Order | Filed: July 28, 2026
| Entered: July 28, 2026
In re: Kwok
Bankruptcy Withdrawal | Connecticut
Order on Motion to Withdraw Reference
ORDER denying without prejudice 1 Motion to Withdraw the Reference. Through the underlying adversary proceeding, and many others, the Trustee has alleged that the Debtor, through one or more of his alter ego shell companies, fraudulently transferred property to Defendant(s) either Pre-Petition, Post-Petition, or in some cases, both. As such, the Trustee seeks to claw back such purportedly fraudulent transfers for the benefit of the Estate, pursuant to Sections 544, 548, and/or 549 of the Bankruptcy Code. To prevail on these claims, the Trustee acknowledges that as a threshold matter, he must establish that the subject transferor entities are indeed alter egos of, and/or beneficially owned by, the Debtor.
In this case, Movant Hayman Hong Kong Opportunities Onshore Fund LP asks the Court to immediately withdraw the reference in the underlying adversary proceeding. The Trustee has objected, arguing that: (1) withdrawal of the reference based solely on Movant's right to a jury trial is unpersuasive where, as here, the proceeding is not yet trial ready; and (2) in any event, Movant is not entitled to a jury trial on the Trustee's alter ego claim insofar as the Trustee is not seeking a money judgment. The Court agrees in part with the Trustee.
While the Court concludes--and the Trustee does not appear to contest--that Movant is entitled to a jury trial on the Trustee's Pre-Petition fraudulent transfer claim, see Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 56 (1989), the Trustee correctly asserts that "[c]ourts in this Circuit have held consistently that a party's entitlement to a jury trial alone is insufficient to compel immediate withdrawal of the reference." In re Enron Corp., No. 04-CV-509 (MBM), 2004 WL 2149124, at *4 (S.D.N.Y. Sept. 23, 2004). And here, as this Court has described in prior rulings, the factors set forth in Orion Pictures Corp. v. Showtime Networks, Inc. (In re Orion Pictures Corp.), 4 F.3d 1095 (2d Cir. 1993) do not support immediate withdrawal of the reference, given that: (a) doing so would result in tremendous, categorical inefficiencies, insofar as the Bankruptcy Court has already administered the underlying adversary proceeding; and (b) relatedly, the Bankruptcy Court has a profoundly greater understanding of the Debtor's underlying Chapter 11 case, to include numerous related adversary proceedings involving factual and legal issues similar to those presented here. See, e.g., In re Kwok, No. 3:24-MC-109, ECF No. 15 at 6-8. As such, the Court declines to immediately withdraw the reference, and the 1 Motion to Withdraw the Reference is DENIED without prejudice to a renewed Motion, as may be appropriate, to be filed when the Pre-Petition fraudulent transfer claim is trial ready. If the underlying adversary proceeding is resolved through settlement or otherwise prior to the conclusion of all pre-trial proceedings, the parties are directed to promptly file a Notice in this case advising the Court of the same. It is so ordered. Signed by Judge Kari A. Dooley on July 28, 2026. (AS)
Order | Filed: July 28, 2026
| Entered: July 28, 2026
In re: Kwok
Bankruptcy Withdrawal | Connecticut
Order on Motion to Withdraw Reference
ORDER granting in part 1 Motion to Withdraw the Reference. Through the underlying adversary proceeding, and many others, the Trustee has alleged that the Debtor, through one or more of his alter ego shell companies, fraudulently transferred property to Defendant(s) either Pre-Petition, Post-Petition, or in some cases, both. As such, the Trustee seeks to claw back such purportedly fraudulent transfers for the benefit of the Estate, pursuant to Sections 544, 548, and/or 549 of the Bankruptcy Code. The parties refer to these adversary proceedings generally as "Avoidance Cases." To prevail on these claims, the Trustee acknowledges that as a threshold matter, he must establish that the subject transferor entities are indeed alter egos of, and/or beneficially owned by, the Debtor. In certain of the Avoidance Cases, the identified transferor has already been adjudicated as an alter ego of the Debtor, and is thus, an "Adjudicated Alter Ego." Other Avoidance Cases involve transferors whose status as an alter ego (or not) has yet to be adjudicated ("Non-Adjudicated Alter Egos"), or a combination of transferors who are Adjudicated Alter Egos and Non-Adjudicated Alter Egos. Indeed, currently pending before the Bankruptcy Court are two "Omnibus Alter Ego Actions," which seek declaratory judgments as to numerous of the Non-Adjudicated Alter Egos. Here, the underlying adversary proceeding involves transfers by a Non-Adjudicated Alter Ego, that is, the Bankruptcy Court has not yet determined whether the transferor, at the time of the transfers, was an alter ego of or beneficially owned by the Debtor. Notably however, the transferor in this adversary proceeding is the subject of one of the two "Omnibus Alter Ego Actions." Now pending before this Court is Movant Post Oak Motors, LLC's Motion to Withdraw the Reference pursuant to 28 U.S.C. § 157(d), following the conclusion of pre-trial proceedings in the underlying adversary proceeding.
Movant contends that it is entitled to a jury trial on both the fraudulent transfer claims and the threshold issue of whether the transferor is an alter ego of or beneficially owned by the Debtor, and that good cause otherwise supports their timely request for withdrawal of the reference. The Trustee has objected, arguing that: (1) withdrawal of the reference based solely on Movant's right to a jury trial is unpersuasive where, as here, the proceeding is not yet trial ready; and (2) in any event, Movant is not entitled to a jury trial either on any Post-Petition Section 549 claim, or on the Trustee's alter ego claim insofar as the Trustee is not seeking a money judgment. The Court agrees with Movant in part.
The Court first concludes that Movant is entitled to a jury trial on the Trustee's Pre-Petition fraudulent transfer claim, but is not entitled to a jury trial on any Post-Petition fraudulent transfer claim. It does not appear that the Trustee contests that Movant is entitled to a jury trial on the Pre-Petition fraudulent transfer claim raised in the underlying adversary proceeding. And for good reason, because in cases, as here, where defendants have not submitted a claim against the bankruptcy estate, they are entitled to a jury trial in an action to recover fraudulent monetary transfers pursuant to Section 548, even if such proceedings are otherwise statutorily core under 28 U.S.C. § 157(b)(2). See Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 56 (1989). Regarding any Post-Petition claim, however, the Court agrees with the Trustee that the Section 549 claim does not give rise to a right to a jury trial, see In re Belmonte, 551 B.R. 723, 729 (Bankr. E.D.N.Y. 2016), and finds Movant's argument to the contrary unpersuasive.
Lastly, as to the alter ego question, it is unclear that this issue is properly asserted by Movant in this underlying adversary proceeding. Indeed, the transferor at issue here is the subject of currently pending litigation as part of the Omnibus Alter Ego Actions. The Court does not decide whether Movant will be entitled to re-litigate this issue before a jury in conjunction with the Pre-Petition transfer claim once the issue is adjudicated as part of the Omnibus Alter Ego Action, or whether the determination will have "law of the case" force and effect.
Turning to the timing of withdrawal, it is true that "[c]ourts in this Circuit have held consistently that a party's entitlement to a jury trial alone is insufficient to compel immediate withdrawal of the reference." In re Enron Corp., No. 04-CV-509 (MBM), 2004 WL 2149124, at *4 (S.D.N.Y. Sept. 23, 2004). Yet, crucially, Movant here is not seeking immediate withdrawal of the reference. Rather, it seeks withdrawal at the conclusion of pretrial matters. Seeing no reason to delay adjudi... (truncated)