Over $10M Sought From Wolstenholme Irrevocable Trust as Alleged Fraudulent Conveyances
October 20, 2021, Eastern District of Pennsylvania – Plaintiff Trustee Terry P. Dershaw, Esq. for the estate of Debtor WM Robots, LLC recently sued Defendant Eugene B. Wolstenholme Irrevocable Trust to avoid and recover $10,259,586.02 of transfers allegedly made by the Debtor under 11 USC §§§ 544, 548, and 550, and the Pennsylvania Uniform Fraudulent Transfer Act, 12 Pa. CS §§ 5101-5110.
As alleged in the complaint, Robert F. Wolstenholme (“Wolstenholme”) was an officer of the Debtor and owned a ninety (90) percent membership interest in the Debtor. Wolstenholme was also an officer, employee, and owner of another entity, WMI Group. The complaint alleges that the Debtor did not have any interest in WMI Group.
The Trustee argues that during the four (4) year period immediately preceding the Debtor’s petition date, the Debtor “made certain transfers” to Defendant under an assignment of property. The Trustee further contends that the alleged transfers were the transfer of property of the Debtor, i.e., debts owed to the Debtor and the Debtor’s tangible and intangible property and were made “solely for benefit of Defendant, Wolstenholme, WMI Group, or Wolstenholme’s other businesses”. The Trustee also contends that the Debtor “did not receive any value” whatsoever – let alone reasonably equivalent value in exchange for the said transfers, as all value was allegedly obtained by Defendant, Wolstenholme, WMI Group, and Wolstenholme’s other businesses. Accordingly, the Trustee alleges that the transfers constitute an avoidable “fraudulent transfer” according to 12 Pa.C.S. § 5104(a) and Bankruptcy Code section 544(b) and, as such, recoverable from Defendant under Bankruptcy Code section 550(a).