UHY Seeks Summary Judgment Dismissal of Pacific Steel Trustee’s $40 Million Damages Complaint
January 18, 2022, Northern District of California – Defendant UHY, LLP files a motion for summary judgment with the United States Bankruptcy Court for Northern District of California, seeking disposition of claims for relief in the first amended complaint filed by Trustee Sarah L. Little for the bankruptcy estate of Pacific Steel Casting Company, LLC. The Trustee brought a complaint against multiple defendants, including Speyside Fund, LLC, The Alcast Company, LLC, UHY, LLP, Speyside Equity, LLC, and other individual defendants.
In its complaint, the Trustee alleges that he seeks to avoid and recover a series of “illegal dividends”, “fraudulent conveyances”, and “improper insider payments” for the benefit of the Debtor’s estate. Specifically, the Trustee claims that certain defendants “looted” over $14 million from the Debtor, resulting in more than $40 million in damages tied to incremental and avoidable indebtedness “caused by Defendants’ wrongful actions and omissions”.
UHY’s motion contends that the Trustee brought one count against UHY, i.e., of “aiding and abetting breach of fiduciary duty”, and seeks $40 million in alleged compensatory damages from UHY in its complaint. However, UHY claims that the doctrine of in pari delicto operates as a bar to the Trustee’s sole claim against UHY. UHY further claims that the Trustee cannot prove that UHY “substantially assisted” its co-defendants to “loot” Pacific Steel, and accordingly, the Court should grant UHY’s Motion.
In re PACIFIC STEEL CASTING COMPANY LLC, Adversary Case No. 19-04057