Order | Filed: July 27, 2026
| Entered: July 27, 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 identify 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 Adjudicated Alter Egos, that is, HCHK Technologies, Inc. ("HCHK Technologies") and Lexington Property and Staffing Inc. ("Lexington") have already been adjudicated to be either alter egos of or beneficially owned by the Debtor. Now pending before this Court is Movant Jason Miller'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 Jason Miller contends that he is entitled to a jury trial on both the fraudulent transfer claim and the threshold issue of whether the transferors were alter egos of or beneficially owned by the Debtor, and that good cause otherwise supports his 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 on the Trustee's alter ego claims 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. 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). As to the alter ego question, the Court repeats that the transferors in this case, HCHK Technologies and Lexington, have already been adjudicated alter egos of the Debtor. See Despins v. HCHK Technologies, Inc., et al., No. 23-AP-5013, at ECF No. 297 at 4 ("at all times [HCHK Technologies and Lexington] were alter egos of the Debtor."). The Court does not decide whether Movant is entitled to re-litigate this issue before a jury in conjunction with the Pre-Petition transfer claim, 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, he seeks withdrawal at the conclusion of pretrial proceedings. Seeing no reason to delay adjudication of the withdrawal question, as set forth herein, the Court grants Movant's request, and will formally withdraw the bankruptcy reference once the underlying adversary proceeding becomes trial ready. In the meantime, the adversary proceeding will continue in the Bankruptcy Court. While the Trustee urges the Court to deny the Motion as it has done in prior rulings, the Court observes that such denials were expressly "without prejudice to a renewed motion, as may be appropriate, if the Adversary Proceeding... (truncated)