Trustee Robert D. Barr Sues Prestige Worldwide Furniture’s Insider and Others for Breach of Fiduciary Duty and Clawback Transfers
August 13, 2021, Northern District of Ohio – Plaintiff Robert D. Barr, Trustee for the bankruptcy estate of Prestige Worldwide Furniture, LLC brought a lawsuit against Debtor’s owner and multiple other defendants for breach of fiduciary duty and the avoidance and recovery of fraudulent transfers, preferential transfers, and recovery of property of the bankruptcy estate.
As alleged in the complaint, approximately five (5) months before the petition date, the Debtor obtained a loan from a bank in the approximate sum of $900,000.00 through the efforts of its insider defendant, Thomas Muniak. The Trustee argues that Thomas owed a fiduciary duty to the Debtor as owner, member, and/or managing member of the Debtor and had a fiduciary obligation to preserve and protect the assets of the Debtor. Allegedly, Thomas authorized or directed how the loan proceeds were to be distributed, but he refused and/or failed to fulfill and satisfy his fiduciary obligations to the Debtor and its creditors. The Trustee argues that as a direct and proximate result of the breach of Thomas’ fiduciary duties, the Debtor suffered damages of $506,650.77, being the loan proceeds improperly transferred to other parties who were not creditors of the Debtor.
Accordingly, the Trustee requests court to enter judgment in his favor by avoiding and preserving the alleged fraudulent transfers according to 11 U.S.C. §§ 544, 548, 550 and 551, and Ohio Revised Code §§ 1313.56 and 1336.01, et seq.; and alternatively for an affirmative monetary judgment against the defendants to whom the alleged funds were transferred. The case relates to a chapter 7 case of In re Prestige Worldwide Furniture, LLC, Case No. 19-15022 (AIH) pending in the United States Bankruptcy Court for the Northern District of Ohio, Eastern Division.