Flexible Funding Demands Turnover of Payments From Marquez Brothers Southwest, Argues It Has “Perfected Security Interest” Over Alleged Accounts
December 30, 2021, Northern District of Texas – Debtor-Plaintiff Flexible Funding Ltd Liability Co. brings a legal action against Arizona-based wholesale grocer, Marquez Brothers Southwest, Inc. (“MBSW”) for turnover of money or property of the estate pursuant to 11 U.S.C. § 541(a)(1), (6), and (7) of the Bankruptcy Code.
Flexible Funding is in the business of providing accounts receivable financing. Through its complaint, Flexible Funding seeks payment on certain pre-petition accounts receivable that were allegedly assigned to it as collateral under a financing facility that it extended to an entity named Galca Group L.L.C. dba T.S. Personnel Services (“TSPS”). As alleged in the complaint, defendant MBSW is a customer of TSPS, and TSPS had assigned security interests in TSPS’ accounts receivable to Flexible Funding, directing MBSW to make all payments regarding the said account receivable directly to Flexible Funding.
Flexible Funding contends that although it fully performed its obligations under the terms of the notices of assignment on the lien assigned to it by TSPS on TSPS’ accounts receivable, MBSW made pre-petition payments worth $329,587.67, directly to TSPS, “in violation of the debtor’s notice of assignment.” Flexible Funding further argues that TSPS allegedly “failed to deliver” those misdirected payments over to the debtor. Accordingly, Flexible Funding contends that such payments “did not discharge MBSW’s obligations to pay” Flexible Funding and that it is entitled to enforce MBSW’s obligations thereunder according to Sections 1-305, 9-201, 9-406, and 9-607 of the the Uniform Commercial Code.
Precisely, Flexible Funding alleges that it was the assignee of the rights to payment on the subject accounts receivable arising from services provided by TSPS to MBSW and allegedly held a duly “perfected security interest” in those accounts. Accordingly, Flexible Funding brings this action, seeking damages and turnover of the payments that MBSW allegedly “paid improperly” to TSPS pursuant to Section 9-406 of the Uniform Commercial Code and under §542(a) of the Bankruptcy Code.
In re Flexible Funding Limited Liability, Co. Ltd, et al., Case 21-42215-mxm11