the bankruptcy court dismissed the trustees complaint with prejudice and the district court affirmed for two reasons first the trustee elect standing second the trustee failed to state a claim with the court's permission i would like to address the standing issue first i didn't think the district court decided or assumed it in your favor and yet everybody wants us to decide why do we have  well if they get some did it decided it in my favor assumed it in my favor that's great but i believe that they did hold that we did not have standing and in the alternative that we fail to state a claim i can deal with the standing issue i think pretty quickly and if i might i will start there and then spend the rest of my time on the failure to state a claim issue the trustee has standing here because he stands in the shoes of not just some but of any unsecured actual creditor who could have brought the same claim at the time of the bankruptcy filing the claim here is for fraudulent transfer under a particular but commonly used section of the uniform fraudulent transfer act that's codify it in minnesota statutes at five thirteen point forty four correct me if i'm wrong because this is a sort of complicated case your debts were initially in can we call it maybe patters yes and you are trustee as i understand it for polaroid entities and perhaps the spawn off new patters  that i have that right the fraudulent transfers were made by a company named consumer brands that company was dissolved on april twenty seventh two thousand and five and literally one minute later literally one minute later that company was reborn like the phoenix reborn from its own ashes as head of consumer brands same name same owner same officers personnel customers line a business and importantly same assets and the same debts were all assumed so under principles of equity those two companies can be deemed one and the same company so that the transfer of property by one company can be deemed the transfer of property by the other company if the principles of the law require it and here as we've argued in our br wasn't the deaths of the original one if you don't mind i'll call it old patters short one of those extinguished at the time they were not extinguished at the time that old petters dissolved they remain and they were assumed by new patters and ultimately paid off by new patters and i think what you're getting at is can subsequent creditors of the new putters who were never owed any money by the old creditors can they bring this fraudulent transfer claim and the answer is yes the answer is yes because under the express provisions of the uniform fraudulent transfer act section that we were using here five thirteen point forty four in minnesota statutes the creditors who are allowed to bring the claim expressly include creditors whose claims did not arise until after the fraudulent transfer so the subsequent creditors can bring the claim and here they can do so if the purposes of the law require it and the purposes of the law do require it here the reason is that if this wholly artificial separation between putters a new putters is allowed to stand there will just be a recipe for fraudulent transfer or as in their transfer ease to evade the fraudulent transfer laws and do what tom petters did he fraudulent transfer act itself says that does not need to happen but principles of equity apply and the court can grant whatever relief is necessary under the circumstances and i remind the court what it already knows treating two companies as one in the saying is a form of relief now one error of the district court i believe was to rely on the case from the southern district of texas called asarco in asarco the court held that so i was looking at the clock here but in a circle the court held that the only creditors who could bring the claims are those creditors who existed not only at the time of the bankruptcy filing but also existed back at the fraudulent transfer that's wrong that's contrary to section five thirteen point forty four of the fraudulent transfer act and it's therefore contrary to the bankruptcy code section five forty four b a charcoal did rely on two treatises for that statement but those treat  cited cases that don't support that rule the cases cited in the circle involved a different section of the fraudulent transfer laws a section that does require the creditor to have had his claim at the time of the fraudulent transfer but that's not the section we're relying on here and the other cases that there was treatises relied on borrowed inappropriately from the it's rule from that first set of cases and applied it to the section that we're dealing with here but it didn't matter in those cases because there were these preexisting creditors in all of those cases so the trustee was not tonight standing so your honor this court is certain to be the last word on this issue of standing assuming that it is indeed before the court it's important that the a circle statement that was accepted by the district court here be rejected because it is clearly contrary to section five thirteen point forty four of minnesota statutes and section five forty four b of the bankruptcy court if i may then your honors i'd like to move on to the issue of does the trustee state claim for fraudulent transfer the trustee states a claim of intentional fraudulent transfer because he alleges number one that the debt or petters consumer brands intentionally defrauded its own creditors and number two who used these fraudulent transfers as the mechanism to do that defrauding the fraud on its own creditors was that pedders consumer brands entered into business transactions to purchase goods and services from the creditors who the trustee here represents but never intended to pay for them that of course is fraught petters consumer brands was always insolvent it lost money on virtually every single transaction it ever did the only way that it was able to stay in business was through infusions of money from petters ponzi scheme and through loans from outside lenders i don't always insolvent i don't know are you just using sort of a common sense definition i'm using the definition that's in the uniform fraudulent transfer act and here's the facts that support startup business consumer brands was capitalized the money that capitalized it was from the ponzi scheme all the are you talking the lenders here that were that you're after i'm starting with the equity i'm starting with the with the initial capitalization is often a phantom i mean the equity of startup companies is is more often than not spooky zero it was definitely spooky it because you say y you say after a fact it was it was all equity from a ponzi scheme but that's after the fact looking at it well inside it doesn't matter whether it's hindsight in my view well if it was capitalized as it was with money from the ponzi scheme it all that money to the victims of the ponzi scheme at the moment of capitalization so it's not capitalization then would be zero and from that point on was was tainted thousand that doesn't mean you can go back to square one and call us all ponzi victimization and so forth respectfully judge i do have to disagree the reason i disagree is for example if he steals b s money and uses it to capitalize a's business that money is owed to be right from the moment of the theft it doesn't matter that it took years to of zero and under the allegations in a complaint the position goes down from there because petters consumers hands lost money every year and lost money on virtually every sale it ever made are you arguing that when there is a ponzi scheme in the person who is directing diski receives the money under the common law of minnesota he receives those funds in constructive trost for the victims and that by transferring it if it transfers to a person who is not a good faith buyer for value that there is an inappropriate transfer of funds held in constructive trust is that is that your argument my argument i think is essentially that my argument is that when pedders consumer brands received this capitalization of ponzi monies it held those monies in constructive trust for the victims of the ponzi s because since potter's consumer brands was owned by tom petters the ponzi schemer himself petters consumer brands is deemed to have knowledge of the unlawful character of the funds that supplied its capitalization or the fraud on the victims here by petards consumer brands was that pedders consumer brands intended not to repay those victims when it entered into contracts to buy their goods and services and the reason is that because patterns consumer brands was dependent on outside money from the ponzi scheme and from outside lenders it was certain substantially certain in fact it was inevitable that pedders consumer brands would go out of business and fail when the ponzi scheme was discussed but that's because that infusion of ponzi money would obviously dry up at that point and so too would outside lending and that's not just plausible that's what judge kitchell the bankruptcy judge here found actually happened and tom petters was a bad guy but he was no fool he knew to a reasonable certainty that that was what was going to happen that when the ponzi scheme exploded the creditors not just of the ponzi scheme but the creditors of paris consumer brands too would be left unpaid so that means since he knew that to a reasonable certainty he intended that consequence now the fraudulent transfers or the transfers here to opportunity finance provided the platform for petters consumer brands to do this fraud to its unsecured creditors petters consumer brands received over the course of less than three years two hundred forty eight million dollars from opportunity finance that's what kept petters consumer brands alive kept it in the marketplace gave it the opportunity to bring in these creditors that pedders consumer brands knew to a substantial certainty it was not going to repa the transactions between paris consumer brands and opportunity finance gave petters the fishing line and baited the hook by which it was able to bring in these creditors now the we rely on here is the most important case of all i think and fraudulent transfer law in minnesota and that is even vs alliance bank in fin the transfers repayments of real loans or loan participations just like the payments here to opportunity finance the supreme court justice straw us held that those transfers stated of clay or that the receiver rather stated a claim that those transfers were actually fraudulent transfers because they made it possible for the fraudst to commit his fraud against the other fraudulent victims they assisted the fraudster in obtaining other creditors that he knew he was never going to repay and that is exactly what the trust alleges here the trustee also states a claim for constructive fraudulent transfer which as this court knows has two elements one of them is insolvency and i set forth the facts that i think make it plausible that consumer brands was insolvent at all times the second element of constructive fraudulent transfer is lack of reasonably equivalent value here you have two sets of transfers one transfer was what's called the prepayment penalty transfer three hundred forty nine thousand dollars went to opportunity finance on the very day that pedders consumer brands the old patterns consumer brands dissolved consumer brands got nothing in exchange for that transfer the so there was clearly a lack of reasonably equivalent exchange there the second set of fraudulent transfers here  no consumer brands it's simply gave the old one and therefore the new one this hat this three hundred forty nine thousand dollar transfer happened on the last  loans were made at twelve percent interest that's not no value at no value no your honor i do not assert no value that's value the what i assert is lack of reasonably equivalent value which is a distinct concept ok i i will agree wholly that there was value given by opportunity finance the issue before this court is was a reasonably equivalent value the allegation in the complaint is that's not reasonably equivalent value because the market rate for similar loans was substantially less interest now judge kitchell market rate varies by the by the with the strength of the borrower are you talking i mean you're not talking prime obviously but where do you get where you get twelve percent was off the market here's here's where i get it ending rates by two thousand and seven eight were so bad you know everybody crashed right the se transfers not that unusual these transfers occurred between two thousand and three and two thousand and five the reason that the twelve percent was above market and we believe it was about fifty percent above market is that these loans were secured and they weren't secured by a pederast consumer brands they were concerned they were accounts receivable from companies that were blue chip companies like target and best buy so there was little if any risk to these loans i do not think under the case law that we have to allege what the actually lower market rate was this is a rule eight standard of pleading unconstructive fraud but if we do have to make the allegation and if we're given the opportunity we can allege in good faith that the correct market value for these loans would have been an interest rate of eight percent in other words petters gave opportunity finance a fifty percent premium and that's not reasonably equivalent value now for the reasons that i have discussed  all i believe they are not but i can't tell you for sure world train agreed i'd have to look back at the brief but if if we do have to state that we can if we are given the opportunity to amend and as i say we would allege in good faith that the correct rate was eight percent so because we do have standing because we do state a claim for actual fraudulent transfer and construct fraudulent transfer it would not be futile for the trustee to amend his complaint and the notion that the trustee unreasonably delayed in seeking to amend is just plain silly to the extent anybody raised these issues at all but before judge crucial decision the first time they were ever raised was at oral argument on the motion to dismiss and that that very motion the trustee asked may we amend may we have at least brief these issues and judge crucial said no he didn't want us to do that two years later i asked again if you in case you changed his mind and he said no and i just want to note that by contrast judge  allowed a different petters trustee douglas kelly in a case against opportunity to amend his complaint four times the trustee therefore your honor is respectfully asks this court to reverse the judgment of the district court and remand this case to the bankruptcy court thank you if you  may please the court the trustee lacks statutory standing to pursue these fraudulent conveyance claims as both the district court and the bankruptcy court correctly held your got to yes your honor i represent the opportunity finance defendants that the trustee had adequately pled succession but the question of succession does not resolve the question of standing here as the district court found and the bankruptcy court found we think this car can resolve the appeal based on standing alone and i want to mr petters purchased polaroid and pettish to be passed out of the picture allegedly through merger according to the new allegations by the trustee years later the debtors here which are polaroid entities p c filed for bankruptcy and the trustee has not been able to identify any creditor of those debtors that he represents who have a claim against petter c b that is against the entity that made the transfers that's why he l standing to avoid transfers under the bankruptcy code and minnesota law the pet the trustee doesn't contest it is not identified any creditor of petre c b as the trustee appears to admit and this court a respectful your honor corporate succession and the doctrines that have to do with corporate succession then the cited here have to do with whether the successor company is responsible for the liabilities of the predecessor that's what is resolved by that doctrines like alt themselves or the persons themselves have commingled and treated it as though these companies aren't separate they're not independent they're for the law says well fine we'll treat them as one that's an equitable situation where two companies are treated us one there's no allegation of that liable for predecessors liabilities just by corporate lot of the contrary under missouri law and there were two or three different avenues for a plaintiff to get at that that's certainly the case  a legit succession all the creditors appears to be or satisfy that's why this is not only not a legal problem it's not a policy problem the reason that there are no creditors and who sues the trustee could stand here is because they were all paid they were all satisfied there's none of the creditors petter c b have been left in the cold the trustee would like to say all of these corporations can be treated as one therefore the eventual fact that petards tom petters purchased polaroid and then created p c e which is one of the debtors here that the claim success or that somehow all of that means you can look back to the predecessor and say well now successors the creditors of the successor can bring a claim against the predecessor because he would brought money that company would have brought money into the relationship but that leads to absurdity what about the predecessors predecessor that money eventually would have ended up in the successor corporation as well but it's simply not the law the creditors of successor corporation become creditors retroactively of every predecessor and that's what we're talking about here we're not just talking about whether the debtor whether p c or a ph d can claim a property and trust and petr c b s property and the transfer as we're talking about whether a creditor can bring a claim and they can't because no creditor exists with a claim against better c b that's a something that the trustee admits here and it's certainly not plausible based on his pleadings just briefly touch on  sue and when they may do that this court simply does not have the ability to say as a matter of equity we're going to create standing even when these statutes don't provide for it that's not the way that it works i would point out five forty four p one and that points you to minnesota law that points you to minnesota statute five thirteen point forty four a both of those require that you have a creditor with a claim against the transfer or who could briefly touch on the actual fraud we would just like to point out that this case is unlike fan the trustee wants to say that because the court found that actual fraud was adequately pleaded there could be pleaded here and then it was the actual admitted that he intended to defraud this is all evidence of actual intent here but in a different part of tom petters enterprise and the trustee has alleged that petter c p t was actually engaged in real transactions where it made real already did the bankruptcy court have just willy nilly not allowing even a motion to be filed to amend the complaint for a third when i believe counsel didn't move the counsel said he wanted to move cited an example of a case where i guess you're on the eve of a decision and here there's this was the third complaint i believe it had been twenty months since the issue that the trustee allegedly wanted to amend with respect to had been and had been brought up at the at the hearing and the trustee right before a decision was about to issue decided let's try a new tactic and offer an amendment and the district court or the bankruptcy court was well within his authority to say i'm not going to allow that sort of maneuver here i will always get fifteen minutes on much as well they don't get eight and seven they get fifteen combined so there's three and a half equivalent value in constructive fraud yes your honor it seems to me that there is a passage in fin that you have that leaves the alliance bank introduced evidence of the summary judgment stage again undisputed  the rate of return on the loan purchased was commercially reasonable yes that was essential to prevail for alliance bank to prevail why isn't that twelve percent interest issue alive and well for the trustee a few reasons reasonable there wasn't plausible facts as your honor observed twelve percent is within the range of reason the trustee would try to suggest what could be lower but it's there was there's no allegation that the negotiation wasn't arm's length of the interest rate and to say that twelve percent when interest rates raised is high and which is high as the low twenty's during that time period for all kinds of different corporate transactions is not possible that's the first reason the rates and recently equivalent value with the argument that in the spring of two thousand and fourteen when it was argued the trustee in his offer to prove that he made in december of two thousand and sixteen district courts in both of those decisions one by a firm and said that in the uniform project transfer acts involving claims involving commercial loans interest rates in the eight to fifteen percent in one case specifically twelve percent as a matter of that was with respect to the interest rates the trade that that time your honor to be under reasonable has to be if the rates have to be offensive remember this is not these are commercial loans they're not subject to usury they weren't even close to the usury raid even if you argue that their us and the issue is is it if it was two three or four percent higher in the commercial market environment to say that creates a plausible issue of fact about reason the equivalent value goes to far your because rates are variable they are subject to all kinds of negotiation there is no one fixed published rate that applies across the board to everyone and to say that it's plausible to say that's not a market rate in the environment that existed in the mid two thousand and six we forget because it's been ten years since lehman what high interest rate environments were like doesn't pass the ball test and there are the fact is he as the as the district court and or is not the district is there's no plausibility to say and there's no and it would be futile to say that something at the twelve percent range would be unreasonable for a commercial loan because it's a matter of risk in negotiation this year on a pointed out