FRAUDULENT CONVEYANCES Nassau Academy of Law CLE Live ...

394 B.R. 721 Page 12394 B.R. 721, 50 Bankr.Ct.Dec. 192(Cite as: 394 B.R. 721)ficient to state an intentional fraudulent transfer claim.E.g., Fed. Nat'l Mortgage Ass'n v. Olympia MortgageCorp., No. 04 CV 4971(NG)(MDG), 2006 WL 2802092,at *9 (E.D.N.Y. Sept. 28, 2006)(dismissing intentionalfraudulent transfer claims that aggregated and lumped aseries of cash transfers made over a three to five year periodand failed to identify how many transfers were beingchallenged or the specific dates or amounts of those transfers);Gindi v. Silvershein, No. 93 Civ. 8679(LLS), 1995WL 347397, at *6 (S.D.N.Y. June 8, 1995)(dismissingintentional fraudulent transfer claim that alleged a seriesof non-specific transfers and obligations); Silverman v.K.E.R.U. Realty Corp. (In re Allou Distribs., Inc.), 379B.R. 5, 31-32 (Bankr.E.D.N.Y.2007)(dismissing claim ofintentional fraudulent transfer of "millions of dollars"without specifying the source, dates or the amounts of thetransfers that the trustee was seeking to recover); Thalerv. Adler (In re Adler), 372 B.R. 572, 581(Bankr.E.D.N.Y.2007)(dismissing intentional fraudulenttransfer claim that did not "allege any specifics as to theamounts or dates" of cash deposits made by a debtor husbandinto his wifes bank account); cf. Sullivan v. Kodsi,373 F.Supp.2d 302, 306 (S.D.N.Y.2005)(denying motionto dismiss intentional fraudulent transfer claims challengingnon-specific transfers made to *734 a family trustbetween late 1997 and June 2000 on the ground that thefacts were "peculiarly within the opposing party's knowledge,"and several "badges of fraud" were present).[9] The allegations of actual fraudulent transfer directedagainst the Pre-Petition Banks fail to satisfy these requirements.The Amended Complaint does not identifyany specific transfer, transferor, [FN9] transferee, [FN10]or date of transfer. Instead, it challenges the "net" transfersin the amount of $175.3 million to the Fortgang Affiliatesbetween January 2003 and the Petition Date.Moreover, the focus on the aggregate "net" amount oftransfers implies that some were repaid, undercutting theplaintiff's apparent theory that all of the Pre-Petition Bankloans were fraudulently reconveyed to the Fortgang Affiliates.(See 32)("Fabrikant funded the transfers to theFortgang Affiliates through these obligations that it in-from the Pre-Petition curred Banks.")FN9. There are two debtors in the case, but theAmended Complaint frequently lumps them together.FN10. The Fortgang Affiliates include 47 separateentities. The Amended Complaint lumpsthem together, without distinction, in Counts Ithrough IV.The allegations regarding the single SPM transfer arefree of most of these pleading deficiencies, but not all ofthem. MFS purchased $32 million of gold from SPM onJuly 7, 2006, and both debtors were liable for the purchaseprice. ( 37.) Some $22 million worth of the goldpurchased had already been delivered to the FortgangAffiliates. ( 38.) The Amended Complaint neverthelessfails to identify which Fortgang Affiliates were the transfereesor the dates of the transfers. [FN11] Hence, theclaim against SPM also fails to satisfy Rule 9(b). In lightof this conclusion, it is unnecessary to reach the otherarguments raised by the defendants in support of theirmotions to dismiss this element of the plaintiff's collapsingclaim. [FN12]FN11. According to the Amended Complaint,the SPM merchandise was delivered to the FortgangAffiliates prior to the actual sale, and presumablyon consignment.FN12. The Court nevertheless rejects the argument,made at some length by certain defendants,that the plaintiff's claim is really one for aidingand abetting a breach of fiduciary duty which theplaintiff has failed to plead adequately, and inany event, lacks standing to assert. The plaintiffis not asserting any such claim.b. Constructive Fraud[10][11][12][13] The plaintiff may also satisfy its pleadingburden by alleging that the reconveyance of the loanproceeds and gold was constructively fraudulent understate or federal bankruptcy law. Under the New YorkDebtor & Creditor Law ("NYDCL"), which the partiescite, a person challenging a transfer of the debtor's propertyas constructively fraudulent must show that it wasmade without fair consideration and (1) the debtor wasinsolvent or was rendered insolvent by the transfer,NYDCL § 273, (2) the debtor was left with unreasonablysmall capital, id., § 274, [FN13] or (3) the debtor intendedor believed that it would incur debts beyond itsability to pay when the debts matured. Id., § 275. SharpInt'l, 403 F.3d at 53. Under NYDCL § 272,FN13. By its terms, § 274 ("unreasonably smallcapital") applies to conveyances but not obligations,and cannot be relied on to invalidate thedebtors' loan debt or guaranties to the Pre-Petition Banks. See Silverman v. Paul's Land-© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.