EFiled: Nov 01 2016 03:39PM EDT

Transaction ID 59773442
Case No. 9542-VCMR
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

SOUTHPAW CREDIT C.A. No. 9542-VCMR

OPPORTUNITY MASTER FUND LP,

Plaintiff,

v.

ADVANCED BATTERY
TECHNOLOGIES, INC.,

Defendant.

RECEIVERS STATUS REPORT FOR THE PERIOD OF MAY 31, 2016

THROUGH SEPTEMBER 30, 2016

Robert W. Seiden, Esq., in his capacity as court-appointed receiver (the

Receiver) of Advanced Battery Technologies, Inc. (ABAT), hereby

respectfully files this Status Report pursuant to this Courts July 23, 2015, Order

appointing Mr. Seiden as Receiver. The Receiver apologizes for the late arrival of

this report. Due to relative lack of cooperation by ABATs chairman, the Receiver

did not want to burden the court with non-substantive reporting, however the

Receiver is now prepared to report to the court that a settlement of this matter has

been reached. The Receiver and his designees have uncovered unequivocal

evidence that ABAT is insolvent, cannot pay its bills as they come due, has

overwhelming debt owed within The Peoples Republic of China (China), and is
being chased by several banks in China and the Chinese government. None of the

ABAT factories are operating and two are essentially abandoned. Additionally, Mr.

Zhiguo Fu, the former Chairman of ABAT (Chairman Fu), is in dire health. He

recently suffered a heart attack that resulted in an extended stay at the hospital and

open heart surgery. Despite this, we have worked closely with Chairman Fu to

reach a settlement that will bring this sordid chapter to a close.

BACKGROUND

On July 23, 2015, Mr. Seiden was appointed to serve as the limited purpose

receiver of ABAT pursuant to 8 Del. C. 322. Mr. Seiden was appointed after

ABAT, a Delaware corporation with operations in China, was found in default

after failing to respond to Plaintiffs petition to appoint a receiver over ABAT for

failure to comply with Plaintiffs discovery. This Court appointed Mr. Seiden as

receiver to enforce the prior discovery orders and its award of attorneys fees and

cost. Mr. Seiden accepted this Courts appointment by letter on July 24, 2015, to

become effective on August 2, 2015, pursuant to the terms of your Order.

This Courts Order on July 23, 2015, appointing Mr. Seiden as receiver (the

Receiver Order) granted Mr. Seiden the authority to exercise control of ABATs

books and records, property, and assets, wherever they may be located. Since his

appointment, the Receiver has hired legal and financial professionals and begun to

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take certain actions in the United States and abroad to fulfill his charge to locate,

secure, and recover ABATs property, assets, and books and records.

THE RECEIVERS ACTIVITIES SINCE LAST REPORT

The Receiver, with the assistance of his professionals and staff, has managed

to make substantial progress in the past several months towards settlement of the

matter and is now able to report that a settlement has been reached between the

Receiver and Chairman Fu. The terms of this settlement are contained in a term

sheet that has been fully executed. The settlement involves a substantial cash

payment by Chairman Fu. The definitive agreement, releases, and related

paperwork will be provided to this court in the coming weeks as the papers are

finalized and executed by all parties to this action. The Receiver is working with

counsel to structure a distribution plan for the proceeds of the settlement to arrive

at a fair, reasonable, and equitable distribution of the settlement proceeds (after

receiver related fees and expenses are deducted as per this courts order) to the

plaintiffs.

Over the past year, as previously reported, the Receiver procured control of

the ABAT BVI subsidiary Cashtech, as well as the Hong Kong subsidiary Harbin

ZQ. The Receiver has worked with the law firm Baker Hostetler LLP (Baker)

and the accounting firm KLC Kennic Lui & Co, and the China office of Zolfo

Cooper, as well as other professionals in China and the British Virgin Islands

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(BVI), as well as with the law firm of Vanacour Perkins and Bayard, P.A. in the

United States. Significantly, the Receiver sent a letter dated September 5, 2015, to

the Chairman Fu in Shuangcheng City, China. The letter introduced the Receiver,

attached the Court Order and requested the books and records of ABAT, as well as

a meeting to discuss the receivership and the terms of the Order. The Receiver

caused this letter to be personally delivered to Chairman Fu. As a result, within a

week of this letter being delivered, Chairman Fu responded directly to the Receiver

by telephone and email. The Receiver and his agents, and Chairman Fu and his

agents thereafter engaged in intense and substantive negotiations, met in person in

China, and in the United States, and visited the facilities in Wuxi, Donnguan, and

Harbin. The Receiver has worked with Confidential Security & Investigations

(CSI) to identify the assets of ABAT in the United States, Hong Kong, the BVI,

and in China, as well as to assist with the lions share of the administrative,

investigative and financial support needed on this matter. The Receivers counsel

has issued several subpoenas to many banks and other relevant third parties that

ABAT has used or is presently using. In fact, the Receiver was able to freeze and

seize the proceeds of an ABAT bank account at HSBC. The Receivers litigation

counsel in the United States, Vanacour Perkins, PLLC, has successfully issued a lis

pendens against the property in Queens, New York owned by ABAT and

Chairman Fu, and initiated a lawsuit against Chairman Fu personally, under an

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alter ego theory for his misappropriation of corporate funds for personal gain.

These factors have assisted the Receiver in the negotiations. The Receivers China

consultant and negotiator Tim Clissold, and his associate met with Chairman Fu on

multiple occasions (including in the hospital) and spoke with him by phone many

times in concerted efforts to structure this settlement.

THE RECEIVERS PROFESSIONALS AND ACTION TAKEN

Through day to day in-person meetings, telephone conferences, and

correspondences via email and standard mail, the Receiver has managed, organized

and strategized with all of his professionals on the actions summarized herein. The

Receiver, among other things, has met with the ABAT CFO, traveled to China to

meet with Chairman Fu and with local professionals assisting the Receiver.

The Receiver retained several counsel and other professionals in multiple

countries to assist him in his charge to enforce this Courts orders. The challenges

of enforcing a United States judgment and court order in China are complex, time

consuming and nearly insurmountable. The Receiver and his team have worked

hard to get to the settlement and appreciate this Courts patience and confidence in

the work done here. In the United States, the Receiver retained several law firms to

assist, including Vanacour Perkins PLLC, Baker & Hostetler LLP, and the

Delaware law firm of Bayard, P.A. In the BVI, the Receiver hired Zolfo Cooper

Limited (Zolfo), to assist him with corporate matters related to ABATs BVI

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subsidiaries and issues related to offshore and onshore settlement. In Hong Kong,

the Receiver hired KLC Kennic Lui & Co. (KLC), a well-regarded small

Chinese and Hong Kong accounting and consultancy firm, to assist him with

corporate matters related to ABATs Asian subsidiaries and assets, as well as

issues related to settlement. In China, the Receiver hired Tim Clissold, a UK and

China based financial consultant and seasoned negotiator, as well as the Shanghai

and New York offices of the law firm Dentons.

CSI, the investigative team of the Receiver, provides detailed analysis of

vital information coming into the Receivers office, locates and analyzes assets and

asset leads, provides background investigations required for the actions that have

been taken or will have to be taken by all of the Receivers professionals.

FEES AND EXPENSES

The invoices of the Receivers professionals are being reviewed by the

Receiver and will be respectfully submitted to the Court for approval under

separate cover.

The Receiver and counsel remain available at the Courts convenience

should the Court wish to discuss any of the forgoing or any other matter related to

the receivership.

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Dated: November 1, 2016 BAYARD, P.A.

/s/ Stephen B. Brauerman

Stephen B. Brauerman (No. 4952)
Justin R. Alberto (No. 5126)
222 Delaware Avenue, Suite 900
P.O. Box 25130
Wilmington, Delaware 19899
(302) 655-5000
Attorneys for Defendants William A.
Carter and Thomas K. Equels