Barry M. Klayman, left, and Mark E. Felger, right. Courtesy photos
In Miller v. Black Diamond Capital Management (In re Bayou Steel BD Holdings), Adv. Pro. No. 21-51013 (KBO), 2022 WL 3079861 (Bankr. D. Del. Aug. 3, 2022), U.S. Bankruptcy Judge Karen B. Owens held that Delaware’s three-year statute of repose on the liability of a member for distributions from a limited liability company, measured from the date of distribution, was preempted by Section 546 of the Bankruptcy Code, which provides that a trustee must bring an avoidance action under Section 544 within two years from the entry of a debtor’s order for relief. The effect of the decision is to give the Chapter 7 trustee more time to commence an avoidance action to recover distributions made by a debtor LLC to its members.
The adversary proceeding involved an action by the Chapter 7 trustee against various defendants concerning a prepetition distribution and secured loan. The debtors, Delaware limited liability companies, manufactured and sold steel products. Defendants Fund IV and BDCM purchased the debtors through a combination of equity and debt, the latter funded by a revolving loan with several banks. After the acquisition, BDCM appointed two of its managing directors and three independent directors to the board of directors. From June through December 2016, the debtors operated at a loss.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
