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Clawback Lawsuits in Emporia Property Group Bankruptcy

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October 6, 2021, District of Kansas – Plaintiff Sharon Stolte, as the Liquidating Agent of Emporia Property Group Liquidating Trust, for the bankruptcy estate of Debtor Emporia Property Group, LLC, initiated clawback actions against ten (10) defendants to avoid and recover approximately $400k as preferences and fraudulent conveyances under sections 548 and 550 of the Bankruptcy Code. The Trust also seeks to disallow any claim that these defendants have filed or asserted against the Debtor.

Allegedly, Debtor was formed to purchase and renovate a hotel in Emporia, Kansas. The Debtor’s business was funded with debt and equity financing. Per the Debtor, the property failed to provide sufficient cash flow to meet day-to-day obligations. This, along with a combination of other factors, placed significant stress on the Debtor’s liquidity position in the months before the petition date. Eventually, the Debtor filed for bankruptcy on October 8, 2019.

The largest case in the group so far has been filed against HR Service Group for a return of $132,175.15. Honorable Judge Dale L. Somers is overseeing the Debtors case. The law firm of Sandberg Phoenix & von Gontard is representing the Trust. The case is In re Emporia Property Group, LLC, Case No. 19-22155.

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