American court hearing recordings and interviews - Bittrex, Inc. December 11, 2023 U.S. bankruptcy court hearing (Delaware bankruptcy case number 23-10597 styled In re Desolation Holdings LLC, et al.)

Episode Date: December 16, 2023

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Good morning, all. This is Judge Shannon. I understand from the court reporter that necessary parties have joined. This is a hearing in the matter of desolation holdings, also known as Bitrex, case number 23-10597. This is a hearing that the court has scheduled to consider the motion of Azeem Godder to continue the hearing on the debtor's claim objection. That claim objection, I think, is scheduled for a couple days from today. I have the motion as well as the attachments. I do have the plan administrator's objection that was filed, I believe, on Friday to the request to adjourn. The court is also in receipt of correspondence over the weekend with respect to certain documents that appear to have been placed on the court's docket and some redaction and sealing issues that the parties have conferred on. I will hear first from counsel for Mr. Godder.

Mr. Detweiler, good morning. It's good to see you. Good morning, Your Honor. May it please the court, Donald Detweiler of Wombo Bond, Dickinson, U.S. on behalf of Mr. Goddor. Also on the line is Mr. Red to Hart, my partner. He's a former U.S. attorney for the state of California who's been involved in this matter. Your Honor, we plan for purposes of today to limit this hearing for, the motion for continuance and to try to avoid any additional discovery because that's really what's before the court. It's a motion for continuance of the hearing, which is a hearing on

the debtor's objection to Mr. Goddor's proof of claim. The debtors had set the hearing for December 13th at an omnibus hearing, not as an evidentiary hearing. We inquired into the court as to the amount of time your honor has for the hearing, and we are told it's only 30 minutes. And again, Mr. Godder had no control over the docket. Mr. Goddor respectfully seeks a continuance of the hearing for several reasons. One, to allow remaining discovery to be completed. Two, to allow for a scheduling order to be put in place that can allow for the orderly consideration of his proof of claim and the debtor's objection to it,

and then establishing dates for the trial. Your Honor, we would say, and again, just being mindful that this is only for a motion for continuance. Mr. Goddard, the boring citizen who does not reside in the United States. Given the characterization in some of the pleadings of his claim, Mr. Goddard wants to appear personally before, Your Honor, to present lives. testimony and that certainly was part of the reason for the motion for

continuance your honor we believe the motion for continuance is appropriate under section 105 for several reasons the betters set the hearing date on an omnibus hearing with 30 minutes we believe the hearing is going to require two days of evidence including expert testimony on the OFAC regulations which the debtors continually kind of uses their shield a continuance is necessary so that discovery can be completed we haven't taken the discovery issues to the court but there are significant discovery issues there are also your honor as we noted in the pleading mr. Goddard believes there may be other responsible

parties reliable parties with the debtors regarding the fact and what happened here. And he does plan to file a complaint against such parties. I'm not going to go into the back and forth that's happened on that, but I will tell you that he is going to plan a filing a complaint. He wants to get his visa, and more importantly, honor, this continuance does not cause any harm or prejudice to the debtors. What I would suggest, Your Honor, is, and just briefly respond, because it's only, it's only, it's only, worth briefly responding to what the debtors have said so far is that they want to characterize Mr. Godder as a liar, as a fraudster, and otherwise. We respectfully disagree. We respectfully disagree. And, Your Honor, we're going to prove otherwise to you. But we can't do it on December 13th.

Lastly, Your Honor, this is not a strategic mover, a maneuver, as the debtors suggest. And Godder is in the attempt of kind of debtor visa. He's predisposed with some other matters at the moment. I don't think he could even be available. And more importantly, Your Honor, as you're aware from previous correspondence from last week, Mr. Goddard was put on bed rest. He has been put on continued bed rest, and we will say, sent to your honor medical records with regard to Mr. Goddard's physicians instructions to him.

So shortly before the hearing, I received something about continued bed rest. So he's not even going to be available under 13. Leave all that aside, Your Honor, we respectfully disagree with the characterization of the debtor's characterization of his claims and him. Continuance is appropriate. And what we would like to do is to set a time to get a scheduling order in place that would allow for the discovery to be completed, to get depositions, and the two-day trial date that hopefully with that trial date, Mr. Goddard would be able to get his visa. Thank you, Your Honor. Thank you, Mr. DeWallan. Ms. Tomasco, good to see you. Good morning, Your Honor.

Good to see you. If you wouldn't mind allowing my colleague, Mr. Alangea K. to share his screen. Sure. We'll give Mr. Jacket, I believe it's J-A-Q-U-E-T. We'll give him privileges, okay? We should be good. Ellen?

There we go. Thank you. Terrific. All right. Your Honor, this is a very long slide deck. I'm going to try to skip ahead a little bit. Just to briefly show the court. We are post-confirmation.

We are post-effective date. We have been dealing with Mr. Goethe since the first hearing in this case. Mr. Godder filed an opposition to the debtor's motion to seal records on the basis that the debtors were attempting to use the sealing as a a furtherance of its scheme.

He states in his letter in his objection to the court that he was not aware of the OFAC license process. On June 30th, Mr. Godder also files a letter with the court. He claims in that letter to have tried his utmost to get his assets back from Pytrex. He could not because Pitchicks closed all of his accounts.

We show in our opposition to the motion to continue all of the ways in which Mr. Goddor's claims to this court have not been true and are contradicted by the record. Now, I will note for the court, the parties have engaged in document exchange. The documents that we have to show these events came from both Bittrex and from Mr. Goddard. Mr. Goddard has not produced a single document that disproved. this fact. If we could look at the next slide in July, Mr. Goddor files another letter with the court, which he complains that the debtors have not yet responded to his June 30th letter, and he fails to reveal that he withdrew 99% of the assets in his account. He currently has, in his account, less than $200 worth of cryptocurrencies.

He again fails to mention that support in response to the July 18th letter that he filed on July 20th. On August 11th, Mr. Goddard sends a letter to the court in which he also falsely claimed that the debtors did not share with the court their July 18th response to his June and July letters, which of course the court notes that the debtors shared all correspondence with the courts as the court directed. So we are not dealing with somebody who is new to this case or who has not had sufficient time to develop whatever theories he thought that he was going to be able to pursue. What we see instead is when the debtors produce evidence that shekeled that his claims are false, he changes his claims. And this merry go-round has to stop. and that's why we're opposing the continuance not because we want to cram in a you know a day-long hearing into one hour it's because we need the court's assistance in making this stop this has become

extraordinarily expensive for a $3,200 plane well and so what do we do here we know that Mr. Godder believes that he can file now a complaint that effectively amends his claims and brings in third parties. Now, why is he doing this? It is our belief that he's doing this for leverage. He wants to bring in the directors and officers of the debtors in order to increase his leverage. But the bar date was August 31st. And this is well past the bar date, well past confirmation, and more than the bar date, and well-past the effective date. And the reason for this is not because he's found new information.

As I said, we exchanged documents with Mr. Goddard months ago, and so he doesn't have new information. So what do we do with this? One, if there is going to be a continuance, it should not be in service of an amended claim for a new complaint in which Mr. Godder gets to ignore the fact that everything that he has said so far has been disproven by the documents. It should not be for that. It should be to allow for a hearing on the controverted evidence of did Bittrick present Mr. Gauter from withdrawing his crypto in a

time fashion in light of the OFAC sanctions. My suggestion to the court then is that, is we can have on the 13th, on Wednesday, the equivalent of a summary judgment hearing on what does OFAC require and did the debtors go beyond the requirements in responding to the OFAC issue. That would have the effect of dealing with three issues that are on the court's docket for Wednesday.

One is the debtors motion to quash, copy cast, copycat discovery served by three other Iranian claimants who have been corresponding with Mr. Goddard or copying Mr. Goddard's pleadings with respect to the OFAC issue. It would also deal with the three other Iranian claimants that are set for hearing on Wednesday. And that way we can streamline and do away with this issue that somehow Bittrex in complying with the Ophac regulatory issues that they caused any harm to the Iranian claimants. Because if they were required to do what they did with respect to OAC and obviously the terms

of service allowed for the debtors to comply. with regulatory matters. The terms of service also required Mr. Goddor and the three other Iranians to comply with regulatory guidance with respect to embargoed countries such as Iran. So that is my suggestion. It is not to suggest that Mr. Goddard not have his day in court,

but he has his claim. He should not be allowed to amend it. and he should not be allowed to file an adversary proceeding, which is essentially attempting to end run around the party by adding new parties. Okay. So anyone else wish to be heard? All right. Here's what we're going to.

If we could, if we could. No, I think I've heard enough. Here's what we're going to do. I'm going to adjourn the matter for 30 days. I'm going to, I would propose to the parties that I would hear you in the week of the 16th of January and I would ask that the parties confer. I want to make a couple observations. I am simply ruling on a request for an adjournment of claim objection and I'm adjourning that. The only matter before me is the debtors claim objection.

I have a lot of sparring back and forth about whether or not additional litigation is going to be filed, whether or not summary judgment is going to be requested, whether or not significant additional discovery is to be taken. I'm not ruling on any of that. If the debtor believes that the matter at least substantively can be largely addressed on the papers by in January on the OFAC issue, then the debtor should proceed in that direction. And if Mr. Godder and his counsel believe that that's not appropriate, I would expect to hear from the parties and we would confer in advance of that hearing.

But I don't want the court's decision to adjourn this matter to be perceived by either side as a meaningful or substantive assessment of where we are and where we're going. I understand with perfect clarity the debtor's concern with respect to the resources that are being dedicated to a claim which the debtor says is either non-existent or de minimis. On the flip side, obviously Mr. Godder has participated in these proceedings a number of times. And, you know, at this point, he is the counterparty to a claim objection. and we have to get that matter to a hearing. I make no comment on an adversary proceeding or anything else that may or may not be coming, but I am sensitive to the concern that we have, again, a claim of small amount that is leading itself to significant litigation. And I may be informed and educated by Mr. Godder with respect to the additional.

claims that he has, but the debtor has been consistent in its assessment of the state of play. The debtor has filed a claim objection. The debtor is entitled to a hearing on the claim objection. The parties have initially, have certainly filed submissions in connection with that. I confess that I'm not confident that the record is fully developed for purposes of a hearing, as Ms. Tamoska would suggest, on Wednesday, being treated as essentially a summary judgment or an argument on the papers on OFAC. I have not studied the party's submissions as closely as I would in anticipation of the

substance of that hearing. But I know that even just a week or so ago there was sparring between the parties with respect to Mr. Goddor's deposition, which I believe I assume has not been taken. The court directed kind of informally given the holidays and the weekend that the parties should confer and come up with a different date from Mr. Goddard's deposition. hasn't happened so again at least from my lights there seems to be some discovery that needs to occur but here's what I want to do and I'm under no illusions that the courts ruling today is going to yield consensus either on

process or timing but the debtor has a claim objection pending its scheduled for hearing on Wednesday it's no secret to anyone that the court typically schedules relatively brief periods for initial hearings on claim objections where primarily the unopposed claim objections are addressed and some perhaps technical or non-substantive issues are disposed of. Mr. Detweiler is correct that on my calendar I've set only a limited amount of time for the Bitrex hearing on Wednesday. So to the extent that parties were expecting to come in with extensive argument or certainly witnesses, that's something that I would not typically have been fully prepared for. So that really is

what is informing my decision to adjourn this matter. I would direct that the parties meet and confer with respect to where we go from here. Again, being guided by the court that I'm not making any substantive decision about where this thing goes. It is the debtor's position that the record is largely, if not completely developed

for purposes of the relief that they're seeking and that indeed the process being pushed by Mr. Goddor is something I think Ms. Tomasco's term was for leverage. Okay, I understand that, and to the extent that that's an issue, the parties can, again, further educate me. But I have a narrow question in front of me today, and that is the question of whether to adjourn it, and I'm going to adjourn this the next month, and we'll go from there. One other thing. I don't have any problem with the parties filing the motion to adjourn and responding to the motion to adjourn and giving me the benefit of some content.

in this I think everybody's heard me give this speech before as we move forward I would ask that you get me on the phone before we get into either motion practice or letter writing campaigns etc I am becoming more acquainted with this dispute at this point but again I think it's it's pretty familiar to you folks that that's generally how I prefer to deal with it miss Tomasco I assume is hoping to move forward on the merits or the substance of her objection in a month's time. And so if there are issues with respect to motions for protective order, scheduling, briefing, depositions, or anything else,

there's not really time in that framework to brief and respond to motion practice. My practice on these kind of things is that I would rather deal with you personally, or rapidly on the phone, which presumably means that I will be dealing with you soon and rapidly on the phone. But, again, the threshold question before me, as Mr. Detweiler noted, is a narrow one. Should we adjourn this? And the answer is yes. And I will look for the parties to confer and to get back on the phone with me almost inevitably

in the event that there's a lack of consensus about how we proceed. And I will provide the parties with guidance. Are there any questions? No, you're on. Thank you for your time and thank you for hearing this on short notice. We greatly appreciate it. Sure. Ms. Tomasco, can I ask a question?

I have not seen, well, it's not due yet. I have not seen an agenda for Wednesday. Are there other matters? There are other matters for desolation holdings that are on for Wednesday. So the hearing itself is still on. Correct, Your Honor. We have a slate of omnibus objections and a few informal responses from pro se claimants. nothing from that is no one that is represented by council however okay that sounds fine I

will look forward to seeing the parties I just wanted to make sure that it remains on the calendar and it does other than that are there any questions no your honor thank you very much very good I appreciate everyone's time we're adjourned thank you council