As we all know, understanding the applicable statute of limitations for bringing a claim is of critical importance. When bankruptcy is involved, the typical result under state law can be affected by a bankruptcy filing. A claim that would have otherwise lapsed with the passage of time can be asserted later by a debtor or trustee of a Chapter 11 estate. In an opinion issued on Jan. 23 by Judge Karen B. Owens of the U.S. Bankruptcy Court for the District of Delaware in UMB Bank v. Sun Capital Partners V (In re LSC Wind Down), Adv. No. 19-50272 (KBO), the court denied a motion to dismiss a fraudulent transfer complaint filed seven years after the transfer occurred.

The Transfer and Other Key Dates

The debtors in this case, ironically, were The Limited clothing stores enterprise. According to the opinion, one of the debtors, LS Wind Down (f/k/a Limited Stores Co.) transferred $42 million (transfer) to Sun Capital Partners V, Sun Mod Fashions IV, Sun Mod Fashions V and H.I.G. Sun Partners Inc. (the defendants) on Dec. 20, 2011. On Jan. 17, 2017, five years and 28 days after the alleged date of the transfer, Limited Stores Co. and several of its affiliates filed Chapter 11 bankruptcy cases.