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Home New Cases Trustee of Richardson Foods Sues Former Officer and Board Chairman

Trustee of Richardson Foods Sues Former Officer and Board Chairman

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June 07, 2022, US Bankruptcy Court Southern District of New York – Deborah J. Piazza, as Chapter 7 trustee (the “Trustee”) of the Debtors Richardson Foods, Inc. (“RFI”) and Richardson Brands Company (“RBC”) files a complaint against Defendants Kobi Afek, Prairie Street Capital, Inc., Doge Capital, LLC, et al., alleging “preference”, “breach of fiduciary duty” and “constructive fraudulent transfers”.

In March 2020, RBC’s assets were surrendered to Webster which later sold these assets to Roses Holdings Limited. The Trustee alleges that Kobi Afek (“Afek”), as President and CEO of RBC, and John Teeger (“Teeger”), as Chairman of the Board of RFI, owed fiduciary duties to Debtors. The complaint alleges that Afek and Teeger breached their fiduciary duties by agreeing to surrender RBC’s assets to Webster Business Credit Corporation (“Webster”) and consenting to Webster’s “commercially unreasonable” sale to Roses Holdings Limited. Trustee also alleges that Webster “aided and abetted” Afek’s and Teeger’s breach of fiduciary duties to Debtor.

Trustee Piazza claims that Founders Equity I, LP , Prairie Street Capital, Inc., John Teeger and Warren Haber were paid some amounts from the proceeds of the sale of the RBC assets. However, these Defendants allegedly did not give any consideration for such payments. Defendants Doge Capital, LLC and Randall Talcott allegedly received direct payments from RBC’s accounts receivable that Roses Holdings Limited collected after the closing. Trustee seeks to avoid and recover these transfers as preferential transfers pursuant to 11 U.S.C. §§ 547, as actual fraudulent conveyances pursuant to 11 U.S.C. §§548(a)(1)(A) and as constructive fraudulent conveyances pursuant to 11 U.S.C. §§548(a)(1)(B) and 550(a)(1). 

Trustee alleges that Roses Holdings Limited is liable as a successor in interest to RBC and seeks a money judgment against Roses Holdings Limited in excess of $1,635,000, together with interest. Additionally, the complaint alleges that the sale of RBC assets to Roses Holdings Limited for allegedly less than reasonably equivalent value constituted a fraudulent conveyance and requests the Court to recover from Roses Holdings the amount of no less than $6,000,000.00, together with interest thereon.

Deborah J. Piazza v. Kobi Afek et al. (In re Richardson Foods Inc.), AP No. 22-01103, US Bankruptcy Court Southern District of New York

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