Hillman v. H I G Capital L L C, 6:14-cv-00816

Background

Gulf Fleet Holdings, Inc. and related entities filed for Chapter 11; Trustee filed adversary proceeding for fraudulent transfer, preference, and other fiduciary-duty claims against H.I.G. Capital and D&O defendants.
Bankruptcy court granted in part and denied in part the prior Rule 12(b)(6) motions and ordered repleading; parties consented to final orders on core/non-core issues per Gulf Fleet I and BP RE discussions.
Trustee’s Second Amended Complaint asserts numerous transfers and transactions post-LBO (2007) alleged to undercapitalize Gulf Fleet and enrich H.I.G. through fees, notes, and intercompany transfers.
Court must determine whether it may issue final orders on core claims under Stern v. Marshall and applicable Fifth Circuit precedent; Fifth Circuit later held no final-order authority for Stern-defined matters even with consent.
Court conducts choice-of-law analysis for state-law fraudulent transfer claims under 544/548, applying Delaware law to Gulf Fleet Holdings and certain Delaware subsidiaries, and Louisiana law for some Louisiana entities; several counts survive Rule 12(b)(6) while others are dismissed or limited.
Leave to replead denied for further amendments.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Are Counts 1 and 2 viable fiduciary-duty claims based on delaying bankruptcy filing and venue theory?	Hillman alleges delay/venue harmed creditors, shielding LBO.	Zanarini/Fox/Tamer and H.I.G. argue no plausibly pled breach of duty; venue choice does not alter applicable law.	Counts 1 and 2 granted (dismissed)
Do Count 3 fraudulent transfer/recovation claims survive?	Trustee asserts transfers related to M/V Gulf Tiger were insolvent and without value received.	Movants contend insufficient state-law basis or value allegations.	Count 3 denied (fraudulent transfer/revocatory claims not sustained at this stage)
Do Counts 4 and 5 fiduciary-duty claims regarding Gulf Tiger survive?	Zanarini/Fox/Tamer and H.I.G. allege breach in relation to Gulf Tiger assignment and funding.	Arguments inadequate to plead specific duties/line-item breaches.	Counts 4 and 5 survive (denied on dismissal)
Do Count 6 fiduciary-duty claims about funds used for GFH projects survive?	Funds used for GFH projects harmed Gulf Fleet Holdings and creditors.	Allegations reflect normal corporate holdings structure; insufficient breach grounds.	Count 6 dismissed
Do Counts 9-17 (fraudulent transfers, simulations, etc.) survive?	Trustee pleads CSA payments and notes as potential fraud/simulation.	Defenses under state and federal law apply; some claims not pled with sufficient specificity.	Counts 9, 12-14, 15, 16, 18-19 survive; Count 17 (simulation) dismissed; Count 11 partially denied (5.5M note) and partially denied (2.9M note)

Key Cases Cited

Torch Liquidating Trust ex rel. Bridge Associates, LLC v. Stockstill, 561 F.3d 377 (5th Cir. 2009) (Delaware law fiduciary duties; insolvency affects creditors' rights)
Mills Acq. Co. v. MacMillan, Inc., 559 A.2d 1261 (Del. 1989) (fiduciary duties require informed decisions for loyalty and care)
Trenwick America Litigation Trust v. Ernst & Young, LLP, 906 A.2d 168 (Del. Ch. 2006) (creditor-rights focus in insolvency; duties to maximize value for creditors)
In re DBSI, Inc., 467 B.R. 767 (Bankr. D. Del. 2012) (final-order authority and core/non-core considerations under Stern)
In re Am. Housing Found., 469 B.R. 257 (Bankr. N.D. Tex. 2012) (constructive fraud and core claim treatment under bankruptcy statute)
In re Cyrus II Partnership, 413 B.R. 609 (Bankr. S.D. Tex. 2008) (federal 544 rights defined by state law)