Chowaiki & Co. Fine Art Trustee Files a Lawsuit To Redress an Alleged Harm Caused by Debtor’s Majority Equity Owner to the Debtor & Its Creditors
August 30, 2021, Southern District of New York – Plaintiff Trustee Albert Togut of the estate of Debtor Chowaiki & Co. Fine Art Ltd., files a lawsuit seeking damages for breach of fiduciary duties owed to the Debtor and its creditors by Defendant David Dangoor. The complaint allegedly seeks to redress the harm caused to the Debtor, the Debtor’s bankruptcy estate, and its creditors by Dangoor, the majority and controlling equity owner of the Debtor.
As alleged in the complaint, Dangoor was the Debtor’s majority shareholder, owning 66.7% of the shares of the Debtor, and he occupied a position of managerial control over the Debtor’s financial affairs. The Trustee seeks a judgment awarding the Trustee damages that were allegedly caused by the Defendant’s breach of his fiduciary duties of care and loyalty to the Debtor and its creditors by failing to sufficiently capitalize the Debtor and by failing to monitor and stop the Debtor’s financial expenditures in the various projects.
According to the Trustee, Dangoor materially breached his fiduciary duties by failing to act in the best interests of the Debtor as a reasonably prudent person in the same position would have done under the circumstances and by failing to take reasonable steps necessary to preserve and protect the Debtor’s going concern value. The Trustee contends that as a result of Dangoor’s material breaches of fiduciary duties of care and loyalty, the Debtor allegedly suffered the loss of the Debtor’s going-concern value and proximately damaged the Debtor and its creditors. The Trustee specifically argues that the Dangoor knew or should have known that the Debtor’s expenditures of millions of dollars into certain projects would erode the Debtor’s already declining going concern value with no corresponding benefit to the Debtor, and impair the Debtor’s ability to address its obligations to its creditors and third-party consignors.
The case is In re Chowaiki & Co. Fine Art Ltd, Case No. 17-13228 (LGB). The law firm of Togut, Segal & Segal LLP is representing the Trustee in the Debtor’s bankruptcy case.