Trustee Todd A. Frealy Brings an Avoidance Action in Ben Clymer The Body Shop Perris Inc.’s Bankruptcy
February 17, 2021, Central District of California – Trustee Todd A. Frealy, for the consolidated bankruptcy estates of Ben Clymer’s The Body Shop Perris, Inc. (the “Debtor”), Ben Clymer’s The Body Shop Perris, LLC, Ben Clymer’s Body & Repair, Inc., Pimlico Ranch, LLC, brings a complaint against US Metro Bank (the “Defendant”), alleging “actual and constructive fraud.”
The Debtor was engaged in the business of manufacturing and selling luxury limousines, party buses, and shuttle buses throughout the country. Allegedly, the Defendant loaned about $2 million to an affiliate of the Debtor to purchase shares of common stock in the Debtor. The complaint avers that “without adequate, reasonable, or necessary notice” to the Debtor’s creditors, Defendant “secured the repayment of the stock loan with real estate property,” the Magnolia Property valued at about $3 million. The Debtor owned the Magnolia property via a deed of trust and assignment of rents.
The Trustee sued the Bank, alleging that the obligations and payments were incurred by the Debtor “to the benefit of Defendant for no consideration to the Debtor.” Hence, according to the Trustee, the transfer constitutes a transfer of the Debtor’s interests and is avoidable under Sections 544(b) and 550(a) of the Bankruptcy Code and California Civil Code § 3439.05 and § 3439.07.