672 B.R. 557
Bankr. S.D. Florida2025Background
- 274 Atlantic Isles, LLC (“274 Atlantic”) owned a property in Sunny Isles Beach, FL, originally acquired by its sole member, Valerie Kabrita, with substantial investment from Juan Pablo Verdiquio.
- Isaac Halwani took possession of the property and, acting on behalf of 274 Atlantic, encumbered it with two mortgages: a $1.5M first mortgage and a $525,000 second mortgage; 274 Atlantic and the Halwanis personally guaranteed the notes.
- After a default, a deed-in-lieu of foreclosure (the "Deed") was executed in favor of the lender (the Trustee), conditioned by a forbearance agreement, and was recorded on April 5, 2021.
- 274 Atlantic entered bankruptcy and initiated an adversary proceeding to avoid the Deed's recording as a constructively fraudulent transfer under 11 U.S.C. §§ 548(a)(1)(B) and 550(a).
- The dispute centered around whether 274 Atlantic was insolvent at the time of the transfer, and whether its contingent liabilities made it so.
- The court granted summary judgment to the Trustee (Plaintiff) and denied 274 Atlantic’s (Defendant's) motion, finding 274 Atlantic not insolvent at the time of the transfer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 274 Atlantic was insolvent when the Deed was recorded | Contingent liabilities (including partnership and guarantees) should be valued at zero; thus, not insolvent | Had liabilities (Verdiquio’s claim and second guaranty) exceeding assets after transfer; therefore insolvent | 274 Atlantic was not insolvent at time of transfer or as a result of transfer |
| Whether Verdiquio’s investment constituted a liability of 274 Atlantic | Partnership contribution, not a liability of the LLC; no unjust enrichment claim exists | Verdiquio could assert an unjust enrichment claim against 274 Atlantic | Verdiquio’s claim valued at zero; not a liability |
| Value of contingent liability on the Second Note Guaranty | Should be heavily discounted; negligible chance it would be enforced as the property was over-secured | Face value of $721,198.43 should be used since default triggered liability | Value is zero; negligible chance of enforcement |
| Whether transfer constituted a constructively fraudulent transfer under § 548(a)(1)(B) | Transfer did not render 274 Atlantic insolvent; received reasonably equivalent value | Transfer rendered 274 Atlantic insolvent as it left the company assetless | No fraudulent transfer; claim denied |
Key Cases Cited
- Allen v. Tyson Foods, Inc., 121 F.3d 642 (11th Cir. 1997) (summary judgment standard for material facts)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (burden-shifting on summary judgment)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (summary judgment, standard for sufficiency of evidence)
- Kopel v. Kopel, 229 So. 3d 812 (Fla. 2017) (unjust enrichment requires direct benefit)
- Advanced Telecomm. Network, Inc. v. Allen, 490 F.3d 1325 (11th Cir. 2007) (valuation of contingent liabilities in insolvency analysis)
- Schilpp v. Schilpp, 380 So. 2d 573 (Fla. 1st DCA 1980) (primary test for existence of partnership)
- Xonics Photochemical, Inc., 841 F.2d 198 (7th Cir. 1988) (contingent liabilities not valued at face amount)