Legal Proceedings Update: CONSOLFREIGHT PILOT, LLC vs. Hanhwa CEO

Real World Assets Pools
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Legal Proceedings Update: CONSOLFREIGHT PILOT, LLC vs. Hanhwa CEO

  1. On the 19th of October 2023, the Federal Court of Australia issued an order granting us
    permission to:
    Issue subpoenas as per the Federal Court Rules 2011 (Cth) to:
    a. Representatives of the Liquidator Grand Thorton, concerning Hanhwa Aus Pty Ltd, which is
    currently in liquidation.
    b. Directed Electronics OE Pty Ltd.
  2. The court also granted us the option, under the Federal Court Rules, to serve the Originating
    Application and Concise Statement, dated 21 September 2023, to the Hanhwa CEO via email.
    This email should include a copy of the court orders. The documents will be deemed served on
    the fourth working day after these steps have been taken. A copy of these documents should
    also be given to the Liquidator with a request for them to pass it to the Hanhwa CEO as
    practical.
  3. A further Case Management Hearing has been scheduled for 1 December 2023, focused on
    managing and progressing the case.
  4. The Liquidator, Grand Thorton, confirmed receipt of the Concise Statement, Originating
    Application, and Orders, and has subsequently relayed them to the Hanhwa CEO’s known
    contacts.
  5. On the 18th of October 2023, our lead attorney notified both us and the court about the
    directions of the case. They stated that while they would be seeking orders for the issuance of
    the subpoenas, the court might want to make further attempts at serving the Hanhwa CEO.
  6. On the 19th of October 2023, Justice Cheeseman from the Federal Court of Australia outlined
    specific steps for the case, including the means of serving the Originating Application and
    Concise Statement to the Hanhwa CEO and the Liquidator.
    Upcoming Key Dates:
    The Case Management Hearing remains scheduled for 1 December 2023 at 9:30 a.m., as noted
    by Justice Cheeseman.
    The Hanhwa CEO’s response to the court is expected by 15 November.
    Closing Thoughts: We have made significant progress in our recovery efforts. While this marks
    a step in the right direction, it’s important to acknowledge that we still have a long journey
    ahead. The outcome remains uncertain given the complexities of the legal processes and the
    variables in play. However, we are dedicated to seeing this through to its conclusion and will
    persist in our efforts. Rest assured, we will continue to provide regular updates as more
    information becomes available to us.
    Your patience and trust are greatly valued as we navigate these legal intricacies. We remain
    committed to keeping you informed at every significant juncture. Please feel free to reach out
    with any questions.
    Warm regards,
    Jose Tovar
2 Likes
2

Thanks for the update and the transparent description of the legal proceedings.

@Eli if you want to take a look into it

3

@Consol Hi Consolfreight,

Can you give us an update on the legal proceedings? Can you give an expected timeline?

Thanks!
Roy

4

Hi @RoyCrypto11, in case the issuer doesn’t see your reply here, you can take a look at the most recent monthly Real-World Asset report on Maker DAO’s forum here or contact them directly by email.

Thanks.

1 Like
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Dear Valued Investors and Community Members,

We are writing to provide you with an important update regarding the ongoing legal proceedings involving Consol Freight Pools, Hanhwa AUS Pty Ltd, and Hanhwa New Zealand Pty Ltd.

Hearing Update: Federal Court of Australia - NSD1052/2023

We have received confirmation that the hearing of the applications to set aside the subpoenas issued to the liquidator and Directed Electronics has been scheduled for 27 February 2024 at 10:15 am. The hearing will take place at the Law Courts Building, Queens Square, Sydney.

Key Dates:

  • Subpoena Response Deadline for Directed Electronics OE Pty Ltd: 20 December 2023.
  • Evidence Filing Deadline for Consol Freight Pilot, LLC:
    • Application by Andrew Hewitt (as liquidator) on 29 November 2023.
    • Any application filed by Directed Electronics OE Pty Ltd in accordance with Order 1.
    • Deadline: 19 January 2024.
  • Response Deadline from Directed Electronics OE Pty Ltd and Andrew Hewitt: 31 January 2024.
  • Hearing Date: 27 February 2024 at 10:15 am.

Consol Freight’s Commitment: Consol Freight remains committed to acting proactively and diligently in pursuing our claims and seeking resolution. Our team has meticulously prepared extensive documentation to support our case, demonstrating our dedication to recovering assets and debts. This effort is essential to safeguard the investments entrusted to us by our valued investors.

We understand the significance of transparency in these matters and will continue to provide regular updates as significant developments unfold. If you have any inquiries or questions, please do not hesitate to contact us at operations@consolfreight.com.

We appreciate your ongoing trust and support.

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September 27, 2024

Subject: Legal Update and Appeal Rights Regarding the Hanhwa Case

Dear Valued Investors and Affected Parties,

We are writing to update you on the latest developments regarding the legal proceedings related to Hanhwa and its CEO, Ryan Lee, and to outline the next steps available to Consol Freight and the impacted stakeholders.

As you are aware, this case has significantly impacted Consol Freight, leading to a halt in our operations. Our legal team has been actively pursuing recovery options through the courts, but recent decisions have created additional challenges.

Recent Court Decision

On 27 May 2024, Judicial Registrar Birchall delivered a decision that rejected Consol Freight’s attempt to subpoena documents from the Liquidator and Directed Electronics (the Plaintiff in this case). These subpoenas were critical to understanding the sale and disposal of assets that Consol Freight financed through its trade finance agreement with Hanhwa. The court also declined our request for preliminary discovery, further hindering our ability to gather evidence regarding the sale of inventory.

Options Moving Forward

Our barrister has advised that Consol Freight has the right to appeal this decision. The appeal would be a “de novo” hearing, meaning the court will look at the case from the beginning, allowing us to present new evidence and arguments. While we have a reasonable basis for an appeal, there are significant financial obligations associated with pursuing this course. In addition to paying a deposit to cover the defendants’ attorney fees, we must also settle any outstanding legal costs resulting from our unsuccessful subpoena request.

One critical factor in the appeal is that the Liquidator had initially undertaken not to deal with the

$440,000 from the sale of Consol Freight’s inventory. However, recent developments suggest the Liquidator has reversed this decision without notice, and it appears the funds may have been used. This raises serious legal questions, and our legal team is exploring potential claims against the Liquidator for breaching their duties and assisting in what may have been a fraudulent disposal of Consol Freight’s goods.

Limited Time to Act

While these legal arguments provide a potential path forward, we want to be transparent about the risks and uncertainties involved. There is no guarantee of success, and the financial burden of continuing this case is significant.

Given these considerations, Consol Freight is offering MakerDAO and Defactor, as the largest affected parties, the opportunity to take over our rights to appeal and continue pursuing the case. We will limit this offer to a 30-day period, after which time Consol Freight will cease any further legal actions if no other party steps in to take over.

Next Steps

If MakerDAO or Defactor wishes to explore this option, we encourage you to contact us within the next 30 days to discuss how the process might proceed. We will continue to provide any relevant information and legal documentation to support your decision.

Please understand that, while the appeal offers a chance to recover funds, the process remains uncertain, and any further legal proceedings will come with associated risks and costs. We remain committed to supporting this process in any way we can, and we will be as transparent as possible throughout the remaining stages.

We deeply appreciate your patience and understanding during these challenging times. Should you have any questions or wish to discuss this further, please feel free to reach out to us.

Sincerely

Jose Tovar