META Advisors LLC Files Motion for Summary Judgment Against a Hong Kong Based Company Engaged in Design and Development of Portable Lighting Products, Seeks $93k in Alleged “Preferences”
May 27, 2021, District of Nebraska – Earlier last week, META Advisors LLC on behalf of G-Estate Management Company, Inc. (f/k/a Gordmans Management Company, Inc.), (the “Plaintiff”) moved for summary judgment under Rule 56 of the Federal Rules of Civil Procedure against Mastercraft International Limited (the “Defendant”) on the Plaintiff’s alleged claims under 11 U.S.C. §§ 547, 550 and 502 of the Bankruptcy Code. Plaintiff alleges that there are “no genuine issues of material fact” concerning the alleged claims and that Plaintiff is entitled to judgment as a “matter of law”.
Before the Gordmans Stores, Inc., et al ( the “Debtors”) filing of bankruptcy on March 13, 2017, the Debtor and Defendant allegedly had a multi-year business relationship in which Defendant sold décor, textile, decorative accessory, and giftware products to the Debtors for resale in the Debtors’ stores. Allegedly, the Debtor or one of its affiliated Debtors would submit a purchase order (a “PO”) to Defendant to purchase certain merchandise. Each PO allegedly represented a “binding contract” between the Debtors and Defendant and identified, among other things, the merchandise purchased, the quantity purchased the cost of the merchandise and the payment terms. The business was allegedly carried out “as per the terms of each PO” – Defendant would ship the merchandise to the Debtors on credit and submit an invoice with the outstanding amount due. Per the pleadings filed in the court, the credit terms between the Debtors and Defendant reportedly were “Net 30 days” and “later were changed to Net 60 days”. During the 90 days before the Debtors’ bankruptcy petition, the Debtor allegedly made transfers worth $93,667.00 to Defendant by check from “its own funds”, that Plaintiff seeks to avoid and recover.
In its motion for summary judgment, Plaintiff argues that the alleged transfers constituted a transfer of the “Debtor’s property” as the funds that comprised each transfer allegedly originated from the “Debtor’s operating account”. The Plaintiff further contends that the said transfers satisfied all conditions of Sec. 547 (b) – the transfers were allegedly made to Defendant “on account of outstanding invoices” and the transfers “benefited” the Defendant by paying outstanding amounts owed to it; the Debtors were “presumably insolvent” as outlined in the Debtor’s schedules of assets and liabilities on the petition date – the Debtor’s assets totaled $8,359,390.05, while its liabilities totaled $109,546,491.91; the liquidation analysis in the Court-approved disclosure statement allegedly demonstrated that the Defendant “received more” on account of the transfers than it would in a chapter 7 bankruptcy case.
Based on above, the Plaintiff alleges in its motion for summary judgment that the Debtors incurred the “debt” to Defendant “before making each transfer” and that the alleged transfers represented funds that “would have been part of the Debtors’ estates”. Plaintiff urges the Court to grant its motion for summary judgment and allow it to recover the alleged transfers from Defendant as allegedly “an undisputed recipient” according to section 550(a) of the Bankruptcy Code.
The case is In re Gordmans Stores, Inc., et al, Case No. 17-80304 (TLS) in the United States Bankruptcy Court for the District of Nebraska. The objection to Plaintiff’s motion for summary judgment is due by June 17, 2021. Chief Judge Thomas L Saladino is overseeing the Debtor’s case. The law firm of Frost Brown Todd, LLC is representing the Plaintiffs in the Debtors’ bankruptcy case.