Tiger Oak Media Trustee Prosecutes Debtor’s CEO For Alleged “Breach of Fiduciary Duty”
April 1, 2021, District of Minnesota – Trustee Edwin H. Caldie for the estate of Tiger Oak Media, Inc. recently commenced an adversary proceeding against the Debtor’s CEO, Craig Bednar for “fraudulent transfers” and “breach of fiduciary duty.”
Bednar allegedly operated Debtor as his “alter ego and for his personal benefit.” According to the complaint, Bednar authorized Debtor “to enter into a promissory note and a guaranty” with a financial group, Venture Bank. Debtor via Bednar apparently “executed a security agreement” with Venture Bank and allegedly “pledged all of its inventory, equipment, accounts, chattel paper, instruments, letters of credit rights, documents, deposit accounts, investment property, money, right to payment, and general intangibles to secure its obligations” to Venture Bank. Besides, as per the complaint, Bednar also authorized his salary at approximately $315,000 per year, plus benefits from the Debtor.
The Trustee asserts that the Debtor allegedly received “no consideration and derived no benefit of value” in exchange for either undertaking the guaranty or in exchange for his salary. The Trustee further contends that due to Bednar’s “failure to exercise care” of a reasonably prudent person and to exercise his reasonable business judgment, the Debtor presumably suffered unnecessary financial losses and lacked basic resiliency sufficient to survive financial downturns, including the COVID- 19 pandemic.
The Trustee also accused Bednar of “imprudent distributions” and for the “failure of performing his fiduciary duties” towards the Debtor. The complaint alleges that Bednar took actions “for his benefit and the benefit of his other businesses,” to the detriment of the Debtor, the Debtor’s estate, and its creditors.
According to the Trustee, the Debtor’s “actual intent to hinder, delay, or defraud any creditor” of the Debtor is supported by badges of fraud, such as the alleged transfers were made “for the benefit of an insider;” were “not fully disclosed” on the statement of financial affairs; were made while the Debtor was “insolvent;” the Debtor received “less than reasonably equivalent value” in exchange for the alleged transfers, etc.
Thus, the Trustee urges the court to enter judgment against Bednar and in favor of the Trustee for Bednar’s “breach of his fiduciary duties” in the amount equal to the sum of all allowed unsecured claims filed and/or scheduled in the Chapter 11 case.