Plaintiff Debtor Wing Dinger Texas Sues Reserve Capital Management LLC, Alleging “Civil Conspiracy” & “Fraud”
December 22, 2021, Eastern District of Texas – Plaintiff Debtor Wing Dinger Texas brings a lawsuit against a merchant cash advance company, Reserve Capital Management, LLC (RCM), its principals and investors, alleging “fraud” and “civil conspiracy” to carry out a long-running “scheme” allegedly “to collect upon unlawful debts and fraudulently obtain thousands of dollars in funds from Wing Dinger in violation of the Racketeer influences and Corrupt Organizations Act (“RICO”).” Wing Dinger also seeks to recover the preference and “fraudulent transfers” that Reserve Capital allegedly received under Sections 547 and 548 of the Bankruptcy Code.
Wing Dinger owned and operated several popular restaurants in the state of Texas. The complaint alleges that during COVID – 19 pandemic, Wing Dinger and RCM entered into certain agreements under which the latter allegedly sold future receipts and became obligated to make daily payments to RCM until a set amount was paid. Adding further, the restaurant argues that although the transaction was “couched as the purchase of future receipts,” the terms and conditions of agreements and the RCM’s action allegedly demonstrated that “no sale of receipts took place” and the transaction was “merely a sham” to evade applicable usury laws. The complaint argues that, in reality, the transactions were loans that charged interest rates far greater than the maximum 28% permitted under the laws of Texas or the maximum 25% under the laws of New York. Wing Dinger alleges that it received five loans from RCM for $1,058,100.00 and was required to pay $1,609,835.00 i.e., $551,735.00 in interest.
Accordingly, Wing Dinger seeks judgment against principals and investors, declaring that the alleged “loan is usurious in violation of Texas Fin. Code and New York Penal Law award” direct and consequential damages. Additionally, Wing Dinger urges the Court to enter judgment in its favor under Section 547 and 548, avoiding the transfers for $247,164.65 as alleged preferences and directing the RCM to return the amount of avoidable transfers to the debtor.
In re Wing Dinger Texas, LLC, Case No. 21-60327