457 B.R. 441
Bankr. M.D.N.C.2011Background
- This adversary proceeding seeks avoidance of guaranties under §548(a)(1)(B) as fraudulent conveyances by the Debtors.
- Trustee for the Debtors alleges the Debtors guaranteed PTM Technologies, Inc.'s loan to Huntington, with the loan proceeds used for PTM.
- The motion to dismiss contends the Debtors received reasonably equivalent value, potentially via indirect benefits, and argues lack of direct benefit.
- The court discusses whether extrinsic documents (e.g., PTM disclosure statement) may be considered on a Rule 12(b)(6) motion and concludes they cannot be relied on by the trustee here.
- The court applies Iqbal/Twombly standards to determine sufficiency of the amended complaint to state a plausible §548(a)(1)(B) claim.
- The court ultimately denies Huntington's motion to dismiss, allowing the §548 claim to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the guaranties confer reasonably equivalent value as a matter of law | Renegade argues indirect benefits may render value. | Huntington asserts the value is conferred by downstream/indirect benefit. | Not established as matter of law |
| Whether extrinsic records can be considered on a Rule 12(b)(6) motion | Complaint facts suffice; records not necessary. | Extrinsic records should be considered to show value. | Extrinsic documents cannot be used to defeat the claim here |
| Whether the amended complaint plausibly states a §548(a)(1)(B) claim | Allegations show lack of direct benefit and insolvency, supporting plausibility. | The complaint fails to allege plausible value transfer. | Yes, the amended complaint plausibly states a §548(a)(1)(B) claim |
Key Cases Cited
- Metro Communications, Inc. v. The Official Committee of Unsecured Creditors, 945 F.2d 635 (3d Cir. 1991) (indirect benefits in cross-stream cases must be weighed against value received)
- In re R.M.I., Inc., 92 F.3d 139 (3d Cir. 1996) (determine value conferred and then compare to obligation; impossibility of precise valuation in some cases)
- Branch v. FDIC, 825 F. Supp. 384 (D. Mass. 1993) (downstream guaranties; insolvency defeats presumption of indirect benefit)
- In re Fruehauf Trailer Corp., 444 F.3d 203 (3d Cir. 2006) (insufficient evidence of value; if insolvency present, indirect benefit presumption may fail)
- In re Duque Rodriguez, 77 B.R. 937 (Bankr.S.D. Fla. 1987) (insolvency defeats indirect benefit presumptions)