Wells Fargo Faces $7M Clawback Suit From CRS Trustee
October 3, 2017, New York – Last month, the trustee for bankrupt human resources contractor Corporate Resource Services Inc. (CRS) and co-debtor, TS Employment Services, Inc. (TSES) initiated a $7 million adversary suit against Wells Fargo Bank NA for forcing them into liquidation and charging millions of dollars towards unfair fees. The trustee for CRS and TSES, James Feltman allegedly stated that before and after the 2015 bankruptcy filings of CRS and TSES, Wells Fargo imposed unnecessary restructuring at the cost of millions of dollars to the debtors and also began charging bogus fees. As per the Trustee, Wells Fargo allegedly pushed the CRS debtors to leave Wells Fargo and obtain financing from other sources by decreasing loan advance rates (resulting in lower availability), blocking CRS from repaying intercompany indebtedness to TSES, and imposing fees and conditions upon the CRS debtors’ borrowing. In its complaint, the trustee alleged that starting in June 2014, Wells Fargo charged more than $4.0 million in monitoring and facility fees to the CRS debtors, over and above interest, expenses and other charges under the loan agreements. Those fees were allegedly not designed or intended to compensate Wells Fargo for risk, but rather to compel the CRS debtors to exit the Wells Fargo relationship, and included a $500,000 fee foisted upon the CRS debtors as Wells Fargo forced them into liquidation.
The cases are In re TS Employment Services Inc., case number 1:15-bk-10243, In re Corporate Resources Services Inc. et al., case number 1:15-bk-12329, and Feltman v. Wells Fargo Bank NA et al., case number 1:17-ap-01176, in the U.S. Bankruptcy Court for the Southern District of New York.
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