April 12, 2019, Southern District of New York – Last week, the trustee liquidating the estate of SunEdison, Inc. initiated an adversary proceeding against a logistics company – Expeditors International in the New York bankruptcy court seeking to clawback $17 million in payments that SunEdison made to the defendant on or after September 1, 2015. The liquidating trustee asserted in its complaint that the alleged payments were avoidable transfers as preferences or fraudulent conveyances, under sections 544, 547, 548 and 550 of the Bankruptcy Code, and sections 273, 274, 275, 278 and 279 of the New York Debtor and Creditor Law.
About three years ago, on April 21, 2016, SunEdison Inc. et al. had filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. On March 28, 2017, the debtors filed their joint plan of reorganization of SunEdison, Inc. and its affiliated debtors.
The major event, which led to the downfall of the Sun Edison debtors, included a series of planned acquisitions, which the debtors announced in May 2015. These planned acquisitions gave rise to billions of dollars of funding commitments, over and above the nearly $10 billion in debt that SunEdison, Inc. was already carrying at the end of the second quarter of 2015. Investors reacted negatively to the debtors’ acquisition plans, and eventually, SunEdison’s stock value dropped 70% as opposed to the stock values of companies in its peer group – which dropped just 10% to 15%. As alleged in the trustee’s complaint, by September 1, 2015 – SunEdison and its affiliated debtors were insolvent and/or were no longer able to pay their debts as they came due, and had entered into transactions (i.e., the planned acquisitions) that they had no ability to consummate.
The trustee argued in its complaint that the transfers made during the ninety days (90) preceding the debtors’ petition date were made on account of, antecedent debts. Further, the alleged transfers enabled the defendants to receive more than what they would receive if: (a) the debtors’ bankruptcy case was administered under chapter 7 of the Bankruptcy Code; (b) the preference transfers had not been made, and (c) defendant received payment of such debt to the extent provided by the provisions of the Bankruptcy Code. Alternatively, the trustee asserted that debtors made the fraudulent transfers for services provided to a third party and failed to receive reasonably equivalent value in exchange for such transfers and that these transfers comprised of an interest in property of the Debtor. The defendant has not filed an answer to the trustee’s complaint as on date.
Judge Stuart M. Bernstein is presiding over the debtors’ case. The adversary proceeding number is #: 19-01110-smb in U.S. Bankruptcy Court Southern District of New York (Manhattan). According to the recent docket activity, the court has issued summons to the defendants. The date of the pre-trial conference is yet to be determined.