Trustee Kapila Sues Black Diamond Group For $39M in Richert Funding Bankruptcy Case
April 6, 2021, Middle District of Florida – Trustee Soneet R. Kapila for the substantively consolidated bankruptcy estate of Richert Funding, LLC and Dwight and Holly Richert (the “Debtor”) sues Black Diamond Holdings, LLC (“BD Holdings”) and Black Diamond Financial Group, Inc. (“BD Financial”) (the “Defendants”).
The Debtor was apparently engaged in the business of “factoring accounts receivables” with several companies, including the Defendants. BD Holdings allegedly “assigned and sold all of its then-existing and subsequently created accounts receivable to Richert Funding.”
The facts alleged in the complaint are as follows – Under the factoring agreement, BD Holdings allegedly had to “repurchase receivables” it had sold to Richert Funding if BD Holdings’ customers disputed the validity of any receivable or failed to pay timely. To secure BD Holdings’ performance under the factoring agreement, BD Holdings allegedly granted Richert Funding a “security interest” in BD Holdings accounts, chattel paper, deposit accounts, general intangibles, and other obligations. Richert Funding apparently perfected its security interest by filing a UCC-1 in Colorado. The obligors on several BD Financial’s invoices allegedly “failed to pay the invoices when due,” triggering BD Holdings’ obligation to “repurchase those invoices for the difference between the face amount of the invoice and the amount received” by Richert Holdings. BD Holdings’ repurchase obligation allegedly totaled $113,442,941.72. Richert Funding allegedly acquired substantial debt from other individuals and entities and transferred over $24 million “to or for the benefit of” BD Holdings and over $15 million to BD Financial.
The Trustee argues that Richert Funding “did not receive reasonably equivalent value” in exchange for any of these transfers. The Trustee further contends that the Defendants “breached their contract” with Richert Funding by failing to pay $113,442,941.72 under the agreement. As a result, Richert Funding allegedly suffered damages of at least $113,442,941.72 plus interest. The Trustee also seeks to recover the alleged transfers as a “fraudulent conveyance” under Sec. 548 of the Bankruptcy Code. Besides, the Trustee seeks an order from the Court “to enforce its security interest” through non-judicial foreclosure under the factoring agreement.
The case is In re Richert Funding, LLC, case number – 6:18-bk-06276-KSJ in the United States Bankruptcy Court for the Middle District of Florida.