you're honest this isn't a fuel verdict dismissing claims kicks in a bench trial before a judge judge who are no wouldn't look familiar with the cases about it let me ask this i assume that you're not contesting the fact that this fail unique clear and convincing evidence our of you is very deferential do you have any case law our argument about this unusual situation where we have just cement on two thousand and twelve public opinion that's pretty favorable to you but then we have a why should we consider your arguments on those badges if at least at one point you already conceded them what what do you make is their right and a stop all problem here without considering them  let's say we find that there's not concealment here at least that it's not clear enough to overcome our deference should we treat badge g differently it said that the that the closing proceeds were going to go to the seller hollywood tanks distance inc and he didn't say anything about the money he's going to win on the principles of the entity i am assuming that who was foreseeable i'm sure the times the lease as opposed to wasn't it was foreseeable but this is a situation where this was historically a very h t s i'm talking about was historically a very h t s was going to be a very viable organization that wouldn't paid the forty million dollars that they did pay for what you can when you take out the money for the liabilities so you but you're arguing that's not where we should be focusing and i guess you're hoping that's where judge maule now can i ask you about whether hollywood tending had anything left its debts after the distributions what do we make of the twenty five percent equity interest worth supposedly ten million dollars isn't that a diligence done that's why that commission so important you've got an object of arm's length buyer who came in look at this company and the way that ten million dollars was arrived that they had to  there was enough left in the company's justify that and also the ricos maintain the twenty five percent interest in the entity the survived and to what what should be make of that if anything at all the fact that they were willing to retain pretty sizable stake twenty five percent in an entity that again given the history of this enterprise has been a very successful enterprise and they've been very microscopically involved in the operation of these turning someone's historically but irrespective of whether or not the business was good at the time of sale you know the business hat on going obligations st of all while they had a twenty five percent interest in can hold priest as well that in order for interest to have a value cast it has to have an actual saleable figure on the market and that's exactly what happened here not only did they have a twenty five percent interest dollars left in the check we now within four months of that closing the principles of hollywood's having had to go back into this business one million nine hundred and fifty five thousand dollars it clearly kicking three hundred and seventy thousand dollars apiece just so that they can pay what was owed to the box if you talk about a little bit about constructive fraud how can we tell if a transfers unreasonably small you know it doesn't need to be if the amount left is unreasonable if the assets left run reasonably small they don't have to be insolvent but still what's the record evidence here that it was unreasonably small th help and a one hundred and twenty seven thousand dollars that was you know a tank from other open bank accounts where all the positive by the end of that day not only did they spend the entire amount agreement since it was a natural part of the transaction and part of the alleged solvency are in solvency of hollywood tanning systems with respect to the giving deference to judge kruger o course the court should judge kugler was the trial judge he did schedule a whole sixty three conference and he was really in a trial i know you've written a little bit about this but i understand what replied to that isn't it a situation where any deference even given the reasons for we are in our policy of giving deference to try refract he wasn't really a tribe or a factor here your view or of transcript and he made certain conclusion based upon what he read he read the same thing we're going to read of course but that is the lawyer your honor is as you as you said yeah but it right is in the context of assuming why just that the person who's the trier of fact sees the evidence that if it comes in and witnesses as they testify when that goes away i'm not sure the reason should should persist well the way they go the way rule sixty three works is federal civil procedure sixty three if the judge becomes uncapped capacit passes away and another judge takes over at the district court level that judge schedules a conference and invites counsel to that conference to discuss whether counsel wants to recall witnesses or whether the court  attorney mullen arrow and i to recall witnesses we both declined just kluger said he did not believe it was necessary to recall the witnesses he was familiar with the record and then he proceeded to  denying the motion to dismiss etc is at least in tension with the findings the judge kugler made and so i too am interested to learn is this a hard and fast rule or do other circuits or our current apply a little bit of a citing scale wor defer to the extent that it's warranted but i've don't understand whether deference means exactly the same thing in this and in this case your honor is  second circuit atlantic specialty insurance company vs coast the environmental group night forty five dollars that fed three d fifty eight year two thousand and nineteen and it went on to say success or judge is no independent obligation to recall witnesses was requested by one of the parties that deference is the same that would be due if the findings had been made at the district court judge who presided over the perhaps we could move to this he started with the point that usually we do the badges of fraud but it just might be an unusual situation we have this actual intent i'd like to hear you discuss the robin you know e mail it may th two thousand and seven why do you think that and there were many other points in the record where mr newdow testified that this was an arm's length transaction and it was there was no intent anywhere soon bankrupt hollywood tans or make it a shell company as they as had an opportunity to recall a witness in the w decision and then have to decision is against them and they lose then they say oh well you know what we really want to witness or we should recall the witness or we'd like the appellate court to adopt  leases and pay off the races and get everybody just a kind of public you know i think it would be helpful if unless my colleagues want to stay on this point it would help me to march through at least seven of the eleven factors and i have to confess i transferred funds now the relationship between the been innocent hollowing tending was very fluid it's not clear that there really respect in the corporate form rigidly here like shouldn't we find that hollywood tanning retained possession or control of the transfer it fo they did not retain possession or control of the disappeared funds because once the distributions were made that was it then they were kept in a bank account and they were put in a personal bank account to each each  public respected enough that we should treat the transfer as a worker so they were and in fact they would have had to bend because hollywood tans was also taking a twenty five percent interest in this in this new entity and holdings and you know ted holdings didn't want to pay all his money to hollywood tanny's it probably would ten years was simply going to keep the money that ten dollars holdings was paying it and put it as part of a twenty five percent interest that would've made no practical sense  so i can't really confirm that but how will our creditors like m s keep the supposed to find out about the transfers if that's the focus on and the reason we focus on concealment while the transfer was not concealed because it was a proper distribution ma historically has held her to any systems historically many distributions use your holders and it was shown at trial that this whole issue of the general ledger was just was just nonsense the general ledger gets converted into a trial ballots about the distributions they were aware of the sales aren't i don't think there's a dispute about d d i don't think anyone is disputing that there was a debtor who was sued or threatened was suit so i think we could skip that the transfer was substantially all of the debtors assets i think you're dispute on that point is hollywood tending maintains its central assets because the twenty five percent equity interest but there's a lot of reason to think it wasn't liquid it was closely held they need to get approval to sell it as mr mollenhauer argued so if we set the equity aside an agreement that's in if and you dispute that if we set the equity aside were there any other assets hollywood tending had left that would defeat that substantially all of the yes they had accounts receivable and they had monies that were road by i guess former store owners franchise franchisees and they had other redundant to see but the statute says concealed removed concealed were removed removed or concealed s s didn't hollywood tanning remove enormous amounts of assets through the shareholder distributions they went directly to the shareholders so only in the most technical sense were they not remove those assets were no longer available to creditors and why isn't g satisfied say i had you know one million dollars in a bank account and a creditor had a judgment against me i just removed it and put it somewhere else this wasn't a remove all this was a trance this was a shareholder distributions of the company then you abate scrutiny under g because your yard but this you just invented the question business even if the purpose of the distribution was to put at risk the interest of future creditors million dollars judgment he has a one million dollars in his bank account he's on the bank account only he wants to evade that from a creditor so he he he comes home from work one day and says it was white hey honey can i put this one million dollars in you concealment that's removal because that's not word marry transaction between the husband and wife this was an ordinary transaction between ten holdings in hollywood hands it was an ordinary shareholder distribution there was testimony at the trial plenty of it that they made distributions for years this way and so it was consistent with prior practice and so if this was a concealment removal then all these other prior distributions could potentially be for hollywood tenants they could be for any other corporation and the purpose to this intentional fraudulent transfer is to prevent a debtor from removing his property from the jaws of execution and that's just not what happened here you know i don't see any findings in this is a it can explain on page twenty seven paragraph eight because judge kugler thought the test was just concealed i don't see any findings that this so it seemed like if we think this is pivotal that we would at a minimum need to remand it i'm sorry you said he and you were saying this is what judge kugler thought about this i don't see it in his opinion in his conclusions of law when he's making the findings on this batch so a lot i don't see how we can defer to that it's everywhere else in the in the in the record your honor all of the findings of fact indicate or support what i'm telling you today at this oral argument i did make i think he got a lot at least it is not clear to me that the law has correctly spelled out on this bad so i can't know that there's something to defer to about applying it that's also going to be important to get to construct a fraud what did hollywood tending to get in return for the shareholder distribution debtors insolvent if the sum of the debts is greater than all the debtors assets after that shareholder distribution you mentioned the assets they had left to pay debts like the look at least the liquid assets was about a one million dollars accounts receivable one creditor was that enough to pay to two dollars to be able to pay their debts yes and they proved they put on expert witness our expert your honor was a rebuttal expert who rebutted their testimony their expert was found to be not credible by kugler as he did not rely on the report and that's because the expert did not testify credibly the expert did not state her opinions with confidence under cross examination and was not credible or didn't the district court focus on whether or not the franchisee was it in this case i believe that the tenant was paying you know the image will store owner was paying the rent directly to the landlord and had been and just continued and i suppose in some point that stock you know jumps to mandel requested information as you know about when the rent payments started and there was no evidence in the in the transcript indicating when exactly it's up but it was it was current as of the time or the rent was current so let's try to sum this up my understanding of the new jersey case law and you can correct me if you disagree is that we don't focus on the fact that a few are absent we focus on whether badges are pressed and if there are several badges present you know that that can easily suffice you've conceded badge a is present transfer to insiders you've conceded badge eight each is present they're not getting a reasonable equivalent value for all the money that's being taken now you're just getting cheap but i think they've got a strong case that the debtor removed the assets maybe you'll be you've got some case law that will make us read the verbal move differently but if if there are two or three batches of product clearly present and then a few more that are being disputed like concealment or solvent see under let's it that at least direct a presumption of fraud what evidence would you point to that would rebut that presumption well that the the the insider the badger fraud leading insider believe was was present from the start of the case so you know and judge what you and and so the only other one you giving his money to his wife these were shareholder distributions made follow the legitimate arms thank sale by a solvent company which the panel noted had had a very positive success the sales legitimate no question but then the family goes and drains everything out of the company what's the bet against that show that not just taking some of it out but taking most of the money out at that point that rebuts the idea that this is just you know leaving a shell corporation especially when we have this robin you know e mail that is already suggestive that they knew they weren't leaving very much in there for these you know little larger others to go after because they took twenty five percent interest in ten holdings they were confident and that's why they took a twenty five percent interest in hand holdings they didn't abscond they wanted ten holdings to do well they wanted and holdings to pay the least since what's the know for sure but at least it's in his  he says to the history success of the company it's just it's a very successful company historically right and that's why they were able to make distributions start early and continue when the spill happened until it's twenty five percent interest that would that was twenty five dollars when you're getting that much money upfront and i initially i was trying to didn't know how to interpret the twenty five percent interest but the more i thought about it suits me the less significant it becomes of the getting that much upfront the back to take twenty five percent of what they may in the future understand it's going to be nothing because they didn't the company well somewhat because the walking away was where five million dollars apiece are they getting pretty proper sort of nothing in the long run that's trying to give me that give me five million now and twenty five percent of nothing i'm happy with that i don't need twenty five percent of nothing i've got my five million so i'm not sure that what the twenty five percent interest accomplishes in terms of getting  property lines if they could land them further because there's nothing to get twenty five percent from all right well we've been nice had they been able to get twenty five percent or something but they didn't buy theatres and that's that's kind of trying to prove and prove a negative i mean that's what their expert witness tried to do i mean that's what their expert witness devoted many many pages and hours of testimony is that it was a fraudulent transaction and they didn't know that they were getting had an expert witness there their test their case regarding solvency was predicated largely on their expert witness who produced evaluation report said many things and what it  knew what they were doing and they knew that they were selling a company that was worth less and that their ten percent or twenty or twenty five percent stake would be worthless all that already has a process that it considered reviewed decided and that's why you know the appellate cherry picking one email from ralph and you know just doesn't cut it on appeal because there's just a mountain about other evidence that was considered by a judge kugler and that was heard by judge transfers that were made to the own trust account were not only made to the shareholders but it was made to their wives the record the panix has copies of the the the positive or rather the monthly statements which reflect that r here because the poor only need to look at the checking account and the deposits that were made following immediately following this transaction then they had an id one thousand dollars insurance policy they had to pay they had know i've built this business for my family we're going to cash out but this will make sure that my family and my wife my kids are secure i don't have to worry about creditors getting stiff because of the french i see in place my company has a history of not selling your franchise to anyone unless we're pretty certain that person knows what they're doing they're going to be successful franchisees and historically almost none of my franchisees and failed so i'm going to just take what i can from my family and run and these are going to get paid because there's a perfectly stolid tenant in place to pay that these seventy eight months later we find out there's not a solid tenant in place where he's that he's that get paid and we don't know quite when that went into default i guess to the level of fraud and i said of the very beginning you could have such negligence as to be suggestive of fraud but what if it's just bad forecast and you didn't mean just that anybody you just meant to build a nice one house they for your family were wrong  five to the next one so clearly here what happened was these people had every intention of taking these monies all the monies from the sale of the monies that they probably would never see and distribute themselves well couldn't stop them you're talking about the negligence or maybe they were just being i was leaving taking five million dollars apiece and leaving a it each of them leaving eight hundred thousand dollars of the proceeds check so that they could fund operations that and to fund receivables that were going to be coming they didn't do their they want to take all this money out of the hands and the creditor that come along and say you ok are you saying so even if you look at this whether or not there was that at the time where there was a claim and whether we had a creditor for purposes of you know it's a little stretch to say ignored perhaps he also looked  mediator but i mediator mr turner grosso has been listening in pretty sure and i would taishan to the argument and it may be worse only if you and your clients are willing to engage once again with him and with that process to see whether or not it's not possible to resolve this case the mediation if you can make that revisitation or maybe you can't you know whether or not you'd be willing to do that well not me strike that question because we don't need to know that when sides willing to  joint don't let us know who's yes who's know we just want to get some ideas to should please go ahead and start deciding the case or should we just hold off on that you folks work something out a make a plea if you will and also like to ask that a transcript be produced of the argument and that can be split between the two of you and if you have questions on that patrick can help you out in terms of the back and we can explore having a transcript reduce or if we do have to go ahead and defied this because