Cambridge Marine Construction Trustee Seeks $1 Million As “Insider Fraudulent Transfers” from Patel Construction
February 11, 2022, District of Connecticut – Trustee Bonnie Mangan of Debtor Cambridge Marine Construction, Inc. (“CMC”) commences a legal action against Patel Construction, LLC and its sole manager, Milan Patel, to recover alleged “insider preferential and constructively fraudulent transfers” of the CMC’s property under Section 547 and 548 of the Bankruptcy Code. The Trustee also brings claims for alleged breach of fiduciary duty, aiding and abetting breach, turnover of property of the estate, and claims under the Connecticut Uniform Fraudulent Transfer Act.
The complaint asserts that allegedly under a mentor/protege agreement, Patel Construction was to guide CMC and CMC’s owner, Jeffery P. Johnson, on all aspects of the business. Mangan argues that instead of fulfilling that role and helping CMC become a profitable business, Patel Construction allegedly “took out more money in distributions than it had paid to purchase an ownership interest in CMC” and “borrowed funds it never repaid to CMC.” In particular, Mangan argues that the Defendants allegedly “orchestrated” an Avidia Term Loan transaction, which concluded with a payment of $1,045,000.00 to Patel Construction to buy out its shares in CMC and a release of Patel from almost $700,000.00 in personal liability on the bank loan. The Trustee contends that Patel Construction and Patel, as Patel Construction’s “alter ego”, allegedly “breached their fiduciary duties to CMC” and “put their own interests ahead of CMC”, thereby increasing CMC’s “indebtedness” and allegedly leaving CMC insolvent.
Through its complaint, Trustee Mangan requests the Court to issue an order in its favor and against the Defendants, awarding money damages and directing that the alleged transfers be set aside as avoidable for the benefit of the CMC’s estate.
In re: Chapter 7, CAMBRIDGE MARINE CONSTRUCTION, INC., Case 22-02006