April 29, 2021, Southern District of New York – Trustee Deborah J. Piazza, of the jointly administered estates of JZRM Corporation (“JZRM”), HRI Consulting Inc. (“HRI”), and MZRJ Inc. (“MRZJ”, collectively with JZRM and HRI, the “Debtors”) charges six defendants with clawback suits. The Trustee seeks to avoid and recover alleged preferential and fraudulent transfers worth $1.3M, purportedly made by one or more of the Debtors to and for the benefit of the defendants, under 11 U.S.C. §§ 547, 548 and 550 of the Bankruptcy Code, plus applicable interest thereon, and to disallow claims according to 11 U.S.C. § 502(d), together with any related relief.
By way of background, the Debtors operated a collection business before the filing of the bankruptcy cases. Allegedly, the Debtors’ working capital and any recoveries that it used to receive for the benefit of its clients, were commingled in the Debtors’ bank accounts. The Trustee alleges that the Debtors made numerous transfers of monies in the ninety days before the petition date for the benefit of the defendants. According to the Trustee, certain transfers are also avoidable under section 548(a)(1)(B) of the Bankruptcy Code because the transfers caused the Debtors to receive less than reasonably equivalent value in exchange and were supposedly made at a time in which the Debtors were insolvent, or became insolvent as a result of the transfers.
In its complaint, the Trustee also reserves the right to make a separate demand on the defendants, to the extent the defendants owe the Debtors a collection fee on account of the transfers as the statute limitations for breach of contract has allegedly not yet expired.
The largest case in the group is filed against The New York Racing Association, Inc. for a return of $485,442. Honorable Judge Cecelia G. Moris is overseeing the Debtors’ bankruptcy cases. The adversary proceeding is being administered in the United States Bankruptcy Court for the Southern District of New York, styled as In re JZRM Corporation, et al, Chapter 7, No. 21-01118.