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Monetary Damages Under IUFTA Are not Available Against Debtor/Transferor


September 16, 2021, Northern District of Illinois – First Midwest Bank (“First Midwest”) filed a seven-count complaint against RMG Sports Group LLC (“RMG”) and Robert M. Garber (“Garber”) to avoid “fraudulent transfer” of property under the Illinois Uniform Fraudulent Transfer Act (“IUFTA”), 740 ILCS § 160/1 et seq. Defendant moved to dismiss certain counts of the complaint.

The Court found that since First Midwest sufficiently alleged an impermissible transfer of RMG’s property within the meaning of the IUFTA, Defendant’s motion to dismiss counts V&VI was denied. The Court found that although First Midwest alleged a transfer of Garber’s property, it nonetheless failed to state a claim upon which relief can be granted. The Court ordered First Midwest to join Bash Baseball as a party in the action, as Bash Baseball was a ‘necessary’ party to this action and it may be the only party from whom First Midwest can recover the relief it seeks in Counts V and VI.

The Court highlighted that under Section 9(b) of the IUFTA – where a transfer is voidable, judgment may be entered against the first transferee of the asset or the person for whose benefit the transfer was made or any subsequent transferee other than a good faith transferee who took for value or from any subsequent transferee. Although First Midwest asserted that RMG and Garber constitute parties “for whose benefit the transfer was made,” the Court found that the case law makes it clear that a debtor/transferor does not fall into this category. The Court ruled that since a monetary “fraudulent transfer” judgment cannot be entered against Garber (the debtor/transferor) and because there is no other party against whom such a claim could be made, Plaintiff’s Count VII was premised on actual fraud theory must be dismissed.

First Midwest Bank v. RMG Sports Grp. LLC, 2021 U.S. Dist. LEXIS 176722