Twenty-Seven Defendants Face Clawback Lawsuits Over Alleged Fraudulent Transfers By AME Zion
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July 29, 2022, US Bankruptcy Court for Eastern District of California – Jeffrey I. Golden, the Chapter 11 trustee (“Trustee”) for the bankruptcy estate of AME Zion Western Episcopal District (“Debtor”) files lawsuits against twenty-seven Defendants to clawback alleged “fraudulent transfers” pursuant to 11 U.S.C. §§ 544(b), 548(a)(1)(A), 548(a)(1)(B) and California Civil Code
§§ 3439.04(a)(1) and 3439.04(a)(2).
The Trustee makes the following allegations against the Defendants:
- Bishop Powell, the former CEO of the Debtor was elected as a Bishop of the African Methodist Episcopal Zion Church to preside over the Western Episcopal District of the said Church.
- Bishop Powell allegedly caused the Debtor to become incorporated, using the name “AME Zion Western Episcopal District, Inc.,” despite being allegedly a separate and unrelated entity to the Western Episcopal District of the AME Zion Church.
- The Debtor allegedly acquired the real property from local churches affiliated with the AME Zion Church.
- The Debtor allegedly entered into secured financing agreements with various lenders using the said real property.
- The Debtor allegedly used the secured financing to pay for its operations and expenses from 2016 through the petition date.
- The Debtor allegedly made transfers to Defendants in furtherance of its alleged “scheme” to allegedly exhaust assets of the Debtor, to the detriment of the Debtor and its creditors.
The Trustee claims that the Debtor’s books and records do not reflect any invoice or other memorandum identifying an obligation owed by the Debtor to Defendants in connection with the respective transfers made to Defendants.
The Defendants sued under the group adversary proceedings include Fairway America, LLC; Wells Fargo Bank; SunTrust Bank; Bank of Baroda among others.
In re AME Zion Western Episcopal District, Case no. 20-23726, US Bankruptcy Court for Eastern California.