Goodman v. H.I.G. Capital, LLC (In re Gulf Fleet Holdings, Inc.)
491 B.R. 747
Bankr. W.D. La.2013Background
- Gulf Fleet, owned by Gulf Fleet Holdings, underwent a May 2007 leveraged buyout by H.I.G. Capital, with Hillmans selling and H.I.G. obtaining a 65% stake.
- Post-LBO, Gulf Fleet claimed H.I.G. dominated Gulf Fleet through board control and mismanaged funds for H.I.G.’s benefit.
- Trustee allege PSA and CSA contracts funneled management fees and reimbursements to H.I.G. without value to Gulf Fleet.
- Gulf Tiger construction deal involved assignment to GF Tiger Acquisition and lack of reimbursements for Gulf Fleet; later financing schemes allegedly underfunded Gulf Fleet.
- Gulf Fleet filed Chapter 11 in May 2010; liquidating trust created; trustee asserts 14 counts including fraudulent transfer, recharacterization, simulation, and fiduciary duties.
- Motions to dismiss were granted in part and denied in part; trustee granted leave to re-plead in several counts and Brightpoint’s and Rule 12(e) motions granted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law for fraudulent transfer claims | 544(b) claims should apply Delaware or Louisiana law based on most significant relationship. | Delaware law governs as state of formation for many entities; Louisiana arguments rejected. | Louisiana law applies; 544(b) claims limited to three-year reachback. |
| Allowance and value for PSA/CSA payments under 548 | Payments under PSA/CSA may be avoidable as transfers lacking value to Gulf Fleet. | Payments satisfied antecedent debt; not constructively fraudulent; no value deficiency. | Payments were for antecedent debt; not avoidable under 548; leave to re-plead with additional facts. |
| Recharacterization and simulation under state law | Notes and contracts should be treated as equity contributions under Louisiana Civil Code 2025-2027. | Lothian Oil limits 105-based recharacterization; must rely on state law; defenses to simulation lacking. | Count 2 barred under federal recharacterization; Count 3 simulated claims insufficiently pleaded; leave to re-plead. |
| Equitable subordination of claims | H.I.G.’s conduct merits subordination under 510(b)/(c). | Insufficient pleading of inequitable conduct. | Counts survive; subordination claim not dismissed. |
| Count 12 single business enterprise/veil piercing | Gulf Fleet and affiliates and H.I.G. form a single enterprise liable for debts. | Veil piercing under Delaware law; insufficient facts to prove single economic entity. | Count 12 dismissed under both Louisiana and Delaware theories; leave to re-plead. |
Key Cases Cited
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (U.S. 1941) (diversity-based forum choice uses forum state rules)
- Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (U.S. 1989) (fraudulent transfer claims and jury trial implications)
- Stern v. Marshall, 131 S. Ct. 2594 (S. Ct. 2011) (court authority to enter certain orders in bankruptcy proceedings)