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Home New Cases Court Denies Summary Judgment On “Strip-and-Strand” Allegations

Court Denies Summary Judgment On “Strip-and-Strand” Allegations


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June 22, 2022, US Bankruptcy Court for the District of Delaware – The Delaware Bankruptcy Court denies the motion for partial summary judgment filed by Maxus Liquidating Trust (“Trust”) on a 23-count complaint that the Trust brought against YPF S.A. (“YPF”) and Repsol, S.A. (“Repsol”) in the bankruptcy case of Maxus Energy Corporation (“Maxus”).

The Trust alleges that, soon after YPF acquired Maxus and realized the potential extent of Maxus’s unsatisfied environmental liabilities, it allegedly “orchestrated” a “strip-and-strand” scheme. In other words, the Trust claims that YPF arguably “stripped” Maxus of all its valuable assets by transferring those assets to alleged “insiders” or “affiliates” of YPF in an alleged attempt to “strand” Maxus’s environmental creditors. The Trust maintains that Repsol allegedly continued this “scheme” after acquiring YPF in 1999. 

The Trust seeks to hold YPF and Repsol liable for all of Maxus’s unpaid environmental debts and liabilities claiming that the Defendants operated as alter egos of Maxus. However, the Court rejects the application of All Liabilities Damages Theory and finds the Causation Damages Theory more consistent with equitable principles of alter ego law. The Court concludes that YPF and Repsol may only be held liable for the harm the estate suffered as a result of the alleged “asset stripping strategy” upon which the Trust bases its alter ego claim.

Defendant denies the trustee allegations in full. YPF argues that it had a “legitimate supervening business purpose” for making the alleged transfers; and that it was done for the purpose of addressing tax inefficiencies.

The Court found too many material facts in dispute to rule on this issue. Therefore, the Court reserved the fraudulent transfer issue for trial denying the Trust’s motion for summary judgment.

Maxus Liquidating Trust v. YPF S.A. (In re Maxus Energy Corp.), 2022 Bankr. LEXIS 1748


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