Atlantic Cooling Seeks to Dismiss Trustee’s Complaint, Argues That Funds Were Held in Trust & Were Not Estate’s Property

October 11, 2021, Southern District of New York – Defendant Atlantic Cooling Technologies and Services, LLC seeks to dismiss the adversary complaint filed by Plaintiff Marianne T. O’Toole’s, solely in her capacity as Chapter 7 Trustee of the estate of JPR Mechanical Inc., d/b/a JPR Mechanical under Fed. R. Bankr. P. 7012 and Fed. R. Civ. P. 12(b)(6) for failure to state a claim.

The Trustee alleged that payments made to Atlantic Cooling during the preference period are avoidable under Bankruptcy Code sections 547 and 548 and recoverable by the Debtor’s estate under section 550 of the Bankruptcy Code. Defendant argues that it received the alleged transfers as a subcontractor of the Debtor. Further, the payments were explicitly designated as payments for services it performed on a construction project on the Debtor’s behalf. Thus, according to Defendant, the alleged funds were held in trust per NY lien law. As a result, Defendant asserts that the disputed funds were not the property of the Debtor’s estate and the Trustee cannot avoid them. Accordingly, Defendant claims that the complaint necessarily fails and must be dismissed with prejudice according to Fed. R. Civ. P. 12(b)(6).

In re JPR Mechanical, Inc. d/b/a JOR Mechanical, et al., Case No. 19-23480-RDD.

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