After an Infringement Lawsuit, Infogroup, Inc. Brings Avoidance Action Against DatabaseUSA.Com
Earlier this month, Creditor Infogroup Inc., (“Infogroup” or the “Plaintiff”), for and on behalf of the bankruptcy estate of DatabaseUSA.com LLC (the “Debtor”), brought a high-value clawback lawsuit against nine Defendants, namely - Everest Group, LLC, Research USA LLC, Vinod Gupta, Fred Vakilizadeh, Vijay Malik, Rakesh Gupta, Robins Kaplan LLP, Aggarwal Data Company and Red Fox Industries, Inc. The lawsuit comprises multiple claims including claims for avoidance as preferences and fraudulent transfers, equitable subordination, alter ego claims, et al against the Defendants. The Defendants are the insiders of the Debtor.
According to the complaint, one of the Defendants allegedly signed a revised collateral description in the backdated amended loan documents for the Debtor as an officer of the Debtor. The amended loan documents allegedly led to the “creation of a lien or other encumbrance”. Infogroup alleges that this execution of the backdated amended loan documents with the revised collateral description constitutes a transfer of an interest of the Debtor in the property as it was signed for the benefit of one of the Defendants and was hence avoidable under 11 U.S.C. §§§§ 547(b), 548, 550(a), 544 and Nev. Rev. Stat. § 112.190 of the Bankruptcy Code.
The case is In re DatabaseUSA.com LLC, Case No. BK-S-19-10001-BTB, A.P. No. - 20-01178-BTB in United States Bankruptcy Court for the District of Nevada. Honorable Bruce T. Beesley is presiding over the Debtor’s bankruptcy case.
Earlier, Infogroup’s founder Vinod Gupta had left the company and formed DatabaseUSA, which also compiled a business information database. Infogroup had previously sued DatabaseUSA for copyright infringement for copying its database and sued Gupta for breaching a separation agreement. On April 27, 2020, the US Court of Appeals for the Eighth Circuit affirmed a Nebraska federal jury’s award of $21.2 million of damages in favor of Infogroup, for which DatabaseUSA was liable. Unable to pay the judgment, DatabaseUSA filed for Chapter 11 bankruptcy protection in Nevada.