Windfall From Sale of a Property is Subject to Recovery For the Benefit of Debtor and Its Creditors, Argues Debtor Suffern Partners
August 20, 2021, Southern District of New York – Last week, Plaintiff-Debtor Suffern Partners, LLC brought a lawsuit against Defendant North 14th Street Realty Associates LLC to obtain recovery of an alleged benefit that Defendant received under Suffern’s efforts to sell a property – to which North 14 allegedly contributed nothing.
As alleged in the complaint, North 14 had no role in or contributed any funds to Suffern’s marketing of the property for sale or towards the identification of any prospective or eventual buyer for the property. The Plaintiff argues that North 14 was a co-obligor with Suffern on a promissory note and hence obtained an unearned benefit from Suffern’s sale of the property, which it ought not to retain.
Suffern thus, requests judgment against North 14 for failure to pay its proportionate share of the amounts due and owing under the promissory note, for an amount reasonably believed to be more than $4.85 million, plus pre-judgment interest, costs, fees, and other disbursements. Suffern’s lawsuit is premised on the argument that North 14 cannot rightfully withhold the full amount of their windfall from Suffern, as that is subject to recovery for the benefit of Suffern and its creditors. Suffern also seeks avoidance and enforcement, respectively, of a pre- petition release and a pre-petition indemnification agreement it entered into with North 14 concerning a collateral.