521 B.R. 231
Bankr. E.D. Mich.2014Background
- Debtor (formerly Kensa LLC) was part of a Zaima-controlled multi-entity business that manufactured wiring harnesses; it was minority-owned and heavily indebted to Comerica Bank.
- In early 2008 CAE/CAE US negotiated a multipart transaction: newly formed THB entities and Sakoma purchased various Kensa assets and membership interests; the agreements were executed Feb. 29, 2008 but effective Jan. 1, 2008. Proceeds paid off Comerica and funded consideration to sellers.
- Sakoma APA transferred certain accounts receivable and other assets from the Debtor to Sakoma for $100,000 and assumption of limited liabilities; THB APA and Honduras APA transferred other assets and allocated assumed/excluded liabilities.
- Trustee (Chapter 7) sued to avoid and recover fraudulent transfers under 11 U.S.C. § 548 and § 544(b)/state UFTA, asserting: (a) transfers to Sakoma (and ultimately THB/TENA) were fraudulent and (b) a "due to/due from" claim for an alleged post-effective-date increase in Comerica line usage netting $625,488 owed to estate.
- Defendants (THB/TENA/Sakoma) argued the transactions were an integrated sale closing most Kensa assets for reasonably equivalent value, many transfers were encumbered by Comerica’s lien, and TENA (successor to CAE US) cannot be successor-liable to THB on the present record.
- Court heard cross-motions for summary judgment and denied all motions, finding genuine disputes of material fact on the fraudulent-transfer valuation, the proper transactional scope for § 548 analysis, the allocation of Comerica line advances (assumed vs. excluded per THB APA), and successor-liability issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Preclusive effect of Sanilac County opinion | Trustee relied on state-court findings that Sakoma APA was fraudulent/scheme to avoid liability | Defendants argued state-court findings have effect; alternatively Trustee not in privity | Court: No collateral estoppel. Trustee was not party; trial occurred post-petition in violation of automatic stay; state opinion not given preclusive or probative effect |
| Avoidability of Sakoma transfers under § 548 (constructive and actual fraud) | Trustee compared Debtor’s assets transferred to value received under Sakoma APA and claimed deficiency | Defendants: Sakoma APA was part of an integrated, contemporaneous multi-document transaction producing indirect benefits (e.g., Comerica payoff) that must be considered | Court: Must view transfers in context of the entire integrated transaction; genuine disputes of material fact preclude summary judgment for Trustee or defendants |
| "Due to / due from" claim (Comerica line increases during gap) | Trustee: post-effective increases in line funded operations after Jan 1, 2008 => THB assumed liability; net owing ~$625k | THB/TENA: THB APA excludes liabilities incurred pre-Effective Date; expert disputes and lack of allocation evidence | Court: THB APA unambiguous; but record does not quantify which advances paid pre- vs post-effective-date obligations; genuine factual disputes—summary judgment denied to all parties |
| Successor liability of TENA for THB debts | Trustee: TENA is a "mere continuation" of THB and liable as successor (THB dissolved; TENA acquired assets) | TENA: TENA acquired assets as secured creditor/ purchaser; Michigan law limits successor liability; no admissible proof of asset retention or improper winding | Court: Michigan recognizes "mere continuation" exception in commercial context; threshold factors arguably met and factual disputes remain—summary judgment denied |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (Sup. Ct. 1986) (summary judgment standards and assessment of genuine disputes)
- Celotex Corp. v. Catrett, 477 U.S. 317 (Sup. Ct. 1986) (moving party’s summary judgment burden)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (Sup. Ct. 1986) (courts may discount implausible claims when evaluating summary judgment)
- Easley v. Pettibone Mich. Corp., 990 F.2d 905 (6th Cir. 1993) (actions in violation of the automatic stay are voidable)
- United States v. Whiting Pools, Inc., 462 U.S. 198 (Sup. Ct. 1983) (property of the estate includes property subject to liens)
- C.T. Charlton & Assocs., Inc. v. Thule, [citation="541 F. App'x 549"] (6th Cir. 2013) (Michigan successor-liability doctrines; distinction between "mere continuation" and "continuity of the enterprise")