Team One Motors Trustee Seeks Return of $120k as Fraudulent Transfers, Accuses Debtor’s Principal of Breach of Fiduciary Duty
February 24, 2021, District of Massachusetts – Janice G. Marsh, Chapter 7 Trustee (the “Trustee”) for the estate of Team One Motors, LLC (the “Debtor”), seeks to establish that certain transfers made by the Debtor to Adam D. Haddad (the “Defendant”) constitute avoidable fraudulent transfers. The Trustee also alleges counts for breach of fiduciary duty, conversion, and turnover of estate property.
The Debtor was engaged in the business of selling used automobiles. Defendant was the principal of the Debtor. As per the complaint, Debtor executed a promissory note in favor of a creditor, JJJA, LLC. Allegedly, under the terms of the note, JJJA was to provide $200,000.00 in funding to Debtor for the express purpose of purchasing automotive inventory for re-sale by Debtor. The Debtor supposedly received the funds from JJJA. However, instead of using the funds to purchase inventory as expressly promised, the principals of the Debtor, including Defendant, ostensibly used the monies in a series of transfers to either purchase inventory for other businesses or to pay obligations owed by someone other than the Debtor. According to the complaint, the Defendant received $121,900.00 from the Debtor four years before an involuntary petition was filed against the Debtor.
The Trustee sues Defendant, alleging that Defendant was a member of the Debtor and therefore owed a fiduciary duty and a duty of care to the Debtor. The Trustee argues that Defendant breached his fiduciary duty by having the Debtor write numerous checks to Defendant out of the Debtor’s funds. According to the Trustee, Defendant’s self-dealing was a breach of his duty to the Debtor, and as a direct and proximate result, the Debtor suffered. Thus, the Trustee seeks to avoid the alleged transfers under 11 U.S.C. §§§ 544, 548, 550, 551, and M.G.L.c. 109A §§ 5 and/or 6.
The Trustee requests the Court to order Defendant to turn over all personal property of the Debtor or to pay an equivalent amount to the bankruptcy estate.
The case is – In re Team one Motors, LLC, case number: 18-42386 in the United States Bankruptcy Court for the District of Massachusetts. Chief Judge Christopher J. Panos is presiding over the Debtor’s bankruptcy case. Robert Girvan from Weiner Law Firm, P.C. is representing the Trustee in the case.