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Crystallex International Corporation is a Canadian-based gold company with a successful record of developing and operating gold mines in Venezuela and elsewhere in South America

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Message: Re: Ad Hoc Equity..E&Y

May 14, 2018 09:22PM

May 14, 2018 09:23PM

May 14, 2018 09:45PM
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May 15, 2018 12:24AM
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May 15, 2018 01:53AM

May 15, 2018 09:40AM

So Noteholders requested to know more on how the Arbitration proceeds are being used:

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Further, the Court ordered requirement on Crystallex to provide Distribution Statements to the Trustee and Ad Hoc Committee requires that it disclose the application of Arbitration Proceeds. Accordingly, the proposed sealing of the accrued professional expenses that Crystallex intends to satisfy with the Arbitration Proceeds (as outlined at paragraph 22 of the Twenty-Fifth Report) is inappropriate and the amounts should be publically disclosed so creditors can understand the use of Arbitration Proceeds and the amount of expenses that rank in priority to them. Moreover, there is simply no basis for the continued sealing of information at this stage in the case (to the extent there ever was such a basis).
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as well as additional "Professional Fees" that CRY accrued from whom knows what kind of shady dealings over in VZ:

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Professional Fees
The disclosure for the first time that $36 million is owing to professional advisors, including $30 million to Venezuelan counsel that apparently has been accruing for 6 years, is disturbing. Based on our discussions with the Monitor throughout the case and prior disclosures in the case we had understood that some amounts were due and owing to North American professional advisors, including some $6 million that Crystallex paid using the bridge DIP loan obtained in December 2017. This new disclosure that there is still $36 million of accrued and unpaid professional fees owing by Crystallex raises significant questions regarding the use of DIP proceeds by Crystallex and of its and the Monitor's disclosures in the case to date.

Please immediately provide us with a schedule of each of the professional advisors Crystallex is paying, the amounts paid by Crystallex to each of them to date, and the accrued amounts owing to each such professional firm. Please also advise whether the amounts owing to Venezuelan counsel are based on hourly rates or some sort of contingency arrangement.
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Crystallex response:

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We cannot disagree more strongly with your view that there is no basis for the continued sealing of information at this stage of the case. For Venezuela to know the state of Crystallex's finances would be extraordinarily prejudicial to Crystallex's ability to continue to ensure that payments in respect of the Award continue to be made and maintain the credibility of continued enforcement proceedings should such payments cease for any reason. As you know, this is Crystallex's only asset and the value of such asset would suffer irreparable harm should such disclosure be made.

In the same vein, while we can confirm to you, again, that there is no contingency arrangement with Crystallex's Venezuelan counsel, it would also be extraordinarily prejudicial to provide the level of detail regarding Crystallex's professional advisors that you have requested. Doing so would, quite plainly, endanger people's lives. It would also reveal the network of law firms and asset collection firms that has been essential to securing and successfully enforcing the Award and receiving the Venezuela Payments when others, like Gold Reserve, have been unsuccessful in doing so. Not only would revealing Crystallex's network be prejudicial to its ongoing position with Venezuela, as you know, one of Crystallex's largest bondholders (and a member of your client group) is Gold Reserve's largest shareholder. Accordingly, a material competitive advantage could also be lost in revealing such information. Lastly, as mentioned earlier, no Distribution Statement is even required to be delivered at this time and, even if it had been, the DIP Credit Agreement (which is the operative document that established the Distribution Statement concept) contains no requirement that such statement provide the level of detail you have suggested.
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In challenging the sealing of info, the noteholders also confirm the Tenor game plan to maximize their share:

Of note, in light of the significant tax reserve being proposed by Crystallex, even though Crystallex is forecast to receive approximately $155 million over the next year, it is not currently forecast that any of the DIP loan will be repaid, with the result being that the DIP lender will continue to accrue 10% interest (compounded semiannually) on its loans, to the prejudice of stakeholders who will see the claims ahead of them grow larger (this on top of the new $36 million of unpaid post-filing professional expenses).
..

Looks like the Hudge Heiney is not buying Fung's BS anymore and is tightening the leash as well as allowing stakeholders to see the details of the Settlement Agreement and KRY's shady dealings in VZ should come to light as well.

Their arrogance and greed should be their downfall in this mess...

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May 15, 2018 09:14PM

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