Plaintiff-Debtor Payroll Management, Inc. Sues Florida Self-Insurers Guaranty Association, Inc For $5 Million in Alleged Fraudulent Transfers

March 8, 2022, Northern District of Florida – Plaintiff-Debtor Payroll Management, Inc. sues Florida Self-Insurers Guaranty Association, Inc.(“FSIG”), United States of America, Internal Revenue Service, Sunz Insurance Company, U.S. Capital Partners, Inc., Centennial Bank, Vensure Employer Services, Inc., and Okaloosa County Florida Tax Collector for turnover of funds aggregating to $5,144,108.00, alleging constructive fraudulent transfers under Section 548 of the Bankruptcy Code. The Debtors also seek declaratory judgment determining the validity and priority of any liens in the transferred funds for the benefit of the estate.

The complaint alleges that the Debtor operated as a professional employer organization to employ individuals who worked for various companies, leasing the employees to the companies. Further, as a self-insured entity, and under Fla. Admin Code Rule 69L-5.218, the Debtor allegedly provided a security deposit, in the form of a letter of credit secured by a certificate of deposit, in favor of FISGA for $5,144,108.00. Later, Debtor obtained a workers compensation policy, ceased to be a self-insured entity, and executed a letter of credit agreement in favor of FSIGA for $5,144,108.00. Following the funds’ transfer, the Debtor filed a Chapter 11 Petition. The Debtor alleges that while the transferred funds representing the security deposit were previously statutorily held for the benefit of workers compensation claimants, they are not encumbered by a lien in favor of FSIGA and allegedly remain property of the Debtor and an asset of the Debtor’s bankruptcy estate.  

In re Payroll Management, Inc., Bankruptcy Case No. 18-30298-KKS

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