Lender Asserts “First in Time, First in Right” in California Lien Dispute
June 09, 2022, US Bankruptcy Court for the Central District of California – Inferno Investment, LLC (“Inferno”), as one of the creditors of the Crestlloyd, LLC (“Debtor”), brought a lawsuit against Crestlloyd LLC; Hankey Capital, LLC; Securities Holdings, LLC; and Hilldun Corporation (“Defendants”) to determine validity and priority of liens involved in the bankruptcy case.
Inferno alleges that it had granted initial loans to Debtor Crestlloyd, LLC for acquisition of a property located at 944 Airole Way in Bel-Air long before any other party was involved. Inferno argues that its lien is senior to those of Hankey Capital, LLC (“Hankey Capital”), Yogi Securities Holdings, LLC (“Yogi”), and Hilldun Corporation (“Hilldun”).
Inferno’s allegations are in response to Hankey Capital’s claim that Inferno agreed to subordinate its claim to theirs. The Debtor, Hankey Capital, and other Defendant lienholders seek to rely on an alleged 2016 “Memorandum of Agreement” between Inferno and Debtor (“the MOA”) to claim that Inferno subordinated its debt to Defendant lienholders’ debt, including with respect to loans made to the Debtor even after the MOA was signed.
However, Inferno argues that the agreement was that Inferno would subordinate only to future debts to which they specifically agreed in writing. Inferno also avers that the MOA is of no force or effect because Crestlloyd allegedly committed “fraud” and repudiated the MOA by “misappropriating” millions of dollars.
Inferno also makes an allegation that the signature of Inferno’s principal on an alleged agreement to subordinate to the initial $82.5 million advance by Hankey Capital in October 2018 was “forged”.
Inferno seeks a judicial determination that the secured debt owed to Inferno is not subordinate to secured debts claimed by Hankey Capital and other Defendant lienholders.
Inferno Investment, Inc. v. Crestlloyd, et al. (In re Crestlloyd, LLC), AP No. 22-1125, US Bankruptcy Court for the Central District of California.