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debtor to pay a $1.7MM advisory fee to affiliates for which the debtor received no new consideration. The court also held that allegations that a law firm received fees for helping the majority shareholder of the debtor to hinder creditors stated a claim, as did allegations that services rendered by the law firm caused the majority shareholder to receive a preferred claim in a restructuring and therefore the debtor did not receive a reasonably equivalent value for the services. The complaint also alleged that the transfers occurred during the wrongful perpetuation of the debtors' existence and represented an attempt to hinder, delay or defraud creditors. The Court rejected deepening insolvency as giving rise to a separate claim, but suggested it might be a measure of damages for various torts. Finally, the court held there was no liability for aiding and abetting a fraudulent transfer.
Two recent cases held that a triangular setoff--i.e., P owes money to debtor; debtor owes money to P's subsidiary S--is not permitted under section 533. In re SemCrude, L.P., 51 BCD P 20 (Bk D. Del. 2008); In re Garden Ridge Corp., 399 B.R. 135 (D. Del. 2009).
In re Tanner Family, LLC, 2009 WL 238262 (11th Cir. 2009) (prepetition lease termination payment within 90 days of petition was preference; rent obligation due at time lease was signed and was antecedent debt even though payments matured periodically).
Natural gas producer had contract to sell gas at fixed price and if price fell and it didn't deliver, to pay the difference. Price fell and debtor delivered, and trustee said difference between the market and contract price was a fraudulent transfer. Nondebtor argued that the agreements were commodity forward agreements (a form of swap agreement) and outside of the avoidance powers under sections 546(g) and 548(d)(2)(D). The Bankruptcy Court held the transactions were not commodity forward agreements because they provided for physical delivery, and the provisions in question were designed to protect the financial markets. On direct appeal, the Court reversed and remanded. The Court said that even though the contracts provided for physical delivery, they still might be commodity forward agreements, and also, the contracts could influence financial markets. It left the precise issue to the Bankruptcy Court on remand without defining the term itself. In re National Gas Distributors, LLC, 556 F.3d 247 (4th Cir. 2009).
One recent case held that in a suit by the trustee pursuant to state fraudulent transfer law and section 544, prejudgment interest is required because the issue is governed by state law and the applicable state law in fraud actions (Mass.) requires the payment of interest. In re Keefe, 2009 WL 427276 (BAP-1st Cir. 2009).
The recent Chrysler decision raises the issue of whether plan type issues can be raised as part of a section 363 sale and, if so, whether this applies only insofar as the issues afftect the new financer and/or applies to "emergency" situations.
©2009 Jonathan M. Landers
