Bankruptcy - Fraudulent transfers.


Byline: Mass. Lawyers Weekly Staff

Where a Chapter 7 Trustee has moved for summary judgment on claims to avoid transfers from the debtor to the defendants, the trustee has established the elements for avoidance of fraudulent transfers, so the motion should be allowed.

"The matter before the Court is the Plaintiff's Motion for Summary Judgment pursuant to which Stewart F. Grossman, the Chapter 7 Trustee of the bankruptcy estate of Connolly Geaney Ablitt & Willard, P.C. (the 'Debtor' or the 'Law Firm'), seeks summary judgment against the Defendant, Durham Commercial Capital Corp. ('Durham'), on Counts I and II of his Complaint to avoid $1,024,799.48 in transfers of cash and other property to Durham pursuant to 11 U.S.C. 548 (Count I) and pursuant to 11 U.S.C. 544(b) and Mass. Gen. Laws, ch. 109A, 5 and 6 (Count II). The Plaintiff also seeks summary judgment against Durham and Defendant, Maasai Holdings, LLC ('Maasai'), on Count III of his Complaint to recover for the benefit of the estate the value of the avoided transfers pursuant to 11 U.S.C. 550(a)(1). Specifically, the Plaintiff seeks judgment against Durham as the 'initial transferee' and against Maasai as 'the entity for whose benefit such transfer[s] [were] made.'

" The Plaintiff has shown that he is entitled to judgment as a matter of law. In sum, the Plaintiff established the elements for avoidance of fraudulent transfers. He established that while the Debtor was insolvent, it transferred sums in the amounts of $198,100.22, $200,000.00, and $951,719.81 to Durham, that Durham failed to remit the sum of $626,699.15, and that the Debtor did not receive reasonably equivalent value in exchange for those transfers. Furthermore, the Plaintiff established that Durham provided funds to Maasai to acquire the DCR Note and thus established entitlement to recovery against the Defendants pursuant to 11 U.S.C. 550(a)(1). The Court agrees with the Plaintiff that the benefit to Maasai was both actual and intended because the funding documents were executed under the terms of an email from Tim Mura at Durham to Robert Feige, the Chief Operating Officer of the Law Firm (App Ex. 12) that enabled Maasai to acquire the DCR Note and because Maasai did acquire the DCR Note as a result of the Law Firm's execution of the funding documents that confirmed the sources and uses of the transfers. The Plaintiff submitted evidence of a benefit to Maasai that was 'direct, ascertainable, and quantifiable.' The...

To continue reading