In re Donnan (Ch. 11 Case No. 11-31083, Adv. Nos. 13-03001, 13-03002)

   The defendants advanced funds to GLC.  The debtor personally guaranteed GLC’s notes.  After GLC defaulted, the debtor honored his guarantees by paying the balance due on the notes and taking an assignment of the notes, a profit sharing agreement and guarantees.  GLC’s business failed.  Thereafter, the debtor filed a Chapter 11 case.
    The debtor’s trustee sought to recover under bankruptcy and state fraudulent and preferential transfer statutes the payments made by the debtor to the defendants.  11 U.S.C. §§ 544(b), 547, 548(a), 550; O.C.G.A. §§ 18-2-74, -75.  The court held that the debtor had received reasonably equivalent value because he received a dollar for dollar satisfaction of his guarantee debt in return for his payments.  The court also ruled that the defendants were not non-statutory insiders of the debtor.  Since these adversary proceedings were “Stern-Core” matters to which the defendants did not consent to the court entering a final judgment, the court’s decision was a  proposed findings of fact and conclusions of law.  Bankruptcy Rule 9033.

Thursday, March 17, 2016