New Bankruptcy Opinion: IN RE CATCO RECYCLING, LLC – Bankr. Court, D. New Hampshire, 2016

In re: Catco Recycling, LLC, Chapter 7, Debtor.

Michael S. Askenaizer, Chapter 7 Trustee, Plaintiff,


Jean Anderson, Defendant.

Bk. No. 14-11021-BAH, Adv. No. 15-1012-BAH.

United States Bankruptcy Court, D. New Hampshire.

February 10, 2016.


BRUCE A. HARWOOD, Bankruptcy Judge.


Michael S. Askenaizer, the chapter 7 trustee (the “Trustee”) of the bankruptcy estate of Catco Recycling, LLC (“Catco” or the “Debtor”), has filed a motion (Doc. No. 26) (the “Motion”) seeking summary judgment in his favor against Jean Anderson (“Anderson” or the “Defendant”) with respect to Counts I through VI of his amended complaint (Doc. No. 23) (the “Complaint”). Specifically, the Trustee seeks a determination that the sum of $7,314, which was given to the Defendant by Donald Belisle III (“Belisle III”), her son and the sole member of the Debtor, for the installation of a furnace at her home, was fraudulently transferred within the meaning of 11 U.S.C. §§ 544(b), 548(a)(1)(A), and 548(a)(1)(B) and NH RSA 545-A:4(I)(a), 545-A:4(I)(b)(1), [1] and 545-A:5(I). The Trustee further seeks a determination that the Defendant is liable for the value of said transfer pursuant to 11 U.S.C. § 550(a). This Court has jurisdiction of the subject matter and the parties pursuant to 28 U.S.C. §§ 1334 and 157(a) and Local Rule 77.4(a) of the United States District Court for the District of New Hampshire. This is a core proceeding in accordance with 28 U.S.C. § 157(b).


A. Summary Judgment Standard

In bankruptcy, summary judgment is governed by Federal Rule of Bankruptcy Procedure 7056, which incorporates Federal Rule of Civil Procedure 56 and its standards into bankruptcy practice. Weiss v. Wells Fargo Bank, N.A. (In re Kelley), 498 B.R. 392, 397 (B.A.P. 1st Cir. 2013) (citing Desmond v. Varrasso (In re Varrasso), 37 F.3d 760, 762 (1st Cir. 1994) ); Fed. R. Bankr. P. 7056; Fed. R. Civ. P. 56. Rule 56(a) provides that a movant is entitled to summary judgment if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). [2] “Genuine issues of fact are those that a factfinder could resolve in favor of the nonmovant, while material facts are those whose `existence or nonexistence has the potential to change the outcome of the suit.'” Green Mountain Realty Corp. v. Leonard, 750 F.3d 30, 38 (1st Cir. 2014) (quoting Tropigas de Puerto Rico, Inc. v. Certain Underwriters at Lloyd’s of London, 637 F.3d 53, 56 (1st Cir. 2011) ). In assessing the summary judgment record, a court must draw all reasonable inferences in favor of the non-moving party but is “not obliged to accept as true or to deem as a disputed material fact, each and every unsupported, subjective, conclusory, or imaginative statement made to the Court by a party.” Torrech-Hernandez v. Gen. Elec. Co., 519 F.3d 41, 47 (1st Cir. 2008) ; see Adamson v. Walgreens Co., 750 F.3d 73, 78 (1st Cir. 2014) . The Supreme Court has explained that “[t]he inquiry performed is the threshold inquiry of determining whether there is the need for a trial—whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) . “[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Id. 247-48 (emphasis in original). “With respect to issues on which the non-movant would bear the burden of proof at trial, the non-movant . . . must adduce sufficient evidence to permit the trier of fact to resolve that issue in his favor. . . . If the non-movant fails to make the required showing on such an issue and the issue is a dispositive one, summary judgment is appropriate.” Harrington v. Simmons (In re Simmons), No. 15-9005, 2016 WL 234516, at *3 (1st Cir. Jan. 20, 2016) (citing Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010) ).

B. Summary Judgment Record

The summary judgment record establishes the following. The Debtor was in the business of recycling catalytic converters, other metals, and scrap produced by salvage yards. On June 18, 2013, the Debtor and Rebuilders Automotive Supply, Inc. (“RAS”) executed a promissory note in which the Debtor agreed to pay the lesser of $75,000 or “the aggregate unpaid principal amount of outstanding advances made” by RAS pursuant to an advance agreement by and between the parties, which was executed that same date. Less than a month later, on July 12, 2013, Belisle III, the sole member of the Debtor, and Donald Belisle (“Belisle”), Belisle III’s father and the sole member of Recore Trading Co. LLC (“Recore”), executed a document titled “Preliminary Purchase And Sale Agreement” (the “P&S Agreement”), which states in its entirety:

Preliminary Purchase And Sale Agreement
Seller Donald Belisle III (Catco Recyling)
Buyer Recore Trading Co LLC.
Seller agrees to sell all assets of “Catco
Recycling” To Buyer including but not limited to
Peterbilt dump truck, Isuzu box truck, Nissan
fork lift, Baler, Cat shear, wire stripper misc
containers and shelving, customer lists,
company name and rights. Buyer agrees to pay
seller $150,000.00 total with $50,000.00 due at
signing, $50,000.00 due in 60 days and the
balance of $50,000.00 due in 120 days. This
agreement is preliminary and will be
superseded by final agreement when it is
prepared by buyers attorney.

Seller Donald Belisle III

Buyer Donald Belisle

On July 12, 2013, pursuant to the P&S Agreement, Recore Trading issued and delivered to Belisle III the first $50,000 payment due under the P&S Agreement. The check was made payable to Belisle III, instead of the Debtor, at Belisle III’s request. [3] Nonetheless, the check was deposited into the Debtor’s only bank account. On or about the date the P&S Agreement was executed, the Debtor ceased operating and Belisle III became a full time employee of Recore Trading. Belisle III began earning a salary of $2,000 per week.

On July 13, 2013, Belisle III withdrew $50,000 from the Debtor’s bank account in the form of an official bank check for $45,000 and $5,000 in cash. Belisle III used that money to purchase a truck for $52,000; title was taken in Belisle III’s name.

On July 18, 2013, the Debtor, through Belisle III as the Debtor’s managing member, executed and delivered to RAS a security agreement granting to RAS “collateral security for the payment and performance of the obligations contained in the Note and Advance Agreement,” which the parties had executed the month before.

On July 25, 2013, Belisle III, on behalf of the Debtor, wrote to Charles Zoulias (“Zoulias”), the Debtor’s landlord since October 2011, to inform him that the Debtor had vacated its leased premises due to “black mold” issues; Belisle III also mentioned that he “needed to take the necessary precautions to keep my business going.” On September 10, 2013, Zoulias, through his counsel, issued letters to the Debtor and Belisle III (each of whom was described as a “lessee”) demanding payment for past due rent and damages to the leased premises in the total amount of $37,430.

Sometime in September 2013, the Debtor transferred a 2011 Cadillac Escalade, worth $28,000, to Belisle III for no consideration. The vehicle had not been included in the sale of Catco’s assets to Recore Trading.

On September 13, 2013, Recore Trading issued and delivered to Belisle III a $15,000 check as part of the second installment due under the P&S Agreement. On September 17, 2013, Recore Trading issued and delivered to Belisle III two more checks, one for $2,500 and the other for $32,500, in order to pay the balance due on the second $50,000 installment. The $32,500 check was deposited into the Debtor’s bank account. Like the earlier check, these three checks were made payable to Belisle III.

In September 2013, Belisle III gave cash to the Defendant in the amount of $7,314, which money she used to pay for the installation of a furnace in her home on September 25, 2013. This money came from Recore Trading’s September 2013 payments. At the time of the transfer, the Debtor did not owe Anderson any money.

As of September 25, 2013, the Debtor owed money to three creditors, Alpha Recycling, Zoulias, and RAS, totaling at least $118,819. As of that same date, the Debtor’s assets totaled either $66,443 or $81,443. [4]

The Debtor filed a chapter 7 bankruptcy petition on May 20, 2014. On July 3, 2014, the Debtor filed its schedules and statement of financial affairs. In response to Item 10, titled “Other transfers,” in the Debtor’s Statement of Financial Affairs, the Debtor indicated as follows:

10 Other transfers

None a. List other property, other than property transferred in the ordinary course of the business or financial affairs of the debtor, transferred either absolutely
[ ] or as security within two years immediately preceding the commencement of this case. (Married debtors filling under chapter 12 or chapter 13 must include
transfers by either or both spouses whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not filed.)


Transferee: Recore Trading Co., 7/12/13 Property: Sale of assets — see attached bill
LLC bill of of sale dated 7/12/13 & tax return schedule
Address: Sale date; shows sale date as 9/18/13
Relationship: Recore is owned by 9/18/13 Value: $150,000, $100,000 paid and $50,000
member Donald Belisle’s father tax return balance due; also see two attached
sched. summaries of assets transferred and 2012
and 2013 Form 4797

tranferee: Jean Anderson X-XX-XXXX Property: Don Belisle purchases a furnace
Address: 28 Sullivan Court, for the mother with proceeds from the sale
Salem, NH of Catco
Relationship; mother of sole Value: $7,314 from Londonderry Plumbing and
member/manager Heating — receipt attached

The Debtor included with its Statement of Financial Affairs the following itemization of the assets sold to Recore Trading:



2001 PETERBILT DUMP TRUCK (new $12th body) $50,000.00


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