In Re: Transcare Corporation
2:25-cv-01691
S.D.N.Y.May 22, 2025Background
- The Trustee of TransCare Corporation pursued claims against Lynn Tilton (TransCare’s controller) and PPAS (an affiliated entity) following TransCare’s bankruptcy and asset foreclosure.
- The underlying bankruptcy court actions involved two theories: fraudulent transfer (against PPAS) and breach of fiduciary duty (against Tilton), both based on the same asset transfer.
- Both the bankruptcy court and district court ruled for the Trustee, awarding damages on both claims, but limited recovery to a “single satisfaction” for the same injury.
- The Second Circuit affirmed the findings but likewise held the Trustee to one recovery under the Bankruptcy Code’s single satisfaction rule.
- The Trustee collected full satisfaction of the judgment from Tilton and then sought attorney’s fees from PPAS based on the fraudulent transfer claim; the bankruptcy court largely granted these fees.
- PPAS appealed, arguing that the single satisfaction rule barred further fee recovery after the Trustee had been made whole by Tilton; the district court certified this legal question for direct appeal to the Second Circuit due to a lack of controlling precedent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the single-satisfaction rule bar attorney’s fees from PPAS after full recovery from Tilton on parallel claims arising from the same transfer? | Entitlement to fees from PPAS as allowed under state law, and fees are separate from base damages. | No additional recovery from PPAS once Trustee has full satisfaction, including interest, from Tilton. | Certified for direct appeal: No controlling authority, legal question to be resolved by Second Circuit. |
Key Cases Cited
- Stern v. Marshall, 564 U.S. 462 (explaining bankruptcy courts’ authority over core and non-core proceedings)
- Bullard v. Blue Hills Bank, 575 U.S. 496 (explaining direct appeal certification under § 158(d)(2))
- Weber v. United States, 484 F.3d 154 (providing the Second Circuit’s guidance on direct bankruptcy appeals and legal uncertainty)
- West Virginia v. United States, 479 U.S. 305 (discussing prejudgment interest as full compensation in federal claims)