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Bankruptcy Estate.

Byline: Derek Hawkins

7th Circuit Court of Appeals Case Name: Pethinaidu Veluchamy, et al. v. Arun K. Veluchamy Case No.: 15-2902; 15-290; 15-315; 16-3496 Officials: MANION and KANNE, Circuit Judges, and MILLER, District Judge. Focus: Bankruptcy Estate This is an appeal from the district courts decisions in bankruptcy adversary proceedings. Pethinaidu Veluchamy and Parameswari Veluchamy (collectively senior Veluchamys) earned great wealth in various businesses. They acquired two banks in the 1990s and merged them. When this bank suffered financial problems, the senior Veluchamys personally borrowed and guaranteed loans totaling $40 million from a predecessor of Bank of America (BoA). But the loans went into default in 200, and BoA obtained a judgment against the senior Veluchamys in 20 for over $43 million. The senior Veluchamys filed a bankruptcy petition in 2011, so BoA filed an adversary proceeding against them and their children, Arun and Anu (collectively junior Veluchamys), alleging a scheme to hinder, delay, or defraud creditors by attempting to hide tens of millions of dollars from BoA and other creditors. After a bench trial in 2013, the bankruptcy court determined the evidence established all of BoAs major allegations. The Veluchamys and BoA sought review by the district court, which agreed almost entirely with the bankruptcy court. The Veluchamys no longer contest the heart of the lower courts conclusions. Instead, they appeal various particular holdings. The senior Veluchamys raise three issues on appeal. First, they argue that turnover to the Estate under 11 U.S.C. 542 was not the appropriate remedy regarding $5,500,000 they claim they transferred to a company in India, particularly when that company was not joined as a necessary party. Second, they challenge the language of the district courts judgment requiring turnover of 24 pieces of jewelry. Third, they appeal the district courts denial of their motion concerning the trial record. The junior Veluchamys also raise three issues on appeal. First, they argue the district court erred in holding them jointly and severally liable. Second, they challenge the amount of the Estates recovery regarding VMark stock. Third, they argue the district court erred in reversing the bankruptcy court regarding Appu Hotels stock. We affirm the district court on all issues. Affirmed Full Text [box type="shadow" ] Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firms startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at or contact them at 262-737-25.[/box]

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Publication:Wisconsin Law Journal
Date:Jan 22, 2018
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