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Brown Medical Centre Trustee to Continue with $2M Clawback Suit Against Greenberg Traurig LLP

August 26, 2016, Texas – Elizabeth M. Guffy, the Plan Agent under the confirmed Chapter 11 plan of liquidation of Brown Medical Center, Inc., pushed the court to allow her to carry on with her $2 million clawback suit accusing Defendant Greenberg Traurig LLP of receiving fees that were technically fraudulent transfers. Guffy filed a response to the Defendant’s motion in the last week of August, alleging that Greenberg already filed two prior motions to dismiss and each time she has addressed the concerns raised in Greenberg’s motions to dismiss.

Guffy added that initially, Greenberg complained that the complaint was not clear as to whether an actual and/or constructive fraudulent transfer claim were asserted and the alleged transfers were not sufficiently identified. Guffy contended that although she disagreed with the defendant, but voluntarily agreed to file the amended complaint and addressed each of Greenberg’s concerns. Greenberg subsequently moved to dismiss the first amended complaint too under a preclusion theory and further alleged that specific bank accounts and account holders from which Greenberg received the transfers should be identified in the complaint. Guffy disputed these issues too, but again agreed to amend the complaint.

Again, Greenberg now brought new grounds to dismiss Guffy’s second amended complaint as well. The matter was due for hearing on September 6, 2016 and the Court denied Greenberg’s motion to dismiss. The Court said that Guffy’s complaint provided sufficient detail to meet plausibility and fair notice requirements. The Court further observed that the current state of the law on the avoidance of transfers to permit suits against subsequent transferees is too unsettled to dismiss Guffy’s claims as a matter of law at this stage. The Court entered an amended scheduling order in the matter and allowed Guffy to continue with her lawsuit.