Navigator Business Services LLC v. Chen, 1:23-cv-01551

Background

Navigator obtained a $2.5M guaranty claim against Aiguang Chen, and the court later entered judgment exceeding $4.6M on that guaranty.
While the debt was outstanding, Chen transferred 90% of his membership interest in Mao Sheng Realty LLC to his son, Qin Wei Chen, in August 2020 for nominal consideration ($10 / described as a gift); Mao Sheng owns a Queens property Chen values at ~$4.3M.
The transfer occurred after the loan to Navigator matured/defaulted and the same day another Chen-guaranteed company defaulted on an $18M loan, facts suggestive of asset dissipation to frustrate creditors.
Navigator filed three fraudulent-conveyance suits (July 2021, Aug 2021, Feb 2023) challenging multiple transfers; Judge Donnelly previously enjoined transfers of two other properties in related suits.
Navigator moved for a preliminary injunction here to bar further transfers of the Mao Sheng membership interest; the court granted the injunction, found irreparable harm and likelihood of success on the fraud claim, and declined to require a bond.
The court consolidated the three fraudulent-conveyance cases under Rule 42 and ordered Navigator to file a consolidated amended complaint.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a preliminary injunction barring asset transfer is permissible given Grupo Mexicano	Navigator argues it seeks equitable relief (setting aside conveyance) under New York fraudulent-transfer law, so an injunction is allowed.	Chen contends an injunction improperly restrains disposition of his property and would harm his business; asserts estate-planning/refinancing purpose for the transfer.	Court: Permissible — Gucci narrows Grupo Mexicano: injunction allowed where plaintiff seeks final equitable relief (e.g., to set aside conveyance).
Whether Plaintiff showed irreparable harm to justify injunctive relief	Navigator asserts assets will be dissipated or moved beyond jurisdiction, harming its ability to collect if transfers continue.	Chen denies intent to hide assets but admits the injunction would prevent selling membership interests, implying desire to transfer.	Court: Irreparable harm shown — risk of dissipation and prior pattern of suspect transfers increase likelihood of further transfers.
Likelihood of success on the merits of fraudulent-conveyance (actual intent)	Navigator points to badges of fraud: family transfer, nominal consideration, contemporaneous defaults, retention of control, timing after loan defaults.	Chen says transfer was for estate planning and to use son’s credit to refinance; denies fraudulent intent.	Court: Likely to succeed — badges of fraud suffice to infer actual intent; Chen’s explanations were unpersuasive.
Whether Plaintiff must post security under Rule 65(c)	Navigator implicitly argues bond unnecessary given minimal risk to defendants and precedent.	Defendants demand a $5M bond based on property value and carrying costs.	Court: No bond required — discretion to waive security where likelihood of harm to enjoined party is not shown.

Key Cases Cited

Grupo Mexicano de Desarrollo, S.A. v. All. Bond Fund, Inc., 527 U.S. 308 (1999) (federal courts may not issue injunctions to freeze assets when plaintiff seeks only money damages).
Gucci Am., Inc. v. Li, 768 F.3d 122 (2d Cir. 2014) (Grupo Mexicano does not bar injunctions when plaintiff seeks final equitable relief or claims an equitable interest).
Benisek v. Lamone, 138 S. Ct. 1942 (2018) (preliminary injunction is an extraordinary remedy requiring clear showing by movant).
Conn. State Police Union v. Rovella, 36 F.4th 54 (2d Cir. 2022) (sets out elements required for a preliminary injunction motion).
Trump v. Int’l Refugee Assistance Project, 582 U.S. 571 (2017) (purpose of interim equitable relief is to balance equities pending final resolution).
Hall v. Hall, 138 S. Ct. 1118 (2018) (district courts have broad discretion over consolidation and related case management).
Devlin v. Transp. Commc’ns Int’l Union, 175 F.3d 121 (2d Cir. 1999) (district court may consolidate cases, including sua sponte).
Ray v. Ray, [citation="799 F. App'x 29"] (2d Cir. 2020) (badges of fraud may be used to infer fraudulent intent in transfer cases).