MDC Litigation Trust Seeks $23.5M From Debtor’s CEO & Others, Alleges Fraud, Breach of Fiduciary & Seeks Clawback
November 5, 2021, District of Delaware – Plaintiff Trustee RPA Asset Management Services, LLC of the MDC Litigation Trust (the “Trust”), files a complaint against Defendants Mark Siffin (“Siffin”), MDC Acquisition LLC (“MDC Acquisition”), Maefield Development Corporation (“Maefield”), and MDCE Investments LLC. The Trust seeks to recover $23.5M as fraudulent and preferential transfers allegedly made by Debtor MDC Energy LLC to or for the benefit of Mark Siffin, who at the time of the transfers was Debtor’s CEO and majority interest holder.
The complaint argues that Siffin allegedly directed and caused Debtor to transfer $23.5 million to Siffin’s wholly-owned company, MDC Acquisition. The complaint further asserts that the transfer was part of an undocumented “cash management” arrangement, allegedly a thinly-veiled effort to defraud secured lenders by placing MDC Energy’s funds beyond their reach. The Trustee alleges that although a portion of the funds improperly transferred to MDC Acquisition was later paid to some of the Debtor’s trade creditors, Siffin allegedly devised a scheme to keep a substantial amount of the money for himself.
Accordingly, the Trustee alleges that the Court must avoid $23.5 million as fraudulent transfers under § 548 of the Bankruptcy Code. The Trustee also argues that the Debtor transferred $23.5 million on account of an antecedent debt – towards fees for services Siffin allegedly provided to Debtor and for Debtor’s trade creditor obligations. Accordingly, the Trustee contends that the alleged transfer is avoidable as improper preferential transfers under § 547 of the Bankruptcy Code. The Trustee also accuses Siffin of breach of fiduciary duty, unjust enrichment, and conspiracy.