Company can set aside property transfer under recent court decision.
The case arose out of a $15 million note given to Insilco by defendant Star Services, Inc. of Delaware, a company organized by Peter DeGeorge. When the note was about to come due, Star conveyed the Park Avenue property to PRD Holdings Inc., another DeGeorge company.
At the time of the transfer, the Park Avenue Property was subject to a mortgage, initially held by Westpac and subsequently assigned to Peter DeGeorge's brother. PRD took the Park Avenue Property free and clear, and Star had no assets to pay Insilco. Although Insilco obtained summary judgment against Star for payment of the note in 1999, for over $21 million, the judgment remains totally. unsatisfied to date.
In this case, Insilco proved at trial that Star was insolvent at the time of the transfer, that the transfer was less than an arm's length transaction, made in bad faith, and that the consideration for the transfer was grossly inadequate.
Insilco also proved that the transfer was made with actual fraudulent intent. Based on these and other factors, the court found the transfer of the Park Avenue Property was both an actual and constructive fraud. As a result, the transfer will be set aside and subject to Insilco's claim.
The court reached the correct conclusion," said John P. McCahey, a litigation partner at Hahn & Hessen LLP, and counsel to Insilco in this case. "This was clearly a case where the defendant had transferred property for the purpose of avoiding its financial obligations. We are pleased with the result."
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|Publication:||Real Estate Weekly|
|Article Type:||Brief Article|
|Date:||Dec 4, 2002|
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