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