Legal Document: Mizuho Securities Usa Llc v. All Blue Investment Management Ltd.

On March 04, 2024 a MEMORANDUM OF LAW IN SUPPORT - (AMENDED) was filed involving a dispute between Mizuho Securities Usa Llc, and All Blue Investment Management Ltd., for Commercial - Contract - Commercial Division in the District Court of New York County.

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FILED: NEW YORK COUNTY CLERK 03/05/2024 02:31 PM INDEX NO. 651140/2024
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK

MIZUHO SECURITIES USA LLC,
Index No. 651140/2024
Plaintiff,

- against -

ALL BLUE INVESTMENT MANAGEMENT LTD.,

Defendant.

PLAINTIFF’S AMENDED MEMORANDUM OF LAW IN SUPPORT
OF ITS APPLICATION FOR AN ORDER OF ATTACHMENT, EX
PARTE TEMPORARY RESTRAINING ORDER,
AND EXPEDITED DISCOVERY

PATTERSON BELKNAP WEBB & TYLER LLP
Joshua A. Goldberg
Henry J. Ricardo
Daisy Y. Joo
1133 Avenue of the Americas
New York, NY 10036-6710
Tel: (212) 336-2000
Fax: (212) 336-2222

Counsel for Plaintiff Mizuho Securities USA LLC
March 4, 2024

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TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES .......................................................................................................... ii

INTRODUCTION ...........................................................................................................................1

BACKGROUND .............................................................................................................................2

ARGUMENT ...................................................................................................................................5

I. MSUSA IS ENTITLED TO AN ATTACHMENT ORDER...............................................5

A. MSUSA Has a Valid Cause of Action .....................................................................6

B. MSUSA Is Highly Likely to Succeed on the Merits of Its Breach of
Contract Claim .........................................................................................................7

C. Grounds for Attachment Exist Under CPLR § 6201(1) ..........................................8

1. All Blue Is a Foreign Corporation Not Qualified in New York ..................8

2. MSUSA Has Demonstrated the Need for Security Pending Entry
of Final Judgment ........................................................................................9

D. The Amount Demanded in the Complaint Exceeds All Known
Counterclaims ........................................................................................................10

II. MSUSA IS ENTITLED TO OTHER RELATED RELIEF ..............................................11

A. A Temporary Restraining Order Freezing All Blue’s Assets Is Warranted ..........11

B. Expedited Discovery Is Warranted ........................................................................12

CONCLUSION ..............................................................................................................................14

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TABLE OF AUTHORITIES

Page(s)

Cases

A & M Exports, Ltd. v. Meridien Int’l. Bank, Ltd.,
222 A.D.2d 378 (N.Y. App. Div. 1995) ..................................................................................11

Agnew v. Alicanto, S.A.,
125 F.R.D. 355 (E.D.N.Y. 1989) .............................................................................................12

Capital Ventures Int’l v. Republic of Argentina,
443 F.3d 214 (2d Cir. 2006).....................................................................................................10

CFTC v. Efrosman,
No. 05 Civ. 8422 (KMW), 2005 WL 3832923 (S.D.N.Y. Sept. 30, 2005) .............................13

Coastal States Trading, Inc. v. Zenith Navigation S.A.,
446 F. Supp. 330 (S.D.N.Y 1977) .............................................................................................8

Considar v Redi Corp. Establishment,
238 A.D.2d 111 (1st Dep’t 1997) ..........................................................................................6, 8

Etalon Imob S.R.L. v. Schoenbach,
No. 12 Civ. 6868 (BSJ), 2012 WL 4741595 (S.D.N.Y. 2012) ................................................12

Giorgio Morandi, Inc. v. Texport Corp.,
697 F. Supp. 777 (S.D.N.Y. 1988) ........................................................................................7, 8

Graubard Mollen Dannett & Horowitz v. Kostantinides,
709 F. Supp. 428 (S.D.N.Y. 1989) ......................................................................................7, 10

Herzi v. Ateliers De La Haute-Garonne,
No. 15 Civ. 7702 (RJS), 2015 WL 8479676, at *3 (S.D.N.Y. 2015) ........................................9

ITC Ent., Ltd. v. Nelson Film Partners,
714 F.2d 217 (2d Cir. 1983).......................................................................................................9

Michelsen v. Brush,
233 F. Supp. 868 (E.D.N.Y. 1964) ..........................................................................................12

Onewoo Corp. v. Hampshire Brands, Inc.,
No. 16 Civ. 4623 (PKC), 2016 WL 11779677 (S.D.N.Y. 2016) ...............................................7

Pena v. Morgan,
149 F. Supp. 2d 91 (S.D.N.Y. 2001)..........................................................................................9

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Physicians Planning Serv. Corp. of Connecticut v. 292 Estates, Inc.,
88 A.D.2d 852 (1st Dep’t 1982) ..............................................................................................11

Swiss Bank Corp. v. Eatessami,
26 A.D.2d 287 (1st Dep’t 1966) ................................................................................................8

Thornapple Assocs, Inc. v. Sahagen,
No. 06 Civ. 6412 (JFK), 2007 WL 747861 (S.D.N.Y. Mar. 12, 2007) .................................6, 9

US Bank Nat. Ass’n v. Lieberman,
98 A.D.3d 422 (1st Dep’t 2012) ................................................................................................7

Yong Xiong He v. China New Star Restaurant, Inc.
No. 19 Civ. 5907 (PKC) (CLP), 2020 WL 6202423 (E.D.N.Y. 2020) ...................................12

Other Authorities

CPLR § 6201................................................................................................................................1, 5

CPLR § 6201(1) .....................................................................................................................8, 9, 10

CPLR § 6210..............................................................................................................................1, 11

CPLR § 6212.......................................................................................................................... passim

CPLR § 6220..............................................................................................................................1, 12

CPLR § 6313(a) .............................................................................................................................11

iii

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Plaintiff Mizuho Securities USA LLC (“MSUSA”) submits this Amended Memorandum

of Law in support of its application for an order of attachment, pursuant to New York Civil

Practice Law and Rules (“CPLR”) §§ 6201 and 6212(a), upon assets of Defendant All Blue

Investment Management, Ltd. (“All Blue”), including but not limited to any account held by

Citibank N.A. in the name of or for the benefit of All Blue or for the purpose of settling All

Blue’s securities transactions, including but not limited to Citibank account number xx7217, for

an amount sufficient to ensure satisfaction of judgment in favor of MSUSA; for an ex parte

temporary restraining order prohibiting All Blue from transferring any funds or assets, as

provided by CPLR § 6210, pending the Court’s hearing and determination on MSUSA’s

application for an order of attachment; and an order granting expedited disclosure pursuant to

CPLR § 6220.

INTRODUCTION

This action presents a textbook case for pre-judgment attachment and related preliminary

relief: MSUSA has a straightforward meritorious breach-of-contract claim for more than $19

million against a non-resident British Virgin Island corporation that is not qualified to do

business in New York and that holds at least one account in Switzerland. There is a palpable risk

that MSUSA will be unable to satisfy a judgment against All Blue unless MSUSA obtains a pre-

judgment attachment of the only potential source of All Blue assets in the United States that

MSUSA is aware of, a temporary restraining order pending hearing and determination on a pre-

judgment attachment, and expedited discovery.

All Blue’s liability to MSUSA is self-evident and substantial. All Blue indisputably

failed to deliver securities in two short sale transactions that All Blue executed through MSUSA,

as broker, on February 1 and February 5, 2024. Under the terms of the trade confirmations

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governing these transactions, All Blue’s liability is not reasonably subject to dispute: it must pay

MSUSA for the losses it incurred as result of All Blue’s failure to deliver securities on the

settlement dates, and it has been in breach for twenty-six days as of the filing of this motion

(since February 5 and February 7), which is a relative eternity in the trading world. Despite

MSUSA’s repeated efforts to obtain payment following the breaches of the trade confirmations,

All Blue has failed to timely respond to MSUSA’s inquiries and failed to pay what it owes to

MSUSA.

Pre-judgment attachment is appropriate here because All Blue is a British Virgin Islands

corporation that is not qualified to business in New York, and it appears to have limited assets in

the United States. Based on the records available to MSUSA, All Blue appears to have a bank

account in Switzerland, and it used an account with Citibank N.A. in New York to transact with

MSUSA, which is the only potential source of recovery in the United States of which MSUSA is

aware. All Blue could readily transfer whatever assets it holds in the United States, including

those held in this Citibank account, to avoid payment of its obligation to MSUSA. MSUSA has

reason to believe that All Blue will do precisely that based on All Blue’s blatant and long-

continuing breach of the trade confirmations, failure to respond in a timely fashion to MSUSA’s

communications, and the significant sum All Blue owes. The removal of assets from the United

States would severely prejudice MSUSA’s ability to satisfy a judgment against All Blue.

Accordingly, MSUSA seeks a pre-judgment attachment to prevent any dissipation of assets, and

expedited discovery concerning the extent and location of All Blue’s assets.

BACKGROUND

All Blue became a customer of MSUSA in December 2023, describing itself as an

investment manager based in the British Virgin Islands trading in listed stocks. All Blue has two

principals, Matthew Novak, a Canadian citizen, and Daniel Cookson, a citizen of the United

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Kingdom living in Dubai. (Corrected Affidavit of Nate Spencer (“Spencer Aff.”) ¶¶ 2, 3.)

All Blue began executing securities trades with MSUSA in early 2024, with MSUSA

acting as a broker in these transactions. (Id. ¶ 5.) Before February 1, 2024, all trades for All

Blue settled successfully. (Id.)

On February 1 and February 5, 2024, All Blue executed through MSUSA short sales of

the common stock of Super Micro Computer Inc., NASDAQ ticker symbol SMCI (“SMCI

Shares”). (Id. ¶¶ 6, 8; Exs. 1 & 2.) Short sales are transactions in which traders attempt to profit

from stocks they believe will decline in value by borrowing those securities from a broker to sell

on the open market, with the intent to later purchase stocks at a lower price to return to the

broker. (Id. ¶ 6.) The terms of these transactions were set forth in written trade confirmations.

The February 1 transactions had a settlement date of February 5, 2024, meaning that All Blue

was required to deliver 70,000 SMCI Shares to MSUSA on February 5, 2024 (Id. ¶ 6; Ex. 1.),

and the February 5 transactions had a settlement date of February 7, 2024, meaning that All Blue

was required to deliver 120,000 SMCI Shares to MSUSA on February 7, 2024. (Id. ¶ 8; Ex. 2.)

As to these transactions, All Blue was required to deliver a total of 190,000 SMCI Shares to

MSUSA. (Id. ¶ 9.)

All Blue failed to deliver any SMCI Shares to MSUSA on either February 5 or February

7, 2024 in connection with the short sales executed on February 1 and February 5, 2024,

respectively, thereby breaching its agreements. (Id. ¶ 9.) All Blue’s failure to deliver these

SMCI Shares as promised left MSUSA holding the bag, because, to complete All Blue’s short

sales, MSUSA had to deliver 190,000 SMCI Shares to the exchange through which the trades

had been cleared. (Id. ¶ 11.) To avoid a default with the exchange, MSUSA borrowed 190,000

SMCI Shares from third parties to cover the SMCI shares All Blue failed to deliver. (Id.)

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After All Blue’s failure to deliver SMCI Shares, MSUSA repeatedly reached out to All

Blue to determine why the transactions did not settle and how All Blue would make MSUSA

whole. (Id. ¶ 12.) On February 8, February 9, February 12, and February 13, 2024, All Blue

delivered to MSUSA 4,500, 1,000, 5,000, and 15,000 SMCI Shares, respectively. (Id. ¶ 13.)

This amounted to a partial delivery of 25,500 of the 190,000 SMCI Shares, leaving 164,500

undelivered shares that All Blue still owed to MSUSA. (Id.)

MSUSA made numerous follow-up inquiries to All Blue during this period via email,

telephone, and Bloomberg messaging. (Id. ¶ 14.) On February 21, 2024, All Blue instructed

MSUSA to close out its short position by making open market purchases of the remaining

164,500 SMCI Shares that All Blue had yet to deliver. (Id. ¶ 15; Ex. 3 at 7.) Pursuant to All

Blue’s written instruction, MSUSA purchased 164,500 SMCI Shares at a total cost of

$120,095,462 on February 21, 2024. (Id. ¶ 16.) This resulted in a substantial loss to MSUSA.

Specifically, as a result of All Blue’s failure to deliver the required SMCI Shares to close out the

February 1 and February 5, 2024 transactions as required, and MSUSA’s subsequent cover of

those positions—at All Blue’s instruction—MSUSA lost a total of $19,185,675.87, inclusive of

commissions. (Id.)

On February 21, 2024, MSUSA sent an email confirming the covering purchases to All

Blue in order to settle the account. (Id.) The next day, on February 22, 2024, MSUSA emailed

All Blue a final schedule detailing the charges for the February 21, 2024 stock purchases and

issued a Security Payment Order (“SPO”) for the $19,185,675.87 due from All Blue. (Id. ¶ 17;

Ex. 3 at 3-6.) All Blue failed to respond in a timely manner and never satisfied the SPO.

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The trade confirmations governing the transactions with All Blue provide: “If the

required payment or delivery of securities is not made by settlement date, positions may be

closed out and appropriate charges, including interest, may be made to your account.” (Id. ¶ 10.)

All Blue has never disputed that it failed to comply with its obligations, that it owes payment to

MSUSA as a result, or MSUSA’s calculation of its losses from these transactions. (Id. ¶ 18.)

Instead, All Blue has for all intents and purposes ignored MSUSA’s numerous follow-up

communications to obtain payment from All Blue. (Id. ¶ 18; Ex. 3 at 3-6.)

Four days after the SPO was issued, on February 26, 2024, All Blue sent an email stating,

“we’re reviewing internally and will revert back shortly.” (Id. ¶ 18; Ex. 3 at 2.) But All Blue did

not revert back shortly and did not remit payment. (Id. ¶ 18.) Given All Blue’s continuing

breach of its obligations and failure to make payment to MSUSA as required, MSUSA sent a

formal demand letter to All Blue on February 28, 2024, requesting a response by 12:00 p.m. ET

on March 1, 2024. (Id. ¶ 19.) All Blue failed to meet this deadline, and instead sent a letter from

counsel later on March 1, 2024, vaguely stating, “[w]e are conferring with our client with respect

to your demand and will revert as soon as possible.” (Id. ¶ 20.) To date, All Blue has failed to

make any payment to reimburse MSUSA for the losses caused by All Blue’s default and

subsequent failure to make timely payment. (Id.) As noted above, All Blue has never disputed

that it is in default and owes MSUSA over $19 million, exclusive of interest and other expenses

incurred by MSUSA in attempting to collect payment from All Blue.

ARGUMENT

I. MSUSA IS ENTITLED TO AN ATTACHMENT ORDER

Pursuant to CPLR section 6212(a), MSUSA is entitled to the provisional remedy of

attachment upon showing (i) there is a cause of action, (ii) it is probable that MSUSA will

succeed on the merits, (iii) one or more grounds for attachment detailed in CPLR section 6201 is

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present, and (iv) the amount demanded from MSUSA exceeds all counterclaims known to it. See

CPLR § 6212(a); Considar v. Redi Corp. Establishment, 238 A.D.2d 111, 112 (1st Dep’t 1997).

As described below, each of these requirements is satisfied here.

A. MSUSA Has a Valid Cause of Action

MSUSA’s cause of action for breach of contract provides clear grounds for attachment.

(Compl. ¶¶ 28-36.) The first requirement for attachment—whether a cause of action exists—is

governed by a liberal standard. See Thornapple Assocs, Inc. v. Sahagen, No. 06 Civ. 6412

(JFK), 2007 WL 747861, at *3 (S.D.N.Y. Mar. 12, 2007). “Unless the plaintiff’s papers clearly

establish that the plaintiff must ultimately be defeated, a cause of action exists.” Id.

Here, All Blue formed contracts with MSUSA by executing short sale transactions with

MSUSA on February 1 and February 5, 2024. The terms of these contracts are set forth in the

trade confirmations. MSUSA fully performed pursuant to those agreements by selling the SMCI

shares in question. (Spencer Aff. ¶¶ 6, 8; Exs. 1 & 2.) These contracts required All Blue to

deliver 70,000 SMCI shares to MSUSA on February 5, 2024 and 120,000 SMCI shares to

MSUSA on February 7, 2024. (Id. ¶¶ 6, 8; Exs. 1 & 2.). All Blue failed to deliver the total of

190,000 SMCI Shares as required by those agreements. (Id. ¶ 9.)

Instead of complying with its obligations, All Blue made only partial deliveries of SMCI

shares on February 8, February 9, February 12, and February 13, 2024, respectively. This left a

deficiency of 164,500 SMCI shares. On February 21, 2024, All Blue instructed MSUSA to close

out All Blue’s short position by making open market purchases of the remaining 164,500 SMCI

Shares. (Id. ¶¶ 13, 15.) MSUSA did so that same day and sent All Blue an email confirmation.

(Id. ¶ 16.) The next day, on February 22, 2024, MSUSA emailed All Blue a final schedule

detailing the charges for the February 21, 2024 stock purchases and issued an SPO for the

$19,185,675.87 due from All Blue. (Id. ¶ 17; Ex. 3 at 3-6.). This sum represents what MSUSA

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is owned under the trade confirmations due to All Blue’s failure to deliver SMCI Shares as

promised. (Id. ¶ 16.) To date, All Blue has failed to make any payment to reimburse MSUSA

for the losses caused by All Blue’s default and subsequent failure to make timely payment. (Id. ¶

20.)

These facts satisfy the “essential elements” for a breach of contract claim under New

York law: the existence of a contract, plaintiff’s performance under the contract, the defendant’s

breach of that contract, and resulting damages. US Bank Nat. Ass’n v. Lieberman, 98 A.D.3d

422, 423 (1st Dep’t 2012); see also Onewoo Corp. v. Hampshire Brands, Inc., No. 16 Civ. 4623

(PKC), 2016 WL 11779677, at *4 (S.D.N.Y. 2016).

B. MSUSA Is Highly Likely to Succeed on the Merits of Its Breach of Contract
Claim

MSUSA has demonstrated probability of success on the merits—the second requirement

for an attachment. The Corrected Affidavit of Nate Spencer, sworn to on March 4, 2024, and the

exhibits thereto demonstrate that it is more likely than not that MSUSA will succeed on its

breach of contract claim. (Spencer Aff. ¶¶ 6-20; Exs. 1-3.) See Graubard Mollen Dannett &

Horowitz v. Kostantinides, 709 F. Supp. 428, 432 (S.D.N.Y. 1989) (evidence of legal fees owed

and unpaid sufficient to show probability of success on breach of contract claim for attachment

under Article 62 of the CPLR); Giorgio Morandi, Inc. v. Texport Corp., 697 F. Supp. 777, 779

(S.D.N.Y. 1988) (bills of lading demonstrating contractual obligation to ship products by certain

date and proof that defendant shipped products after that date sufficient to show probability of

success on breach of contract claim for attachment under Article 62 of the CPLR).

All Blue effectively acknowledged the breach of its contractual obligations when it

provided written instruction for MSUSA to purchase the outstanding shares of SMCI that it

failed to deliver by the agreed-upon settlement dates. (Spencer Aff. ¶ 15.) See, e.g., Onewoo

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Corp., 2016 WL 11779677, at *4 (probability of success of breach of contract claim shown for

attachment under Article 62 of the CPLR where no dispute that valid contract existed to pay for

delivered merchandise and failure to pay for items resulted in damages). All Blue then breached

its obligation to cover the costs that MSUSA incurred in obtaining the SMCI shares to close out

All Blue’s positions from the underlying trades. Because it is sufficient that the evidentiary facts

only have “some probative force,” Swiss Bank Corp. v. Eatessami, 26 A.D.2d 287, 290 (1st

Dep’t 1966), and MSUSA “must be given the benefit of all legitimate inferences and deductions

that can be made from the facts stated,” Considar, 238 A.D.2d 111 at 112, MSUSA has

presented more than enough evidence to establish probable success on the merits of its breach of

contract claim.

C. Grounds for Attachment Exist Under CPLR § 6201(1)

1. All Blue Is a Foreign Corporation Not Qualified in New York

Under CPLR section 6201, “[a]n order of attachment may be granted” where a party has

“demanded and would be entitled . . . to a money judgment” against a party who is a

“nondomiciliary residing without the state, or is a foreign corporation not qualified to do

business in the state.” CPLR § 6201(1). Here, All Blue is a foreign corporation residing in the

British Virgin Islands (Spencer Aff. ¶ 3), and it is not qualified to do business in New York

(Affirmation of Joshua A. Goldberg (“Goldberg Aff.”) ¶ 5; Ex. A). See, e.g., Giorgio Morandi,

Inc., 697 F. Supp. at 777 (Hong Kong trading company with international offices selling to New

York customers, not authorized to do business in New York State, is proper defendant for

attachment under CPLR section 6201(1)). That All Blue may conduct “business in this state

does not render” the statutory basis “inapplicable.” Coastal States Trading, Inc. v. Zenith

Navigation S.A., 446 F. Supp. 330, 342 (S.D.N.Y 1977).

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2. MSUSA Has Demonstrated the Need for Security Pending Entry of
Final Judgment

MSUSA has also shown that these circumstances warrant the pre-judgment remedy under

section 6201(1), which is intended to “protect the plaintiff against defendant’s ability to pack his

bags, abandon his place of convenience within the state, and remain at his permanent residence

outside the reach of New York enforcement procedures.” ITC Ent., Ltd. v. Nelson Film

Partners, 714 F.2d 217, 221 (2d Cir. 1983).

Attachment is necessary here because MSUSA has reason to doubt that All Blue will be

able to satisfy a judgment against it. Since breaching its obligations to deliver securities to

MSUSA and cover MSUSA’s costs in closing out All Blue’s short positions, All Blue has

evaded MSUSA’s repeated inquiries, either ignoring MSUSA’s communications or stalling with

vague assurances, all while failing to pay MSUSA what All Blue owes. (Spencer Aff. ¶¶ 12, 14,

18, 20.) All Blue’s conduct reflects an attempt to avoid payment and to evade MSUSA’s efforts

to collect for All Blue’s clear breach. (Id. ¶ 23.) Thornapple Assocs., Inc., 2007 WL 747861, at

*6 (“[D]efendant’s financial instability may justify a plaintiff’s fear that a potential judgment

will not be satisfied”). Indeed, MSUSA believes that the more than $19 million that All Blue

owes to MSUSA represents a substantial percentage of All Blue’s total assets under

management.

Courts routinely grant orders of attachment against non-domiciliary defendants, such as

All Blue, when a defendant does not have sufficient assets in New York compared with its

potential liabilities, or where most of a defendant’s assets are outside of New York. See, e.g.,

Herzi v. Ateliers De La Haute–Garonne, No. 15 Civ. 7702 (RJS), 2015 WL 8479676, at *3

(S.D.N.Y. 2015) (attachment warranted against “private, foreign company without any apparent

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business operations in New York”); Pena v. Morgan, 149 F. Supp. 2d 91, 95 (S.D.N.Y. 2001)

(“[S]trong need for security” exists “in light of defendant’s out-of-state domicile, apparent lack

of other assets in New York, and reticence on the question of where his assets are and whether

they will remain there.”). Based on settlement instructions for All Blue provided to MSUSA, All

Blue appears to have a bank account in Switzerland (Banca Credinvest S.A.) and maintains or

uses a U.S. account with Citibank N.A.—the only potential source of recovery in the United

States of which MSUSA is aware. (Spencer Aff. ¶¶ 4, 23.) MSUSA has reason to believe that

this Citibank account holds assets that could satisfy a potential judgment, because during the

course of trading activity with All Blue, the trades were settled pursuant to the settlement

instructions on file for All Blue, which direct MSUSA to settle trades on All Blue’s behalf

through Citibank account number xx7217. (Id. ¶ 4; Ex. 5 at 3.) Without a pre-judgment

attachment in place, All Blue could “easily transfer[]” assets from this Citibank account to

unknown overseas locations “by a simple telephone call,” Graubard, 709 F. Supp. at 432, giving

rise to the real risk that MSUSA will be put “in the inauspicious position of having to chase

defendants” to foreign venues.

D. The Amount Demanded in the Complaint Exceeds All Known Counterclaims

Finally, MSUSA is not aware of any possible counterclaim available to All Blue and

certainly not one that could come close to exceeding the over $19 million owed to and demanded

by MSUSA. (Goldberg Aff. ¶ 6.) See Capital Ventures Int’l v. Republic of Argentina, 443 F.3d

214, 219 (2d Cir. 2006) (finding element satisfied where “[t]here was no evidence of any

counterclaims against [plaintiff], much less any that would exceed the [amount] demanded from

[defendant]”). Accordingly, the money damages sought by MSUSA exceeds all known

counterclaims. With the final requirement for an attachment order met, MSUSA thus satisfies all

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statutory requirements for obtaining an order of attachment under sections 6201(1) and 6212(a)

of the CPLR.

II. MSUSA IS ENTITLED TO OTHER RELATED RELIEF

In addition to an order of attachment, MSUSA is entitled to a temporary restraining order

prohibiting the transfer of the assets that are the subject of the request for attachment, and

expedited disclosure so that MSUSA can ascertain the location and existence of All Blue’s

assets.

A. A Temporary Restraining Order Freezing All Blue’s Assets Is Warranted

Pursuant to CPLR section 6210, a court may grant an ex parte temporary restraint

prohibiting All Blue from transferring the assets at issue pending a hearing and determination on

the order of attachment. See CPLR § 6210. New York courts have recognized that “[t]he

temporary restraining order provided for [section] 6210 is issued pursuant to [section] 6313(a).”

A & M Exports, Ltd. v. Meridien Int’l. Bank, Ltd., 222 A.D.2d 378, 380 (N.Y. App. Div. 1995).

Under section 6313(a), the plaintiff must show that immediate and irreparable injury will result

unless the defendant is restrained before the hearing can be had. Id. Several compelling reasons

exist to justify the grant of a restraint on the transfer of All Blue’s assets in the amount of

$19,185,675.87, during the brief period before a hearing and determination on an order of

attachment.

Temporary restraining orders are intended for the circumstances here: to prevent the

dissipation of property that could render a judgment ineffectual. See Physicians Planning Serv.

Corp. of Connecticut v. 292 Estates, Inc., 88 A.D.2d 852 (1st Dep’t 1982). There is no dispute

that All Blue is in breach of its obligations to MSUSA. (Spencer Aff. ¶¶ 9, 15.) All Blue has

nevertheless failed to respond to MSUSA in a timely fashion, failed to cure its breach and settle

its trades, and failed to reimburse MSUSA for the payment that All Blue unquestionably owes to

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MSUSA, raising genuine concerns that All Blue is unable to satisfy a potential judgment. (Id. ¶

23.) Given the current doubt about All Blue’s ability to pay the significant sum owed to

MSUSA, and the ease with which All Blue could transfer overseas whatever assets it maintains

in New York, MSUSA faces the imminent risk of being unable to collect on a future judgment,

which would cause irreparable harm to MSUSA. See Agnew v. Alicanto, S.A., 125 F.R.D. 355,

357 (E.D.N.Y. 1989) (ex parte TRO granted where “bulk of the property attached were liquid

funds that easily could be transferred out of New York by wire upon receipt of notice”).

Because MSUSA seeks to restrain All Blue’s assets for only a short period, there is little

if any potential harm to All Blue. By contrast, however, MSUSA will be irreparably harmed by

the substantial chance that it will not be able to recover the excess of $19 million dollars owed to

MSUSA. Consequently, MSUSA urgently requires a restraining order without hearing to restrict

any transfer of funds. (Goldberg Aff. ¶ 4.)

B. Expedited Discovery Is Warranted

MSUSA seeks targeted, expedited discovery to assist with attachment pursuant to CPLR

§ 6220, which permits “disclosure by any person of information regarding any property in which

the defendant has an interest, or any debts owing to the defendant,” CPLR § 6220, and may be

granted in tandem with an order of attachment, see Yong Xiong He v. China New Star

Restaurant, Inc., No. 19 Civ.5907 (PKC) (CLP), 2020 WL 6202423, at *16 (E.D.N.Y. 2020)

(“As the Court issues an attachment order here, it may order disclosure pursuant to CPLR §

6220.”). Broad disclosure is permitted by this provision to “better assess [a defendant’s] asset

holdings and ability to satisfy a judgment.” Etalon Imob S.R.L. v. Schoenbach, No. 12 Civ. 6868

(BSJ), 2012 WL 4741595, at *5 (S.D.N.Y. 2012); see Michelsen v. Brush, 233 F. Supp. 868, 869

(E.D.N.Y. 1964) (CPLR section 6220 has no territorial limitation).

MSUSA requests leave to take targeted and expedited discovery that is limited to specific

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information that will permit MSUSA to take reasonable steps to ensure that any judgment can be

enforced and to reduce the risk that MSUSA will not be able to recover should All Blue seek to

divert its funds abroad. Specifically, MSUSA seeks leave to serve expedited discovery requests

for the following:

• Records of any bank or brokerage accounts held by All Blue at Citibank or

elsewhere within or outside the United States, including account statements and

information regarding any assets held in any such account(s);

• Documents sufficient to identify real property and intangible assets owned by All

Blue;

• Documents sufficient to show All Blue’s ownership and management structure,

including identification of any related funds, entities and principals; and

• Records of bank or brokerage accounts or financial statements showing the

current financial state of All Blue’s related funds, entities and principals,

including their respective accounts, holdings, assets, debts and/or liabilities either

within or outside the United States.

These narrowly tailored requests regarding relevant information and documents pertaining to the

location of All Blue’s assets, its principals, and its ownership structure are in All Blue’s

possession. See CFTC v. Efrosman, No. 05 Civ. 8422 (KMW), 2005 WL 3832923 (S.D.N.Y.

Sept. 30, 2005) (restraining order and request for expedited discovery granted for purpose of

discovering information related to defendants’ assets where good cause to believe that they

would be transferred, impeding court’s ability to grant effective final relief). Because the

information sought by the document demands will be limited in scope, All Blue should be able to

collect and produce the requested information in short order, with little burden, which would, in

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any event, be outweighed by MSUSA’s compelling need for the information.

CONCLUSION

For the foregoing reasons, MSUSA respectfully requests that the Court grant MSUSA’s

application for an order of attachment, an ex parte temporary restraining order pending the

hearing and determination on the motion for attachment, and expedited discovery.

Dated: New York, New York PATTERSON BELKNAP WEBB & TYLER LLP
March 5, 2024
/s/ Joshua A. Goldberg
Joshua A. Goldberg
Henry J. Ricardo
Daisy Y. Joo
1133 Avenue of the Americas
New York, New York 10036-6710
Telephone: (212) 336-2000
jgoldberg@pbwt.com
hricardo@pbwt.com
djoo@pbwt.com

Counsel for Plaintiff Mizuho Securities USA LLC

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CERTIFICATION OF COMPLIANCE WITH VOLUME LIMIT

This document complies with the word limits of Commercial Division Rule 17. I certify
that this brief contains 4,229 words, as measured by the word count of the word processing
software (Microsoft Word) used to prepare the document.

Dated: New York, New York
March 5, 2024

/s/ Joshua A. Goldberg
Joshua A. Goldberg

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