International Surveillance Services Corporation Files a Motion to Dismiss Complaint Brought by Special Claims Committee of the Financial Oversight and Management Board for Puerto Rico to Recover $4.5 Million as Clawback Transfers
August 20, 2021, District of Puerto Rico – Defendant International Surveillance Services Corporation (“ISSC) recently filed a motion to dismiss the adversary complaint to avoid and recover constructive fraudulent transfers and preferences and to disallow claims according to 11 U.S.C.§§ 502, 544,547, 548 and 550 and Puerto Rico Law under Fed. R. Civ. P. 12(b)(6)(1).
The complaint was brought by the Special Claims Committee (the “SCC”) of the Financial Oversight and Management Board for Puerto Rico and the Official Committee of Unsecured Creditors seeking the return of approximately $4.5 million in transfers, corresponding to the payments purportedly made by the Debtor Commonwealth of Puerto Rico to ISSC regarding certain unidentified contracts that were executed before Debtor filed a voluntary petition for relief under section 304(a) of Puerto Rico Oversight Management and Economic Stability Act.
Defendant argues that the Plaintiffs allegations fail as a matter of law because there was a valid business relationship between the Commonwealth and ISSC. Further, the Defendant avers that the alleged transferred funds were not the property of the estate because they were transferred from a trust account or from federal funds and were specifically earmarked for the payment of services of ISSC.