Permian Crude Transport Trustee Indicts a Dallas-Based Energy Company for Alleged Fraudulent Payments Worth $11M
April 2, 2021, Northern District of Texas – Plaintiff Daniel J. Sherman, as the duly appointed Chapter 7 trustee of the estate of Permian Crude Transport, L.P. (the “Debtor”), charges Matador Resources Company (“Matador”) for avoidance and recovery of fraudulent transfers worth $11M under sections 24.005, 24.006, and 24.013 of the Texas Uniform Fraudulent Transfer Act (“TUFTA”) and sections 544, 548, and 550 under title 11 of the Bankruptcy Code.
Matador is an energy company engaged in the production, purchase, and sale of oil and gas. As per the complaint, Matador received transfers from the Debtor through a series of four checks totaling $11,593,091.30 six weeks before the Debtor’s bankruptcy. Allegedly, there was no basis for the transfers, as the Debtor did not owe Matador $11,593,091.30. According to Plaintiff, the Debtor had never engaged in any commercial activity with Matador. The complaint also alleges that there was no record that the Debtor ever received $11,593,091.30 worth of value from Matador, whether from the alleged purchase of crude oil or otherwise. As per the complaint, neither the Trustee found any record of Debtor ever receiving the crude oil it allegedly purchased from Matador nor was there a record of crude oil being sold to a subsequent purchaser which would necessarily involve the Debtor receiving millions of dollars from whoever purchased it.
Therefore, the Trustee brought an action to avoid and recover the transfers, which were allegedly made at the expense of the Debtor’s legitimate and arm’s length creditors, who had allegedly filed proofs of claims against the Debtors’ estate with a face value of $15,913141.70. According to the Trustee, the principals of the Debtor allegedly used the Debtor’s funds to pay the debts of a separate commonly controlled entity despite knowledge of the Debtor’s insolvency. The Trustee argues that the Debtor did not receive reasonably equivalent value in exchange for the transfers because the consideration purportedly provided in exchange was either non-existent or not reasonably equivalent. Accordingly, the Trustee seeks to recover the said transfers as they constitute fraudulent conveyances under section 548(a)(1)(A) of the Bankruptcy Code.