Petr v. BMO Harris Bank, N.A. (In re BWGS, LLC)

Petr v. BMO Harris Bank, N.A. (In re BWGS, LLC)

Opinion

 [*175]  ORDER DENYING SUN CAPITAL'S MOTION TO DISMISS

THIS ADVERSARY PROCEEDING comes before the Court on Defendant Sun Capital Partners VI, L.P.'s 12(b)(6) Motion to Dismiss filed by Sun Capital Partners VI, L.P. ("Sun Capital") on June 4, 2021 (Docket No. 54) (the "Motion"). The Motion seeks dismissal, as to Sun Capital, of the Amended Complaint to Avoid and Recover Fraudulent Transfer filed by John J. Petr, chapter 7 trustee ("Trustee"), [**3]  on April 23, 2021 (Docket No. 40) (the "Complaint").

The Court, having reviewed the Complaint, the Motion, the Brief in Support of Defendant Sun Capital Partners VI, L.P.'s 12(b)(6) Motion to Dismiss attached to the Motion (Docket No. 54-1), Plaintiff's Objection to Defendant Sun Capital Partners VI, L.P.'s Motion to Dismiss filed by Trustee on July 16, 2021 (Docket No. 59), Plaintiff's Omnibus Brief in Opposition to Defendants' Motions to Dismiss filed by Trustee on July 16, 2021 (Docket No. 56) (the "Response Brief"), the Declaration of John J. Petr filed on July 16, 2021 (Docket No. 57) ("Trustee's Declaration"), and the Joint Reply Brief in Support of Defendants' BMO Harris N.A.'s and Sun Capital Partners VI, L.P.'s 12(b)(6) Motions to Dismiss filed on July 30, 2021 (Docket No. 61) (the "Reply Brief"), and being otherwise duly advised, now DENIES the Motion.

Positions of the Parties

By the Complaint, Trustee seeks to recover from Sun Capital the amount of a payment of $24,887,303 (the "Payment") made by BWGS, LLC ("Debtor") to BMO Harris Bank N.A. ("BMO"). Debtor made the Payment with respect to indebtedness owed to BMO by BWGS Intermediate Holding, LLC ("Holding"), Debtor's parent. Trustee asserts [**4]  that the Payment was constructively fraudulent and that Sun Capital is liable for the value of the Payment as an alleged transfer beneficiary under §§ 544 and 550(a) of the United States Bankruptcy Code, 11 U.S.C. § 101 et seq. (the "Bankruptcy Code"),¹ and Ind. Code § 32-18-2-18(b)(1)(A).

Sun Capital argues that Trustee's claims are defeated by the "safe harbor" provision of § 546(e), asserting that Debtor made the Payment to a financial institution in connection with a securities contract. Trustee argues that the safe harbor does not apply.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.