FILED: NEW YORK COUNTY CLERK 05/14/2021 02:15 PM INDEX NO. 653594/2018 NYSCEF DOC. NO. 505 RECEIVED NYSCEF: 05/14/2021 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. ANDREW BORROK PART IAS MOTION 53EFM Justice ---------------------------------------------------------------------------------X INDEX NO. 653594/2018 IN RE RENREN, INC. DERIVATIVE LITIGATION MOTION DATE 04/14/2021 Plaintiff, MOTION SEQ. NO. 015 -v- XXX, DECISION + ORDER ON MOTION Defendant. ---------------------------------------------------------------------------------X The following e-filed documents, listed by NYSCEF document number (Motion 015) 408, 409, 410, 411, 412, 413, 414, 415, 416, 417, 418, 419, 420, 421, 422, 423, 424, 425, 426, 427, 428, 429, 430, 431, 432, 433, 434, 435, 436, 437, 443, 446, 447, 448, 449, 450, 451, 452, 453, 454, 455, 456, 457, 458, 459, 460, 461, 462, 463, 464, 465, 466, 467, 468, 469, 470 were read on this motion to/for INJUNCTION/RESTRAINING ORDER . For the reasons set forth on the record, the plaintiffs are granted leave to supplement the record, which it alleges suggests that certain misrepresentations were made by Mr. Chen to both this court and the Appellate Division, including whether Mr. Chen has any bank accounts in New York and whether Mr. Chen lives in Arizona and not in China as he asserted in support of the motion to dismiss based on lack of personal jurisdiction (Mtn. Seq. No. 009) previously decided (the Prior Motion; 67 Misc3d 1219[A]) and to the Appellate Division when such Prior Decision was appealed and affirmed (192 AD3d 539 [1st Dept 2021]). The plaintiffs’ order to show cause for a preliminary junction is denied as essentially moot. The plaintiffs’ order to show cause for an attachment is granted because it goes to the root of the problem revealed in the record before the court to date. For the avoidance of doubt, should the record reveal future issues warranting injunctive relief, the court shall consider those upon a properly renewed application. 653594/2018 IN RE RENREN,INC. vs. X Page 1 of 4 Motion No. 015 1 of 4 FILED: NEW YORK COUNTY CLERK 05/14/2021 02:15 PM INDEX NO. 653594/2018 NYSCEF DOC. NO. 505 RECEIVED NYSCEF: 05/14/2021 The root of the problem identified is that the alleged self-dealing defendants have improperly looted Renren, Inc. (Renren) and its shareholders of its most valuable assets. In the current motion, the plaintiff alleges that some 22 million shares of Social Finance, Inc. (SoFi) (which is among the major assets identified as having been improperly transferred from Renren) have been secretly sold at below value from Oak Pacific Investment (OPI) while the defendants have slow rolled disclosure of, among other things, the amount of transferred assets (which transfers occurred after the commencement of this litigation). Under the circumstances, attachment pursuant to CPLR § 6201(3) is appropriate. In support of the attachment, by 5 P.M. on Monday, May, 17, 2021, the defendants shall upload to NYSCEF a sworn affidavit, with supporting documents attached to such affidavit, showing evidence of the actual and beneficial owners of the shares or the total of any and all of the proceeds of any share transfers and the location of such proceeds which are now subject to attachment. Inasmuch as the defendants have taken the position that there was nothing wrong with the transfers and that they are able to satisfy a judgment in the event that a judgment is issued, such documentation should already exist and be readily available. The defendants’ arguments in their opposition papers fail. This is an action based on alleged breach of fiduciary duty. The fact that all of the elements of fraudulent conveyance have not been proven at this time is unavailing. It is of no moment that the plaintiffs may have known of the maturity date of the Everbright loan because of all of the things not disclosed, including the amount of transferred shares from OPI, and the replacement loan arranged by a company that Mr. Chen allegedly sits on the board of and which eliminated the covenants prohibiting transfer 653594/2018 IN RE RENREN,INC. vs. X Page 2 of 4 Motion No. 015 2 of 4 FILED: NEW YORK COUNTY CLERK 05/14/2021 02:15 PM INDEX NO. 653594/2018 NYSCEF DOC. NO. 505 RECEIVED NYSCEF: 05/14/2021 of the SoFi shares (which covenants allegedly existed in the Everbright loan). Stated differently, the post spin-off conduct of OPI appears to be prima facie evidence of the breach of fiduciary duty that forms the gravamen of the action. It is irrelevant at this stage of the litigation that the defendants proffer a valuation expert in their opposition papers and have fed the valuation expert some quantum of information or that the defendants’ expert simply disagrees with the plaintiffs’ valuation of the SoFi shares. It is simply unknown to the court, let alone the plaintiff, whether the information provided (or the defendants’ expert’s analysis of the effect on value) was complete, accurate or fair. Neither fact nor expert discovery (including examination of the defendants’ expert and his opinion) are complete and, in any event, the plaintiffs could not file a reply on this order to show cause. The fact that the plaintiffs have not had access to information, including the amount of the transfers, explains why they did not previously seek the requested relief or have sufficient information to retain their own expert in support of this motion, and the fact that the apparent self-dealing conduct continued after this action was brought raises serious concerns relating to OPI’s ability to render itself judgment proof or to otherwise secrete assets to frustrate a future judgment. In addition, that the SoFi shares were sold so soon after the spin-off to OPI and for the defendants’ benefit (i.e., and not the benefit of all of the Renren shareholders) is problematic. It suggests that the plaintiffs’ concern, articulated to the court previously, that these assets were spun off without legitimate corporate purpose and not just sold by Renren at a cooked valuation is correct. Thus, the attachment pursuant to CPLR § 6201(3) must be granted. Accordingly, it is 653594/2018 IN RE RENREN,INC. vs. X Page 3 of 4 Motion No. 015 3 of 4 FILED: NEW YORK COUNTY CLERK 05/14/2021 02:15 PM INDEX NO. 653594/2018 NYSCEF DOC. NO. 505 RECEIVED NYSCEF: 05/14/2021 ORDERED that the plaintiffs’ motion is granted to the extent that it seeks an order of attachment, in accordance with the foregoing, and the undertaking will be fixed in the sum of $1,000,000 bond, and that the plaintiffs shall pay to the defendant an amount not exceeding $100,000 for legal costs and damages which may be sustained by reason of the attachment in the event it is decided that the plaintiffs are not entitled to an attachment; and it is further ORDERED that the defendants shall upload to NYSCEF by 5 P.M. on Monday, May, 17, 2021, a sworn affidavit, with supporting documents attached to such affidavit, showing evidence of the actual and beneficial owners of the shares or the total of any and all of the proceeds of any share transfers and the location of such proceeds which are now subject to attachment; and it is further ORDERED that the plaintiffs submit a proposed order of attached on notice to NYSCEF and the Part 53 email (SFC-Part53@nycourts.gov) by 5 P.M. on Tuesday, May 18, 2021. 5/14/2021 DATE ANDREW BORROK, J.S.C. CHECK ONE: CASE DISPOSED X NON-FINAL DISPOSITION GRANTED DENIED X GRANTED IN PART OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE 653594/2018 IN RE RENREN,INC. vs. X Page 4 of 4 Motion No. 015 4 of 4
Enter the password to open this PDF file:
-
-
-
-
-
-
-
-
-
-
-
-