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Home New Cases GTC Works Seeks To Avoid Transfer of Liens Against the Debtor’s Assets Under Sec. 547

GTC Works Seeks To Avoid Transfer of Liens Against the Debtor’s Assets Under Sec. 547

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April 12, 2021, District of Arizona – GTC Works, LLC recently brought an adversary proceeding according to Rule 7001 of the Federal Rules of Bankruptcy Procedure against Defendants MALCK, LLC, JMG Solutions, LLC, On Deck Capital, Inc., Arizona Department of Revenue, Lendtek Capital Funding, LLC, High-Speed Capital, LLC, and Corporation Service Company. The Debtor requests the court to determine the rights of the Defendants in the sale proceeds. Besides, the Debtor also seeks to avoid transfers of certain liens against the Debtor’s assets.

By way of background, Defendant MALCK, LLC, JMG Solutions, LLC, On Deck Capital, Inc. allegedly held secured claims in the Debtor. As per the complaint, the claims were backed by either collateral or cash or general intangibles or deposit accounts. Defendants Lendtek Capital Funding, LLC, Corporation Service Company and, High-Speed Capital, LLC allegedly did not have secured claims because there was apparently no unpledged collateral value to which their liens could attach.

The complaint alleges that the three Defendants, Lendtek Capital Funding, LLC, Corporation Service Company, and High-Speed Capital, LLC, caused and received transfers of liens against the Plaintiff’s assets. The Debtor argues that these transfers were made on account of an antecedent debt that the Plaintiff owed before making the transfers. Besides, the transfers were allegedly made while Plaintiff was insolvent. Additionally, at the time of the transfer, Plaintiff’s assets allegedly totaled $162,561.62 and, its liabilities totaled $716,953.47. The Debtor also argues that the alleged transfers enabled the three Defendants to receive more than they would receive in a case under Chapter 7 of the Bankruptcy Code. Thus, according to the Debtor, the three Defendants allegedly had no secured claim or other interest in the sale proceeds. Hence, the Debtor urges the Court that the liens perfected by the Defendants must be avoided under § 547 of the Bankruptcy Code.

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