Suntuity Has No Legal Interest in Inventory Held in Debtor’s Warehouse, Alleges Empire Solar Group Trustee
October 13, 2021, District of Utah – Plaintiff Steven R. Bailey, in his capacity as the Chapter 7 Trustee of the bankruptcy estate of Debtor Empire Solar Group, LLC, through counsel of record, Ray Quinney & Nebeker P.C., brings a lawsuit against Defendant Suntuity Solar Limited Liability Company for avoidance for unrecorded ownership interest under Section 544 of the Bankruptcy Code. The Trustee also seeks a declaratory judgment that all inventory and equipment held in each of the Debtor’s warehouses across the United States as of the petition date is property of the bankruptcy estate according to 11 USC § 541(a).
The Trustee further argues that Suntuity holds no legal or equitable interest in the inventory and that the estate is the sole and exclusive owner of the inventory. Finally, the Trustee alleges that Suntuity’s alleged interest in the inventory is subject to a bona fide dispute under 11 USC § 363(f)(4) because, after notice and hearing, the Trustee has the authority to sell the inventory free and clear of any interests under 11 USC § 363(f).
Suntuity apparently bases its ownership claim upon the alleged fact that, after acquiring a majority interest in the Debtor and taking over the Debtor’s management, it ordered and purchased about $1,400,208.03 in inventory for the Debtor.
The Debtor engaged in selling and installing residential solar energy systems in various locations throughout the United States. Defendant Suntuity sells and installs residential and commercial solar energy systems in multiple locations throughout the country. Allegedly, the Debtor and Suntuity entered into a series of agreements, wherein Suntuity agreed to purchase and acquire a majority interest in the Debtor. After the Debtor filed for bankruptcy, the Trustee filed a motion to sell certain assets that the Trustee contended were the estate’s property, including inventory located in the Debtor’s warehouses. Suntuity filed an objection, asserting that a substantial portion of the inventory constituted Suntuity inventory.
In re Empire Solar Group, LLC, Case Number 21-23636. Honorable Joel T. Marker is overseeing the Debtor’s case.