Chinese businessman Guo Wengui says he will drop personal bankruptcy case
- Ex-real estate mogul says he can't afford legal costs of Ch. 11
- Lender says bankruptcy was filed to avoid court-ordered $254 million fine
(Reuters) - Exiled Chinese businessman Guo Wengui has said he will drop his personal bankruptcy case because he says he does not have the money to cover the associated legal costs.
Guo, the former real estate magnate who fled China for the U.S. in 2014 ahead of corruption charges, said in court papers filed on Wednesday that he would not contest a call for his Chapter 11 case to be thrown out by a fund that loaned money to Guo's companies.
The lender, Pacific Alliance Asia Opportunity Fund (PAX), moved to dismiss the bankruptcy in April, arguing that Guo had only filed to avoid paying fines. Guo said he filed to resolve all of his issues with his creditors.
Guo filed for bankruptcy in Connecticut in February after a New York court ordered him to pay PAX $254 million stemming from a contract dispute. PAX had initially loaned two of Guo’s companies $100 million in 2008 for a construction project in Beijing and sued Guo when he failed to pay off the loan.
Guo, who also goes by Ho Wan Kwok, said in Wednesday’s filing that he could no longer afford the legal costs of the bankruptcy, blaming PAX for waging “unrestrained legal warfare” in its effort to reach assets, including a New York penthouse and a luxury yacht. Guo says that he does not own either asset, and they actually belong to his children.
Despite Guo’s own desire to end the bankruptcy, the committee representing his unsecured creditors have opposed PAX’s motion to dismiss the case. The committee argued in a Wednesday filing that while PAX, as the largest creditor, may benefit from ending the case because they already have a court judgment in their favor, the rest of his 159 creditors would be left with no ability to collect on the $373.8 million in debts they say they are owed.
U.S. Bankruptcy Judge Julie Manning will consider the proposed dismissal on May 25.
In September, three media companies Guo is affiliated with agreed to pay more than $539 million to settle U.S. Securities and Exchange Commission charges that they illegally sold stock and digital assets to thousands of investors. One of the companies, GTV Media Group Inc, has also reportedly been linked to Steve Bannon, the one-time top adviser of former President Donald Trump. Neither Guo nor Bannon were accused of any wrongdoing by the SEC.
The case is In re Ho Wan Kwok, U.S. Bankruptcy Court, District of Connecticut, No. 50073.
For Guo: Dylan Kletter, William Baldiga, Jeff Jonas and Bennett Silverberg of Brown Rudnick
For PAX: Peter Friedman and Stuart Sarnoff of O’Melveny & Myers and Patrick Birney and Annecca Smith of Robinson+Cole
For the committee: Irve Goldman and Jonathan Kaplan of Pullman & Comley
Chinese businessman Guo Wengui files for bankruptcy in U.S. court
U.S. SEC fines Guo Wengui-linked media firms for illegal securities offerings
Our Standards: The Thomson Reuters Trust Principles.