Arizona Trustee Ulrich Seeks Order to Subordinate and Avoid the Liens of JDB and Simoncre
May 11, 2022, Bankruptcy Court for the District of Arizona – Dale D. Ulrich, as trustee (“Trustee”) of the bankruptcy estate of Debtor Natural Net Partners, LLC (“NPP”) brings adversary proceedings to subordinate the claims and avoid the liens of JDB Capital Properties, LLC (“JDB”) and Simoncre Second IV, LLC (“Simon”) and for a money judgment against J. Daniel Bennatt (“Bennatt”), Ashley Loren Ellrich (“Ellrich”), JDB, and Simon.
As alleged in the complaint, Bennatt is the beneficial owner of NPP and JDB. Bennatt allegedly caused NPP to grant a security interest in virtually all of its assets to JDB and Simoncre. The alleged secured loans from JDB and Simon included “interest at 11% or more” and bearing “default interest of 14.25% and 25%” respectively with Simon charging “late fees of 3.3333%” of each payment for each day that the payment is late and compounding of past due interest. The Trustee claims that default interest, late fees and compound interest are “penalties” which are not compensation for any actual pecuniary loss suffered by either JDB or Simon.
The Trustee argues that Bennatt “orchestrated a consensual receivership” in favor of JDB and Simon through which a receiver “handpicked” by Bennatt and Simon sold off all of the assets of NPP. JDB and Simon then “attempted to have” the net proceeds of the receivership distributed to themselves “without any funds being paid to the unsecured creditors” of NPP. The Trustee affirms that while NPP’s “non-insider” creditors were not being paid, JDB “received” not less than $2,754,993.06. He alleges that Bennatt, as the principal of the Debtor, “breached his fiduciary duties” to the Debtor and its creditors. The Trustee also argues that the proofs of claim filed by JDB and Simon fail to provide documents supporting the amount claimed.
The Trustee requests the Court to subordinate the claims and liens of JDB and Simon to all other allowed claims against the bankruptcy estate and for transferring the liens of JDB and Simon to the estate. He also prays for a money judgment against Bennatt, Ellrich and JDB, jointly and severally, for the $2,754,993.06 that Bennatt and JDB obtained ahead of the other creditors of NPP.
Dale D Ulrich v. JDB Capital Properties, LLC, et al. (In re Natural Pet Partners, LLC), AP No. 22-91, Bankruptcy Court for the District of Arizona.