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1 Case rfn11 Doc 413 Filed 06/30/14 Entered 06/30/14 13:08:22 Page 1 of 7 UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS FORT WORTH DIVISION IN RE: HI-WAY EQUIPMENT COMPANY LLC, HI-WAY HOLDINGS LLC AND HWE REAL ESTATE LLC Debtors Jointly Administered Under Case No RFN J. MICHAEL MCBRIDE, LITIGATION AGENT, Plaintiff, Vs. Adversary No. 14- GE CAPITAL COMMERCIAL, INC., Defendant. COMPLAINT AND OBJECTION TO CLAIM J. Michael McBride, the appointed Litigation Agent ( Litigation Agent ), pursuant to the confirmed Second Amended Joint Chapter 11 Plan of Liquidation of Hi-Way Equipment Company, LLC, Hi-Way Holdings LLC, and HWE Real Estate LLC (the Plan ), files this complaint against GE Capital Commercial, Inc. ( GE Capital ) and objection to GE Capital s scheduled claim. PARTIES AND JURISDICTION counsel. 1. The Litigation Agent may be served in this adversary through the undersigned Complaint 1

2 Case rfn11 Doc 413 Filed 06/30/14 Entered 06/30/14 13:08:22 Page 2 of 7 2. GE Capital is a corporation that may be served with this complaint and a summons via its registered agent CT Corp System at 1999 Bryan St., Ste 900, Dallas, Texas A copy of this complaint will also be served on Lisa Merz Hedrick, Adams and Reese LLP, 4500 One Shell Square, 701 Poydras Street, New Orleans, LA This Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and Relief is sought pursuant to 11 U.S.C. 502, 547, 548, 550 and other applicable law. This adversary is a core proceeding pursuant to 28 U.S.C. 157(b)(2)(A), (B), (C), (F), (H) and (O). 5. Venue is proper in this district pursuant to 28 U.S.C. 1409(a). SUMMARY OFTHE LITIGATION AGENT S COMPLAINT 6. The Litigation Agent seeks to recover payments made by Hi-Way Equipment Company LLC, Hi-Way Holdings LLC, and HWE Real Estate LLC (collectively the Debtors ) to GE Capital pursuant to 11 U.S.C. 547, 548 and 550 of the Bankruptcy Code, TEX. BUS & COM. CODE ANN et seq. and other applicable law. In addition, the Litigation Agent seeks the disallowance of GE Capital s scheduled claim in Case No and/or that at least $384, of the scheduled claim be reclassified as an unsecured claim. GE Capital does not appear to have filed a Proof of Claim in either of the Debtors cases. Finally, the Litigation Agent seeks his attorney s fees, costs and interest in accordance with applicable law. STATEMENT OF RELEVANT FACTS 7. The Debtors sought voluntary chapter 11 relief on April 1, 2013 (the Petition Date ) [Docket No. 1]. Complaint 2

3 Case rfn11 Doc 413 Filed 06/30/14 Entered 06/30/14 13:08:22 Page 3 of 7 8. The Plan was confirmed on October 15, 2013 [Docket No. 325]. The Plan became effective on the same date (the Effective Date ) [Docket No. 327]. 9. Pursuant to the Plan, the Litigation Agent is authorized to assert causes of action and object to claims on behalf of the Debtors. 10. During the one year prior to the Petition Date, GE Capital received at least the following payments from the Debtors: DATE PAYMENT CHECK 2/19/ , /31/ , /18/ , /13/ , /18/ , /30/ , /30/ , /30/2012 5, /19/2012 5, /26/2012 4, /17/ , TOTAL $930, If Litigation Agent discovers that additional payments were made to GE during the nine days prior to the Petition Date, Litigation Agent reserves the right to seek supplemental relief related to those payments. Complaint 3

4 Case rfn11 Doc 413 Filed 06/30/14 Entered 06/30/14 13:08:22 Page 4 of 7 FRAUDULENT TRANSFERS UNDER 11 U.S.C The payments to GE Capital constitute avoidable transfers under 11 U.S.C. 548(a)(1). Specifically, the transfers were of an interest of Debtors in property, made within 2 years of the Petition Date. Debtors received less than reasonable equivalent value in exchange for the transfers. At the time of the transfers: (i) Debtors were insolvent, or became insolvent as a result thereof; (ii) were engaged or were about to engage in business for which its property after the transfers was unreasonably small capital; and/or (iii) intended to incur or believed it would incur debts that it would be unable to repay. 12. Under 550 (a) of the Code, the Litigation Agent may recover the property transferred or the value of such transfer from the initial transferee of such transfer or the entity for whose benefit such transfer was made. 11 U.S.C. 550(a). GE Capital is the initial transferee of the transfers. The Litigation Agent is entitled to recover the value of the transfers totaling not less than $930, plus pre and post-judgment interest. FRAUDULENT TRANSFERS UNDER TEXAS LAW 13. The transfers were made in violation of TEX. BUS. & COM. CODE ANN et seq. Specifically, the transfers were made (i) for less than equivalent consideration and Debtors (ii) were engaged in business for which the remaining assets were unreasonably small in relation to Debtors business; or (iii) reasonably should have known that Debtors were incurring debts beyond their ability to repay them. TEX. BUS. & COM. CODE ANN A creditor exists whose claim arose before or within a reasonable time after the occurrence of the transfers for whom the Litigation Agent can act. 14. In addition, (i) the transfers were made without Debtors receiving reasonably equivalent value in exchange for the transfers; and (ii) Debtors were insolvent at the time of the Complaint 4

5 Case rfn11 Doc 413 Filed 06/30/14 Entered 06/30/14 13:08:22 Page 5 of 7 transfers or became insolvent as a result of the transfers. A creditor exists whose claim arose before the occurrence of the transfers for whom the Litigation Agent can act. TEX. BUS & COM. CODE ANN (a). The Litigation Agent seeks a money judgment for the value of the transfers in an amount of not less than $930, To the extent that any of the identified transfers were made in satisfaction of an antecedent debt, the transfers were also made in violation of TEX. BUS. & COM. CODE ANN (a). The Litigation Agent seeks a money judgment for the value of the transfers in an amount of not less than $930, PREFERENTIAL TRANSFERS UNDER 11 U.S.C To the extent that any of the identified transfers made during the ninety day period prior to the Petition Date were made to GE Capital in satisfaction of an antecedent debt owed to GE Capital by the Debtors, the transfers are avoidable as preferential transfers under 547 of the Bankruptcy Code. 17. At the time of the transfers, the Debtors were insolvent. The transfers allowed GE Capital to receive more than it would have been paid in a Chapter 7 bankruptcy. 18. Under 550(a) of the Bankruptcy Code, the Litigation Agent may recover the transfers from the initial transferee of such transfer or the entity for whose benefit such transfer was made. 11 U.S.C. 550(a). GE Capital was both the initial transferee and the beneficiary of the transfers. Consequently, the Litigation Agent is entitled to avoid the transfers in the amounts set forth above plus pre and post-judgment interest. OBJECTION TO CLAIM 19. Debtors Schedule G filed in this case lists GE Capital as holding a secured claim in the amount of $3,621, However, based upon information and belief, GE Capital was Complaint 5

6 Case rfn11 Doc 413 Filed 06/30/14 Entered 06/30/14 13:08:22 Page 6 of 7 actually undersecured on the Petition Date as to the Debtors. Following the sale of the Debtors assets, GE Capital was undersecured by at least $384, The scheduled claim should be disallowed in accordance with 11 U.S.C. 502(d) pending the repayment of all avoided transfers and at least $384, of the secured claim should be reclassified as an unsecured claim. ATTORNEY S FEES 21. The Litigation Agent requests an award of his reasonable fees and costs pursuant to TEX. BUS. & COM. CODE ANN and other applicable law. REQUEST FOR PRE AND POST-JUDGMENT INTEREST 22. The Litigation Agent seeks pre-judgment interest on the value of all transfers from the date of transfer through the date of judgment at the rate of 5% per annum. The Litigation Agent seeks post-judgment interest on all money damages awarded hereunder from the date of judgment until paid at the prevailing federal judgment rate. PRAYER Accordingly, the Litigation Agent requests the Court to enter judgment as set forth above and to grant such other relief as is just. Dated: June 30, 2014 Respectfully submitted, Shannon, Gracey, Ratliff & Miller, LLP Complaint 6

7 Case rfn11 Doc 413 Filed 06/30/14 Entered 06/30/14 13:08:22 Page 7 of 7 By: /s/ Joshua N. Eppich John Y. Bonds, III State Bar I.D. No Joshua N. Eppich State Bar I.D. No H. Brandon Jones State Bar I.D. No Shannon, Gracey, Ratliff & Miller, LLP 420 Commerce St., Suite 500 Fort Worth, Texas (817) telephone (817) facsimile Counsel for J. Michael McBride, Litigation Agent Complaint 7

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