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Greenberg Traurig LLP To Face $2.2M Clawback Suit

June 4, 2016, Delaware – Elizabeth M. Guffy, the Plan Agent for the bankruptcy estate of a medical center management company, Brown Medical Centre (BMC) stated that Greenberg Traurig, LLP (GT) can’t escape her lawsuit seeking to clawback transfers worth $2.2 million pursuant to 11 U.S.C. § 544, 548, 550 and Tex. Bus. & Com. Code Ann. § 24.008 and should return the funds to the estate. The Plan Agent also sought to recover the attorney costs and fees pursuant to Tex. Bus. & Com. Code Ann. § 24.013.

The Complaint filed by BMC in the Texas Court contended that GT served as attorneys for Michael Brown (the owner and founder of BMC) and various business entities that he owned or controlled in the years 2012 and 2013.
GT issued a number of invoices to BMC when the latter was insolvent and these invoices related to GT’s representation of Brown personally or certain of Brown’s wholly-owned entities. The Plan Agent argued that the transfers and any agreement by BMC to make and/or allow such transfers within two years of the petition date were avoidable as fraudulent transfers under 11 U.S.C. § 548 because BMC received less than reasonably equivalent value in exchange for those transfers as GT did not provide any legal services for the benefit of BMC, and all value provided by GT was specifically for the benefit of Brown or Brown’s wholly-owned entities unrelated to BMC.

GT argued in its response that the Plan Agent cannot sue to take back $2.2 million as it cannot prove the money came from improper accounts. GT alleged that the Plan Agent’s claims must be dismissed because the amended complaint failed to adequately plead specific and plausible allegations that any of the alleged transfers constituted property of BMC.

As of now, the Court has denied GT’s motion to dismiss and have afforded an opportunity to the Plan Agent till July 11, 2016 to file an amended complaint. The Court also ordered that GT may file a motion to dismiss the amended complaint by August 1, 2016. The case is Guffy v. Greenberg Traurig, LLP et al; Case No. 4:16-cv-00536.