to every 15 unsecured credits. We in total have 40 unsecured credits. We

16 never have a vote -17 THE COURT: You have not filed a proof of claim in

18 this case, sir, and the entity that has filed the claim is 19 Fornova, and thats what you filed this on behalf. Youll get

20 a chance to address the Courts concern once you receive the 21 order and well have another hearing on that. 22 time to do that. Today is not the

I wanted you to be aware though that it was

23 going to be coming, all right. 24 MS. TAVENNER: Your Honor, again for the record Lynn With respect to the 2004

25 Tavenner on behalf of the debtor.

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35 1 order that you were just speaking of with Mr. Chien. We have

2 been using one address for him, 665 Ellsworth Avenue, New 3 Haven, Connecticut 06511. He obviously appeared here today, I

4 expect that he received it, but it would be helpful for him to 5 confirm that is the address to send the order to. 6 THE COURT: All right. Mr. Chien, is that the

7 address to which the order should be sent or is there a better 8 address for you, sir? 9 10 11 12 MR. CHIEN: THE COURT: MR. CHIEN: THE COURT: Yeah, that is the address. Thats a good address? Yes. Thank you, sir. Now you had also Do

13 requested in the order to schedule a mutual time to do it.

14 we want to schedule a time right now while everybody is right 15 here? 16 17 MS. TAVENNER: THE COURT: That would be great, Your Honor. Mr. Chien, why dont you come to

Okay.

18 the podium with Ms. Tavenner and lets schedule a time when 19 this hearing can be conducted, the examination. 20 21 MR. CHIEN: THE COURT: July, I think late July is good. Okay. I was going to -- July weve

22 already got -- the hearing is going to be in -- the trial is 23 going to be in September. 24 want to do it in June. 25 MR. CHIEN: Im too busy. I have a lot of jobs to do July is going to be too late. I

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36 1 in June, you know. Every time I come here I need two days

2 because if one day is the airplane (indiscernible) time to go 3 here. 4 THE COURT: If you cant give me a date in June Im I would suggest June 28th. Its a

5 going to give you a date in June. 6 Is that convenient?

Can you be here on June 28?

7 Thursday, two weeks from today. 8 9 then. 10 THE COURT: All right. You understand if youre not MR. CHIEN: Okay. Ill try to do my best to come in

11 here then on that date after the Court issues an order that 12 youll be in contempt of Court. 13 here on the 28th. Okay. So I expect you to be

And you want to conduct it in the conference

14 room at the end of the courthouse -15 16 17 18 19 be. MS. TAVENNER: THE COURT: Yes, Your Honor.

-- or the courtroom? Yes, please. So thats where its going to

MS. TAVENNER: THE COURT:

All right.

You know where the conference room is right outside the Thats where the examination

20 doors there to the courtroom. 21 will take place. 22 23 MS. TAVENNER: THE COURT:

Thank you, Your Honor.

And the Court will make sure that thats

24 open on the 28th so that you can get there. 25 MS. TAVENNER: Thank you.

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37 1 2 Okay. 3 4 5 6 THE COURT: 10:00. MS. TAVENNER: THE COURT: That works for me, Your Honor. All right. Thank you both. All right. And that will be at 10:00.

All right.

MS. TAVENNER: THE COURT:

Thank you.

Is there any other business we need to

7 take up in this case today? 8 9 10 11 12 13 MS. TAVENNER: THE COURT: No, Your Honor. Thank you all. Court is now adjourned.

All right.

COURTROOM DEPUTY:

All rise. * * * * *

C E R T I F I C A T I O N I, JANET D. PERSONS, court approved transcriber,

14 certify that the foregoing is a correct transcript from the 15 official electronic sound recording of the proceedings in the 16 above-entitled matter, and to the best of my ability. 17 18 /s/ Janet D. Persons 19 JANET D. PERSONS 20 J&J COURT TRANSCRIBERS, INC. 21 22 23 24 25 DATE: October 2, 2012

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