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16-23498-rdd Doc 71 Filed 01/09/18 Entered 01/19/18 10:53:12 Main Document
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1 UNITED STATES BANKRUPTCY COURT
2 SOUTHERN DISTRICT OF NEW YORK
3 Case No. 16-23498-rdd
4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
5 In the Matter of:
7 EDWARD JONATHAN BRONSON,
9 Debtor.
10 - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
11
12 United States Bankruptcy Court
13 300 Quarropas Street, Room 248
14 White Plains, NY 10601
15
16 November 18, 2016
17 11:09 AM
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19
20
21 B E F O R E :
22 HON ROBERT D. DRAIN
23 U.S. BANKRUPTCY JUDGE
24
25 ECRO: A. VARGAS
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1 HEARING re Declaration of Miranda Fritz in Opposition to
2 Debtor's Order to Show Cause (document #17)
4 HEARING re Affirmation in Further Support of Application
5 (related document(s) #12)
7 HEARING re Motion to Impose Automatic Stay and Request for
8 TRO filed by Paul A. Rachmuth on behalf of Edward Jonathan
9 Bronson (document #12)
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25 Transcribed by: Sonya Ledanski Hyde

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1 A P P E A R A N C E S :
3 UNITED STATES SECURITIES and EXCHANGE COMMISSION
4 3 World Trade Center, Suite 400
5 New York, NY 10281
7 BY: KEVIN P. MCGRATH
8 ALAN S. MAZA
10 REID COLLINS TSAI LLP
11 Attorneys for Joint Liquidators of PJW Funds
12 810 Seventh Avenue, Suite 410
14
15 BY: YONAH JAFFE
16
17 THOMPSON HINE LLP
18 Attorneys for Mark Grober and Evan Solomon
19 335 Madison Avenue, 12th Floor
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22 BY: MARANDA E. FRITZ
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1 PAUL A. RACHMUTH
2 Attorney for the Debtor
3 265 Sunrise Highway, Suite 62
4 Rockville Centre, NY 11570
6 BY: PAUL A. RACHMUTH
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1 P R O C E E D I N G S
2 MR. RACHMUTH: Good morning, Your Honor. Paul
3 Rachmuth on behalf of the Debtor, Edward Bronson, who's
4 standing to my right.
5 THE COURT: Okay.
6 MR. TULIS: Good morning, Your Honor. Mark Tulis.
7 I'm the Trustee in this matter.
8 THE COURT: Okay.
9 MS. FRITZ: Good morning, Your Honor. Maranda
10 Fritz of Thompson --
11 THE COURT: And you represent?
12 MS. FRITZ: I am the subject, I guess, of the
13 motion made by Mr. Rachmuth with respect to an alleged
14 violation of the automatic stay.
15 THE COURT: Right, but you also represent two
16 creditors.
17 MS. FRITZ: Yes, I do.
18 THE COURT: And who are they?
19 MS. FRITZ: Mark Grober and Evan Solomon.
20 THE COURT: Okay, for the (indiscernible).
21 MR. MAZA: Good morning, Your Honor. Alan Maza
22 and Kevin McGrath from the SEC.
23 THE COURT: Good morning.
24 MR. MCGRATH: Good morning, Your Honor.
25 MR. JAFFE: Good morning, Your Honor. Yonah Jaffe

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1 from Reid Collins & Tsai on behalf of a creditor, the joint
2 liquidators of the AJW Funds.
3 THE COURT: Okay. You can sit down, you don’t
4 need to speak. All right, this is -- I have to say, this is
5 one of the more unusual sets of pleadings I've had in a long
6 time, where the parties are asserting vehemently, facts that
7 are counter to their interests in the matter before me. But
8 having said that, you know, maybe it makes sense to hear
9 from the Trustee first in this case.
10 MR. TULIS: Thank you, Your Honor. Yes. I first
11 became aware of this case approximately a week ago, with a
12 call from counsel. As the Court pointed out, I did scratch
13 my head a little bit because, no matter what anyone says,
14 this account is or is not property of the estate. It's a
15 bankruptcy estate issue.
16 THE COURT: Right.
17 MR. TULIS: Is this property part of the estate?
18 My position is, I don't know yet.
20 MR. TULIS: And the reason I don't know is, I have
21 a stayed court order from Judge Wein saying it is property
22 of the estate, so -- or it has been attached.
23 THE COURT: Well, I -- all it says, it's been
24 attached.
25 MR. TULIS: Yeah, but that worries me a little

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1 bit. I can't -- last time I checked, and I don't think
2 he'll listen to me that much.
3 THE COURT: Can I interrupt? Maybe I should set
4 what I think is the table for this.
5 MR. TULIS: Well, can I just --
6 THE COURT: Yeah, sure, go ahead.
7 MR. TULIS: Totally not factual enough, my bad.
8 This is the issue. One other issue, though. No schedules
9 have been filed. Schedules have been filed, no I, no J, no
10 SELFA. I have no idea what the amount of these accounts
11 are. I don't know where the money came from in these
12 accounts. Theoretically, the case should be dismissed
13 because those items weren't filed by the 14th. So, I just
14 want to point that out because otherwise, it'd be negligent.
15 I can't review I and J, we have approximately $13,000 in
16 assets and hundreds of millions of dollars in claims,
17 including by the SEC. That said, I'll sit down.
18 THE COURT: Okay, so, I think -- the parties can
19 tell me if I'm missing something here, but as I understand
20 it, the Debtor in this case is seeking to enforce the
21 automatic stay under 362(a) of the Bankruptcy Code against
22 Ms. Fritz and her clients and ultimately in respect of an
23 attachment order issued on 20th --
24 MS. FRITZ: October 28th, Your Honor.
25 THE COURT: October 28th by Justice Singh, which

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1 attached, and more specifically, directed Alpine Securities
2 to restrain and hold and to abstain from removing,
3 transferring, dismantling, selling, pledging or otherwise
4 disposing of property and securities held in accounts in the
5 name of Edward Bronson, who's the Debtor, Dawn Bronson, D-A-
6 W-N, McAllen Partners, B2IP or any other account directed or
7 controlled by Edward or Dawn Bronson. The Debtor alleges
8 that, that order and its continued enforcement violates the
9 automatic stay with respect to accounts controlled and/or
10 owned by entities or persons including Dawn, other than the
11 Debtor.
12 MR. RACHMUTH: May I, Your Honor?
13 THE COURT: Okay.
14 MR. RACHMUTH: Your Honor, again, Paul Rachmuth
15 for the Debtor. The creditors have taken a position in the
16 State Court --
17 THE COURT: Yeah, no, I don't want to -- I don't
18 want to get into --
19 MR. RACHMUTH: No, no, it's --
20 THE COURT: -- positions but you're saying that
21 that --
22 MR. RACHMUTH: I'm saying, to the extent that they
23 claim it's the Debtor's property, then they can't do
24 anything. To the extent it's not the Debtor's property,
25 they can't do anything. They can't have their cake and eat

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1 it too.
2 THE COURT: Well, there's an order --
3 MR. RACHMUTH: They can't say it's the Debtor's
4 property but they can proceed against it.
5 THE COURT: There's an order, all right? And the
6 order doesn’t say whether it's the Debtor's property or not.
7 It just says that Alpine can't do anything with it. Define
8 what the "it" is.
9 MR. RACHMUTH: Well, to the extent that it's --
10 that our --
11 THE COURT: The basis for obtaining the order was
12 an assertion that the Debtor actually controls these
13 accounts and/or transferred his money improperly,
14 fraudulently, into those accounts. And actually, that's an
15 important distinction.
16 MR. RACHMUTH: Absolutely, Your Honor. I welcome
17 a hearing in this Court or that Court as to any alleged
18 fraudulent transfer. They didn’t make any --
19 THE COURT: Well, but I don't know the basis for
20 Justice Singh's ruling. He simply says it's attached. So,
21 what -- what I'd -- I -- and I was about to say that
22 clearly, if the money in the account is -- or the accounts
23 themselves are property of the Debtor, then you don’t need
24 this attachment because the automatic stay applies and the
25 Trustee will administer that asset. I'm assuming that Judge

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1 Singh, Justice Singh, as I said, either made that
2 determination, at least on a preliminary basis, based on
3 what was alleged, which is also what's alleged in Ms.
4 Fritz's opposition, or alternatively, concluded that, at a
5 minimum, what's in the accounts was -- there was a
6 sufficient issue as to whether what's in the accounts was
7 put there as a fraudulent transfer during pending litigation
8 and/or after a judgment, one or the other, in violation in
9 the New York Fraudulent Transfer Law. And it's just not
10 clear to me, again, which of those two is the case.
11 If it's the former, clearly the automatic stay
12 applies and I don't think Ms. Fritz would disagree with
13 that. And in fact, she argues, as you point out, that it is
14 the Debtor's property, in which case there should be no more
15 litigation over it in the State Court. It should be here
16 and the stay applies and this, you know, and it's the
17 Trustee's money unless it's -- unless there's been money put
18 in it from some other source post-petition and the Trustee
19 has the account. If his ruling is based upon his belief
20 that there was a fraudulent transfer then it isn't actually
21 property of the estate under the Second Circuit case law,
22 although the Trustee, Mr. Tulis, has control of the
23 fraudulent transfer claims and has the right to seek
24 whatever relief he wants to seek in this Court to prevent
25 the money being dissipated.

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1 So, I think, one way or another, unless you can
2 show me that this money or some portion of it came in not
3 from the Debtor as a fraudulent transfer or isn't under the
4 Debtor's control, I'm -- well, I just don’t see how it could
5 be used.
6 MR. RACHMUTH: Well, a couple of those pieces,
7 Your Honor. One is, my understanding is, there was no
8 determination made in the State Court -- that was set down
9 for a hearing, but that hearing was canceled because of the
10 bankruptcy filing.
11 THE COURT: Okay.
12 MR. RACHMUTH: So, there has been no determination
13 --
14 THE COURT: Well, but that, I guess, suggests that
15 the automatic stay is in place.
16 MR. RACHMUTH: Certainly, Your Honor, to the
17 extent that they're making the allegation that those funds -
18 - and there's never an allegation in any of their papers
19 that they have a fraudulent transfer claim against --
20 THE COURT: Clearly, they are.
21 MR. RACHMUTH: No, no, they're --
22 THE COURT: It's very clear that they allege both
23 before me and before the State Court that money was -- that
24 basically, the Debtor transferred all of his assets into
25 these vehicles. I mean, and that's consistent with what's

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1 been filed in the bankruptcy case, which is that he has
2 nothing. So, they -- you're right, they did not cite § 270
3 through 276 of the New York Debtor Creditor Law, but the
4 facts they alleged were, you know, textbook fraudulent
5 transfers.
6 MR. RACHMUTH: But they have to make a motion,
7 they have to do something. They can't just say those --
8 those assets in Dawn's name, even though there is, as I've
9 demonstrated in documents filed, the doc -- all the -- the
10 companies are in her name, there's no transfers from the
11 Debtor --
12 THE COURT: But that's the point you -- someone
13 should have made to the State Court judge. I mean, I have
14 the order. You're basically saying to me that the State
15 Court judge made a mistake. I can't -- that's not for me to
16 decide.
17 MR. RACHMUTH: Well, the Judge just put a
18 temporary hold, so now, who should be making that
19 (indiscernible)?
20 THE COURT: Well, there is a temporary hold on it
21 now because they're in bankruptcy. Clearly --
22 MR. RACHMUTH: Well, shall we have the -- lift the
23 stay so that the Judge can final -- (indiscernible) a
24 decision or can we hear it in front of you?
25 THE COURT: Hear what? I mean, it's -- right now

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1 there's a stay in place, all right? Ms. Fritz's clients
2 cannot obtain that money because either it's the Debtor's
3 money or it's --
4 MR. RACHMUTH: Or it's (indiscernible).
5 THE COURT: No, it -- or it was fraudulent
6 transfer, or at least the Trustee, the bankruptcy Trustee,
7 has the right to investigate that, and the Second Circuit's
8 been clear on this issue since 1992 in in re Colonial Realty
9 Company, 980 F.2d 125, (2d Cir. 1992), while the proceeds of
10 what is alleged to be a fraudulent transfer are not property
11 of the bankruptcy estate, the cause of action to pursue a
12 fraudulent transfer is property of the bankruptcy estate.
13 That's the holding of Colonial Realty. It was recently
14 reaffirmed in Picard v. Fairfield Greenwich, Ltd., 762 F.3d
15 199, 209-213, (2s Cir. 2014).
16 So, again, either the automatic stay applies to
17 the money itself or the automatic stay applies to Ms.
18 Fritz's clients' ability to get at the money. Because the
19 two potential grounds for the money to be frozen by the
20 State Court are that it's either the Debtor's money or it's
21 money that was fraudulent transferred by the Debtor. And
22 the Trustee in this case is entitled to a reasonable time to
23 investigate those two things. And you're looking -- the
24 motion before me looks to enforce the automatic stay. It's
25 enforced. They're not able to do anything with that money.

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1 It's just there with those accounts.
2 Now, I think obviously, you want something more
3 than that. You wanted to have Mrs. Bronson have access to
4 the money --
5 MR. RACHMUTH: Actually, no, Your Honor.
6 THE COURT: You don’t? You just want it to sit
7 there?
8 MR. RACHMUTH: Actually --
9 THE COURT: All right.
10 MR. RACHMUTH: May I say specifically what we
11 need?
12 THE COURT: Okay.
13 MR. RACHMUTH: This is a trading account. There's
14 actually -- the only stock it's in is pledged stock. The
15 value of B2YP is zero. However, it has a trading account.
16 She brings stock in and out and she trades. We don’t care
17 about anything that's in the account today. We'd like to be
18 able to bring stock in and trade -- not we, Mrs. Bronson, so
19 it's not a question of if we want to take anything
20 (indiscernible) the stock that's in the account --
21 THE COURT: But none of that is in your motion
22 before me. All the motion before me seeks is to enforce the
23 automatic stay and you won on that. What you're looking for
24 now is something that I think you need to work out with the
25 Chapter 7 Trustee and the first step of doing that is having

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1 complete schedules and other documents.
2 MR. TULIS: Your Honor, absolutely, and I have two
3 choices. I could bring an adversary on this property where
4 I can cite it's not property of the estate, but there's no
5 way I can do it now.
6 THE COURT: Right.
7 MR. TULIS: I need the schedules. The 341 is on
8 December 1st, I need the schedules, I need the tax returns,
9 I need all the normal information. This is a very complex
10 case. This is not $20,000 of credit card debt. Given the -
11 - everyone on this side and the size of this case, you know,
12 obviously, I have a great concern that assets would
13 dissipate.
15 MR. TULIS: So, I need a lot of -- I want to know
16 how much is in the accounts and where the -- I want to see
17 the bank statements, I want to see the account statements --
18 THE COURT: Trading authority, et cetera.
19 MR. TULIS: Trading authority, all that stuff.
21 MR. TULIS: Everything. I want to see the
22 corporate book --
23 THE COURT: How it's trading. Right.
24 MR. TULIS: -- I mean there's so many things that
25 I need.

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1 THE COURT: Right.
2 MR. TULIS: And in fact, I've had interesting
3 first discussions with counsel and he understands what I
4 need. He's been cooperative. He suggested maybe they come
5 up to talk to me but I wasn’t ready yet because I have all
6 these people here. I can't just do that. So, that being
7 said, I would note that Alpine's attitude, Alpine called me
8 and said, what should we do?
9 THE COURT: Right.
10 MR. TULIS: And I responded like many people who
11 are worried about getting sued, I don't know. This case is
12 frozen because there's either a stay or it's property of the
13 estate. I can't tell you which right now.
15 MR. TULIS: So, Alpine is going to wait for a
16 determination and even if I was to abandon it tomorrow, the
17 only way it would happen would be to a notice of abandonment
18 on notice to creditors, my suggestion is that people to my
19 left will object to that for that reason, so --
20 MR. RACHMUTH: Well, there's also the determina --
21 you could determine that it has no value and it is not
22 property of the estate, in which case they can persist --
23 MR. TULIS: Oh, I'm not just going to go -- oh,
24 no.
25 THE COURT: But that's not going to happen.

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1 That's not going to happen today.
2 MR. TULIS: That's also not going to happen
3 without notice -- I mean, I -- again, this is a large
4 matter. I have no idea -- can you tell me how much money's
5 in the Alpine account? I mean, what's -- I don't even know
6 --
7 MR. RACHMUTH: Under $10,000.
8 MR. TULIS: $110,000?
9 MR. RACHMUTH: Under. Under.
10 MR. TULIS: Under $10,000? Well, what about the
11 $11,000?
12 MR. RACHMUTH: I threw out there, I -- the
13 schedule to say to the extent there's a -- to the extent
14 that it would be property of the estate, the first $11,000
15 would be exempt.
16 MR. TULIS: Your Honor, at the very best, I -- I
17 scratch my head, then. I just have to scratch my head
18 because I saw proof of $128,000 grand or --
19 THE COURT: No, I think counsel would say
20 something different which is that some portion of the money
21 that's in the account or accounts would be exempt property.
22 But again, I don't think you have schedules.
23 MR. TULIS: No, no. In fact, I even stipulated
24 that they increased -- they changed their schedules, he
25 said, well, there's $11,000 in cash. Those are exempt.

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1 They're property of the Debtor. I said, fine. I don't care
2 about the $11,000. Go amend. And he amended, fine. It's
3 exempt.
4 MR. RACHMUTH: I have filed -- the only thing I
5 have not filed is the schedules (indiscernible) financial
6 affairs and -- well, the income there isn't in the -- the
7 expenses are a little complicated because of all the inter-
8 related entities.
9 THE COURT: I think the Trustee's going to want to
10 look into transfers within at least the last two years.
11 MR. RACHMUTH: Oh, okay.
12 MR. TULIS: Well, Your Honor, more like in the
13 last six years --
14 THE COURT: Really?
15 MR. TULIS: -- because of, given the history and
16 what I've learned from some of these parties today.
17 THE COURT: All right. So, anyway, I think, just
18 to sum up, the automatic stay, I believe, does apply to
19 these accounts that are referenced in the order that I
20 quoted from Justice Singh. It applies either because the
21 Debtor really does have an interest in them or
22 alternatively, it applies to the efforts by -- or any future
23 efforts by the creditors, Grober and Solomon, to obtain
24 money from those accounts. Because again, it's either
25 property of the estate, or the way -- the reason for

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1 obtaining money from the accounts is based on fraudulent
2 transfer, that would be controlling the Trustee's as far as
3 a transfer claim, which is prohibited by 362(a)3 and the
4 Colonial Realty case that I cited. So, for now, Mr. Tulis
5 is exactly right. The money, unless one can get clear that
6 it's exempt, some portion is covered by a valid exemption,
7 is going to stay there. And --
8 MR. RACHMUTH: But how do we address the question
9 of using the account?
10 THE COURT: No.
11 MR. RACHMUTH: No?
12 THE COURT: It's -- they could -- look, if she
13 wants to use --
14 MR. RACHMUTH: Could she bring in post-petition
15 assets into the account?
16 THE COURT: No, she can open a new account with
17 her own money. I mean, there's no -- this account, there's
18 -- it's just unclear what it means to be using the account.
19 If it's using anything in it, then the answer is no. If she
20 just wants to be able to trade on -- with new assets --
21 MR. RACHMUTH: Yes.
22 THE COURT: -- that's -- you know, open a new
23 account. That's easy enough to do. There's a free market
24 on that.
25 MR. TULIS: That's not without -- I do want to

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1 inquire -- I certainly am going to inquire as to where those
2 funds came from.
3 THE COURT: Oh, absolutely. That's a separate
4 issue, and obviously --
5 MR. RACHMUTH: That -- that I'm not concerned
6 about.
7 THE COURT: Well, I mean, but I want to make sure
8 because again, 727 and 707 of the Code prevent post-petition
9 fraudulent -- make post-petition fraudulent transfer a basis
10 for non -- denial of discharge. So --
11 MR. RACHMUTH: I understand, but actually, Your
12 Honor, the reason why it is completely inapplicable is
13 because of the business model, which is they buy -- you
14 know, B2YP purchases debt.
15 THE COURT: I'm not -- I just -- look, this is
16 just a warning, all right?
17 MR. RACHMUTH: Okay.
18 THE COURT: There's -- it's always better to aim
19 before shooting. And it's always better to make sure you're
20 not going to run afoul of 727 and 707 --
21 MR. RACHMUTH: Right, I understand.
22 THE COURT: -- or a theory that someone disagrees
23 with you on whose property this is.
24 MS. FRITZ: Your Honor, could I make one response
25 to that?

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1 MR. RACHMUTH: No, there is no Debtor property
2 being utilized in any of these transactions.
3 THE COURT: I don't know that. I don't know that.
4 By -- almost by -- by definition, not almost, by definition,
5 Justice Singh issued the order that I quoted from based on
6 his belief that it either was the Debtor's property or was
7 subject to fraudulent transfer claims. And again, as I've
8 said, now that there's a bankruptcy, the fraudulent transfer
9 claims belong to the Trustee and to the extent it is the
10 Debtor's property, the automatic stay applies. So, nothing
11 is going to be done with the account by any creditor.
12 As far as the order is concerned, I don’t see a
13 reason to say it's void. It's just there, and I think, as
14 an enforcement tool, it's redundant. So, there's no reason
15 to say it's void because the stay's in place. As a pre-
16 judgment remedy, I'm going to give the Trustee a chance to
17 look at whether he wants some broader remedy on the theory
18 that it's a fraudulent trans -- these are proceeds of
19 fraudulent transfer. So, he should have some time to look
20 at that after he's had a chance to investigate.
21 MR. RACHMUTH: Okay, Your Honor.
22 MS. FRITZ: Your Honor, could I make one response
23 to what Mr. Rachmuth just said?
24 THE COURT: Okay.
25 MS. FRITZ: Okay. I have been dealing with these

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1 issues for many years now, and boy, am I fully familiar with
2 Mr. Bronson's business model. As you can tell from the
3 papers, I find this assertion that somehow Mr. Bronson
4 suddenly stopped doing these 504 securities deals and Mrs.
5 Bronson suddenly started, in find that not credible. That's
6 what Your Honor's going to be grappling with. But I think
7 that what I'm hearing is Mr. Rachmuth may be taking the
8 position that if funds were transferred to V2IP at one
9 point, for example, I've traced $238,000 from Mr. Bronson to
10 V2IP.
11 MR. RACHMUTH: I -- no.
12 THE COURT: Well, look, this is just attorney's --
13 this is not an evidentiary hearing. I'm just hearing a --
14 MS. FRITZ: It's at (indiscernible) 23. I've got
15 -- is --
16 THE COURT: Go ahead.
17 MS. FRITZ: Okay. So, it certainly is my view
18 that yes, funds moved. I think what Mr. Rachmuth may be
19 saying is, if a deal was done, profits were generated, that
20 somehow that, then, might become Mrs. Bronson's money and so
21 they can do more deals that way. So, I just want to
22 highlight that as a concern.
23 THE COURT: Well, I -- that's why I gave -- that's
24 why I gave him a warning. Okay, look, there's -- there --
25 whether you apply 550 or whether you apply 727, there are

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1 consequences from making transfers that are avoidable,
2 particularly if you have knowledge of their avoidability.
3 That's all I'm saying.
4 MR. RACHMUTH: I understand.
5 THE COURT: I'm not saying that that is the case,
6 but that people should be very careful before they just go
7 ahead. They should aim first. And the aim here is to work
8 with the Trustee on disclosure so he can analyze all of
9 this.
10 MR. RACHMUTH: Your Honor, all I was saying is, if
11 Mrs. Bronson goes off and earns money through the use of
12 those accounts, that does not make it become property of the
13 estate.
14 THE COURT: No, no -- well, no, because if it's --
15 when you say through the use of those accounts, if those
16 accounts were the Debtor's or are the Debtor's then it does.
17 It does. That's a real problem. That's not like opening a
18 new account and using her own acumen to go ahead and make
19 money. If you're saying through those accounts, to me, what
20 --
21 MR. RACHMUTH: If she uses her --
22 THE COURT: -- to me, what that means is, she's
23 using something from the past. And if that past is rooted
24 with the Debtor, that's a problem.
25 MR. TULIS: Your Honor, my approach is -- I mean,

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1 I agree totally with the course of it. We're going to have
2 a 341 next week. I doubt I can get everything by then, but
3 given the nature of 341s, I'm going to recommend to everyone
4 that we do a -- which I do sometimes, a consensual 2004.
5 Once I get all the documents, we get everyone in a room and
6 counsel can prove whatever he wants. As soon as I get all
7 the documents I just mentioned and prob -- what my guess is,
8 you know, if we get them all in two to three weeks, I can
9 take over. It's --
10 THE COURT: I mean, they're -- look, I think there
11 shouldn't be any opposition to doing this promptly because
12 that's ultimately what the Debtor (indiscernible) he wants.
13 MR. TULIS: Right, we get all the information and
14 then we have a nice little tête-à-tête at my office and we
15 see where we go.
17 MR. TULIS: But everyone's going to be invited.
18 THE COURT: Okay. Now, I am going to grant the
19 motion as far as saying that any enforcement actions in
20 respect to the money that's been frozen are subject to the
21 automatic stay, and that includes pursuing fraudulent
22 transfer claims. I'm not going to grant the motion's
23 request for damages for contempt or under 363(h) for
24 violating the automatic stay. As I said at the beginning of
25 this whole hearing, this is a very unusual set of facts

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1 where people are arguing the exact opposite of what they
2 need to win the motion. And I think that frankly, just
3 based on that, there's no reason to award damages. I think
4 that the facts are clear at this point, or that the status
5 is clear at this point, and that's sufficient.
6 MR. TULIS: Thank you, Your Honor.
7 MR. JAFFE: Thank you.
8 THE COURT: So, I don't know -- I don't know who
9 should draft -- who should prepare the order on this.
10 MR. TULIS: Not me because I'm not a party.
11 THE COURT: I granted your relief (indiscernible)
12 MR. RACHMUTH: I had actually submitted an order -
13 -
14 THE COURT: I'm going to ask you --
15 MR. RACHMUTH: -- I will amend the order to take
16 out the relief.
17 THE COURT: And circulate it to counsel and to Mr.
18 Tulis --
19 MR. RACHMUTH: Okay.
20 THE COURT: -- before -- you don't have to
21 formerly settle it on them. You just need to email it to
22 them and then email it to Chambers.
23 MR. RACHMUTH: Certainly I have Mrs. Fritz -- Ms.
24 Fritz and Mr. Tulis' email. I don't have -- I have Yonah
25 Jaffe's. I don't have your email. If you'd like me to

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1 settle the order on you as well?
2 MR. TULIS: Yeah.
3 MR. RACHMUTH: I know you're not a party but I'm -
4 -
5 MR. TULIS: Yeah, I'm fine. I'll give you my
6 card.
7 THE COURT: Now, again, it's not settling. It's
8 just (indiscernible).
9 MR. RACHMUTH: Circulating.
10 THE COURT: Right, circulating. Okay. All right.
11 (Whereupon these proceedings were concluded at
12 11:38 AM)
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1 C E R T I F I C A T I O N
3 I, Sonya Ledanski Hyde, certified that the foregoing
4 transcript is a true and accurate record of the proceedings.
5 Digitally signed by Sonya Ledanski

Sonya Hyde
DN: cn=Sonya Ledanski Hyde, o, ou,
6
7
Ledanski Hyde email=digital@veritext.com, c=US
Date: 2018.01.09 14:23:28 -05'00'
8 Sonya Ledanski Hyde
10
11
12
13
14
15
16
17
18
19
20 Veritext Legal Solutions
21 330 Old Country Road
22 Suite 300
23 Mineola, NY 11501
24
25 Date: August 21, 2017

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16-23498-rdd Doc 71 Filed 01/09/18 Entered 01/19/18 10:53:12 Main Document

1 UNITED STATES BANKRUPTCY COURT

2 SOUTHERN DISTRICT OF NEW YORK

3 Case No. 16-23498-rdd

5 In the Matter of:

7 EDWARD JONATHAN BRONSON,

12 United States Bankruptcy Court

13 300 Quarropas Street, Room 248

14 White Plains, NY 10601

16 November 18, 2016

22 HON ROBERT D. DRAIN

23 U.S. BANKRUPTCY JUDGE

Veritext Legal Solutions

1 HEARING re Declaration of Miranda Fritz in Opposition to

2 Debtor's Order to Show Cause (document #17)

4 HEARING re Affirmation in Further Support of Application

5 (related document(s) #12)

7 HEARING re Motion to Impose Automatic Stay and Request for

8 TRO filed by Paul A. Rachmuth on behalf of Edward Jonathan

9 Bronson (document #12)

25 Transcribed by: Sonya Ledanski Hyde

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3 UNITED STATES SECURITIES and EXCHANGE COMMISSION

4 3 World Trade Center, Suite 400

5 New York, NY 10281

7 BY: KEVIN P. MCGRATH

10 REID COLLINS TSAI LLP

11 Attorneys for Joint Liquidators of PJW Funds

12 810 Seventh Avenue, Suite 410

13 New York, NY 10019

15 BY: YONAH JAFFE

17 THOMPSON HINE LLP

18 Attorneys for Mark Grober and Evan Solomon

19 335 Madison Avenue, 12th Floor

20 New York, NY 10017

22 BY: MARANDA E. FRITZ

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2 Attorney for the Debtor

3 265 Sunrise Highway, Suite 62

4 Rockville Centre, NY 11570

6 BY: PAUL A. RACHMUTH

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2 MR. RACHMUTH: Good morning, Your Honor. Paul

3 Rachmuth on behalf of the Debtor, Edward Bronson, who's

5 THE COURT: Okay.

6 MR. TULIS: Good morning, Your Honor. Mark Tulis.

7 I'm the Trustee in this matter.

8 THE COURT: Okay.

9 MS. FRITZ: Good morning, Your Honor. Maranda

11 THE COURT: And you represent?

12 MS. FRITZ: I am the subject, I guess, of the

13 motion made by Mr. Rachmuth with respect to an alleged

14 violation of the automatic stay.

15 THE COURT: Right, but you also represent two

17 MS. FRITZ: Yes, I do.

18 THE COURT: And who are they?

19 MS. FRITZ: Mark Grober and Evan Solomon.