Defendants Demand Delaware BK Court Throw Out $379m Fraudulent Conveyance Complaint
June 01, 2022, US Bankruptcy Court for the District of Delaware – The Defendants in the adversary proceeding brought by Catherine E. Youngman, as Litigation Trustee for the Debtors ASHNIC Corporation, et al., move to dismiss with prejudice the complaint filed against them.
Each of the Defendants is a limited partner of Yucaipa American Alliance Fund I, L.P. and/or Yucaipa American Alliance (Parallel) Fund I, L.P under their respective Limited Partnership Agreements (“LPAs”). While Yucaipa Alliance Management, LLC and Yucaipa American Alliance Fund I, LLC managed and operated the day to day activities of these partnerships, the limited partners allegedly did not and do not participate in management of the partnerships or otherwise exercise control over the partnerships’ affairs.
In 2021, Trustee Youngman sued the Defendants to clawback approximately $379.7 million of “actual and constructive fraudulent transfers” made under LPAs to the Defendants.
The Defendants, through their motion, argue that the complaint fails to plead with adequate specificity that the transfers were made with actual fraudulent intent; or that the partnerships were insolvent at the time they made each of the alleged transfers or were rendered insolvent by any such individual transfer. The Defendants also contend that Trustee Youngman lacks standing to seek to enforce the “Return of Distributions” provision in the LPAs.
The Defendants request the Court on the ground of foregoing reasons to dismiss the complaint filed by Trustee Youngman against them.
Youngman v. Yucaipa American Alliance Fund I, LLC et al. (In re ASHINC Corporation, et al.), AP No. 21-51179, US Bankruptcy Court for the District of Delaware.