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Showing 4 posts in Fraudulent Transfers.

Delaware Bankruptcy Court Holds Section 546(e) Safe Harbor Does Not Bar a Litigation Trust, as a Creditor-Assignee, From Asserting State Law Constructive Fraudulent Transfer Claims

PAH Litig. Trust v. Water Street Healthcare Partners, L.P. (In re Physiotherapy Holdings, Inc.), No. 15-51238 (KG), 2016 WL 3611831 (Bankr. D. Del. June 20, 2016)

In rendering this Opinion and permitting a post-confirmation trust to pursue state law constructive fraudulent transfer claims against two former shareholders of debtor Physiotherapy Holdings, Inc. (“Physiotherapy”), the Honorable Kevin Gross of the Delaware Bankruptcy Court eschewed the recent holding of the Court of Appeals for the Second Circuit that section 546(e) of the Bankruptcy Code preempts not only state law fraudulent transfer claims brought by trustees in bankruptcy, but also those brought by creditors. Read More ›

Court Addresses Standards for Insolvency, Piercing the Corporate Veil Under Delaware Law, Avoiding Alleged Fraudulent Transfers, and More

Burtch v. Opus, LLC (In re Opus East, LLC), Adv. Proc. No. 11-52423 (MFW), 2015 WL 1404959 (Bankr. D. Del. March 23, 2015)

In this Opinion, Judge Mary F. Walrath addressed 67 counts brought by a chapter 7 trustee (the “Trustee”) against former fiduciaries of the debtor and related business entities.  The Trustee alleged theories of piercing the corporate veil, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, successor liability, avoidance of fraudulent and preferential transfers, unjust enrichment, disallowance and equitable subordination of claims, revocation of certificate of dissolution, imposition of constructive trust, tortious interference with contract, conversion and conspiracy to commit conversion.  After trial on the merits, Judge Walrath granted partial judgment and pre-judgment interest in favor of the Trustee on certain fraudulent transfer and preferential transfer counts against two defendants, and granted related relief to allow the Trustee to revoke a certificate of dissolution against one of the affected defendants, and to disallow the claims of both affected defendants pursuant to section 502(d) and (j) of the Bankruptcy Code pending return of the avoided transfers. Judge Walrath granted judgment to defendants on the remaining counts. Read More ›

Transferee’s Knowledge of Debtor’s Intent Not Relevant For Fraudulent Transfer Claim For Actual Intent To Defraud

SB Liquidation Trust v. Preferred Bank (In re Syntax-Brillian Corp.), Nos. 13-1373, 13-1959, 2014 WL 3893292 (3d Cir. Aug. 11, 2014)

In these consolidated appeals stemming from a 2011 Bankruptcy Court decision, the Third Circuit vacated the Bankruptcy Court’s dismissal of certain fraudulent transfer claims against appellee Preferred Bank because the debtor’s intent determines whether a fraudulent transfer claim may be maintained, not the transferee-defendant’s knowledge of the debtor’s intent.  However, the Court affirmed the Bankruptcy Court’s dismissal of all other claims. Read More ›

Unconscionability Claim Dismissed; Fraudulent Transfer Claim Survives

Ritz Camera & Image, L.L.C. v. Canon U.S.A., Inc. (In re Ritz Camera & Image, L.L.C.), Adv. No. 12-50986 (KG) (Bankr. D. Del. Feb. 4, 2014)

This Memorandum Opinion opines on a routine motion to dismiss federal bankruptcy and state law claims asserted by a chapter 7 trustee against defendant Canon U.S.A., Inc. ("Canon").  The Honorable Kevin Gross dismissed the trustee’s claims for unconscionability, economic duress, unjust enrichment, and declaratory judgment, but denied dismissal of the trustee’s fraudulent transfer claims. Read More ›