center of this case is a debtor known as c e o i thermo credit my client was it secured lender dca services was its management company and we're here today to talk about is one point six million dollars that c o i transferred dca while it was insolvent in exchange c e o i received services that were worth less than eight hundred fifty thousand dollars it's a credit sued to recover the difference between the value of the transfers and the value of the services under the ohio uniform project the transfer act i have an overarching question under that act it specifies as this act like its predecessor and the statue of thirteen elizabeth declares rights and provides room at least for unsecured creditors against transfers that in paid them in the collection of their claims if you have a statute that is geared toward the protection of unsecured creditors  importantly is that for my clients they were under secured and so they were not fully secured and the transfers that we are seeking to recover were not encumbered by the lien once they were in the hands of  ca what do you say they were under secured they were under secure because the value of their debt the dca owed were less than that the amount of the clatter all that was in the hands of what did they have a security interest in all of the assets of the in terms of the me out of their limit under the bankruptcy law they would be considered and treated as an a secured creditor of course yes so i guess that gets back to the basic concept why would you be able to avail yourself of a fraudulent transfers act that is intended to assure that unsecured creditors have something are able to avail themselves of something in the bankruptcy so in believe goes into the ability of them a credit to enforce that security interests against a third party in this case when the transfer when the assets were transferred from a credit no longer had any right to enforce we normally would and but once that money is transferred the u c c treats money differently that it does other collateral such as a car or a home and upon transfer it is and it is is thirteen thirty nine thirteen thirty two and that says that a transfer of money takes the money free of a security interest unless the transfer acts in collusion with the debtor in violating the rights of the secured party to make a couple points on that collusion and that is that collusion has to be for the specific purpose of violating the rights of the secured party and then i'd also want to point you to nine three one two b three which says that a cash may only be protected by possession so once released from the release from possession it is no longer perfected it is no longer encumbered by the security interests and so if you have already approved the transfer of that money why would it be considered a fraudulent transaction so i didn't we did not approve the transfers there's two periods of time here pre partition period the post petition period the preposition period there's no evidence that at is whether there's adequate protection and that's a different issue these are also and wasn't there protection for you because you because credit were see the money use monthly monies at the same time that these pilots were being made those were the amounts that was due under its security agreement with the debtor and i continue to receive the correct correct but there is you know cash ladder orders are in are very very early in a bankruptcy case the bankruptcy or when they became aware that when was that when did they become aware you know i don't believe that that was established in the record well they serve a credit had a great deal of  something that he specifically is aware of as a lender because if a lender becomes actively involved in the management of the affairs of its debtor it can become liable for the debts to the  lands and runs its business then then you have a liability problem but after stood from the record that that is a secured creditor of that u s that thermal credit acted pursuant to its own one agreement and that long agreement authorized them to be provided regular information were guarding the use of the phones is there a place in the record that would indicate that that's incorrect well i think that there's they were entitled to regular information about it but there is nothing in the record they would say that they were allowed to direct the debt or however we're talking about a fraudulent transfer so the concern is credit were fraudulent activities involved that took money that should have been part of their security interest and gave it to another i want to step back from because they don't believe that that is actually w transfer act protection against the uniform praja transfer act is focused on transfers of an insolvent debtor for less than reasonably equivocal value that's the question that we're looking at here and what your your position is that thermo credit could know that a transfer was being undertaken and retain really be aware of that going on and aware of how much money it was and then lighter come in and say well i knew this that the services that dca was providing were worth roughly half of the value that was coming out of c e o i and there's a question i'm struggling with what's the responsibility of the lender who is away or that the entity to which it is lending is in financial trouble and is making payments in order to survive and continue can they turn a blind eye to payments that might encroach on what they would consider their dca and the debtor that no these these transfers this these services are worth what we're paying for them and it was only towards the end of bankruptcy once it came to light that that the financial statements that were being provided to the bankruptcy court were at best inaccurate and that they realized that there was this discrepancy if you know if we look at this case down the road is the question of reasonably equivalent now you is the moving party here you have the burden of stablish ing that there is a genuine issue of material fact with respect to the reasonable acquittal works and for that you rely on this expert opinion so ultimately your fate in this case if you get past all the other hurdles to pin dipping into whether we think that the the evidence from that expert creates a genuine issue of material fact is that correct that's correct and i do and i noticed i have a read like do you can i go ahead and answer your question yes that the and only evidence would argue in that record is that quantifies the value of that service is the dca provided was our expert report they did not rebut that they argued that there were services that were not considered but they did not atte evidence to establish a genuine issue of material fact it's not about weighing the evidence to provide correct i think that's absolutely correct i believe the only evidence and the value of th please the court room will soon for the for the employee services obviously the panel has dug into this case already in that that that's appreciated so let me let me hit the highlights for civil to one of your earlier points about whether there's ever been a secured credit or successfully prevail on a project like transfer case that is a point that in the first place well that's true and i would submit there are other simple reasons even if the statute does apply but that but that that is that is a threshold question but it's also logical even i'll tell you this even in a even in a case that is is a reasonably equivalent case as you say way on down the road the courts say that even in those the the court is i mean the cases say the courts are a to abide by and respect in our poll the reasons for the for the fraudulent transfer statute in the first place and in all of those comments i'll call my holdings about the purpose of act it's as you say it's not to support to protect unsecured creditors one of them from ohio says to protect unsecured creditors from the last minute diminishing of assets in this case as you've already pointed out is the absolute opposite of that this is two and a half years of monthly invoice payments this is not a starts a typical fraudulent transfer cases certainly not that i don't think it's a project transfer case at all and that's one of the reasons this is not a secret you know behind the scenes last minute transfer of unnecessary you have many cases or other the statute says that the cases i have stated or cited say that it's to protect unsecured creditors i've seen no holding in a case that says a secured credit or just as a matter of law can proceed i submit because i know what sort of secured creditor would attempt such a case i mean i've never heard of it it i liken it to trying to fit a square peg into round hole i mean they just it just doesn't fit and that's why i don't think there's ever there's been a reported case say what the statute says it's for because it's never just never come to that point i'm unaware of any secured creditor especially one like this who knows for two and a half years and i guess i take issue with some of counsel statements about the level of thermal credit's knowledge that the evidence and it's undisputed evidence is that from the start to finish of this two and a half years literally start to finish thermal credit had knowledge of seal wise dealings with my client i did them accredit have that knowledge all the start is from exhibit four i can you see that page id if you need it but exhibit four to my summary judgment brief is a email that c o i sent to thermal credit before the first agreement was ever signed and it says you guys management agreement the first management agreement before and they sent a draft of it to him and said look you guys are our ship secured creditor was fraudulent are they that i believe they are i mean they've attacked every every monthly payment that expert report looks at every payment and that damages i think would be based on the  is story that's what i'm told from the entire time history and and frankly while i don't think it's appropriate even more than they are is what they're seeking in damages according to filed papers what other evidence do you have besides that email you know that's the start of it the middle of it is or things like the as the parent pointed out the budgets and financial statements that thermal credit received on  monthly basis where these disclosure i mean these payments are disclosed there are e mails that are my summary judgment exhibits twenty two and twenty three which are good examples and they say these are thermo credit bankruptcy order the cash collateral or it's sort of in my middle ground to i mean clearly at that time they knew this they were year was worth a monthly payments made after that cash collateral order was negotiated by frankly a felony marcus helped who is the same counsel that represents thermal credit in this case from from  if these payments are made and it's not just a lump sum budget attached to the order heart of the difficulty or reason it's a problem for your argument that the true facts about the problematic nature was finances did not come out until the fall of two thousand and fourteen so how it isn't doesn't that isn't that part of the argument of thermo credit that we did not while we knew what was going on you had kept from us the true nature of your finances and we didn't know till the fall of fourteen sometimes they say that but before the first management agreement was ever signed thermal credits senate before before dca was on board in what came out in two thousand and fourteen was there a significant difference between the information that generated a default and what can't be kind to everyone in the fall of fourteen you know i don't think so in the broad sense i mean everyone knew this company was stressed that's why dca was brought in and brought on in the first place c e o i ended up attempting this chapter eleven reorganization never could get traction there and finally came out of it or just gave up that's what happened and think the company i can get you that about my you know my analogy of start to finish the finish of it is even in the very end therma credit was clearly knowledgeable clearly you know involved directly with the payments to to dca so much as is reflected in exhibit thirty two to my motion for summary judgment want see oh i got behind my client and by the way we have a one hundred ninety two thousand dollar uncollectable judgment herself that's in the record once c e o i got behind my client there are e mails showing communication between this fellow named seth block from thermal credit and c e o i about how to negotiate with my guys i mean there are e mails they produced a one inch off from thirty five thousand you think dca will take take that you know to give us some more work i mean the notion that they didn't know what was going on is cia twelve thousand dollars that was either the last payment we have or god or the next to last and so to say that they that they were involved and you know as again i'm saying start middle  they clearly were if you want me to go to reasonably equivalent value now it's you yeah well so let me just say briefly i think you guys are are on the issue i'll say th there are two reasons why some are judgments appropriate before we get to reasonable chromebook value one to three if you count just secured lenders as a matter of fact aren't toddled the second is really sort of the definitional reason under the act about why secured lenders can't recover and it's the definition of transfer under the act which includes the definition of assets so that transfer must be of an asset and an asset means property of the debtor in this case c o i but not to the extent it's encumbered by a link and that's what judge secured loan arrangement that is that's and it's in the record democratic doesn't dispute that even pre bankruptcy they were the first priority first secured creditor equivalent value isn't there a dispute of material fact you have an expert report from pharma credit and then you have no expert report you have some information from someone who worked for the client regarding in direct benefits why is that not just a classic dispute of material fact well on that point that the fellow you reference the work for for what i did i used the source the guy that was involved mr swift i mean mr swenson not only did he testified that he submitted a written report of his own is accepting your argument requires two conclusions in your favor is best i can tell one is that expert testimony on this point is not required unless you consider that mr swenson is the equivalent of an expert  really attempt to qualify me as such and you've got to to establish or to present a convincing argument i'm not saying established as a matter of proof but you have to prevail on the position that the expert that thermite credit offered that his testimony has no tendency to in or insufficient tendency to prove reasonably equivalent value to establish that there was that what d c i was offering was not reasonably the best cases that will tell us that i can so there's a southern district of ohio case called dayton you need the case cite well i've been there so yes goes to ninety two bankruptcy eight fifty seven i mean there is a i don't i'm not sure how to say it but gurneys g e or d e a s is true forty six bankruptcy three eleven as you know so a lot of these are bankruptcy cases because that that's when statutes similar fifty and one thing those cases point out is to come of things one is even in that context you have to look at the purpose of the act protecting unsecured creditors i see my time's up going to continue my i'm really what i was probably paying insufficient attention well like actually that's in your interest because it might means i was listening in thinking about the subject the substance of the argument but it does mean you need to sit down ok pursue it if i don't transfer claim here we are both we had to secure a claim and secured claim we were unsecured to the extent that our debt owed by c u i exceeded the value of our collateral and when we security over all of the exits of the dead right we had our collateral was whether it was consisted of the assets of the debtor but that was not sufficient to but isn't that always isn't that always what happens in bankruptcy to secured creditors when you are still a secured creditor it's just that they don't have enough and i think that in a way in bankruptcy that that may generally be true i don't think it's always true that secure creditors are under secured or or have  that they even have interest in the whole universe of a debtors property do you have a cases where a secured creditors are employed the fraudulent transfer say so i haven't i don't i can't point you to a specific case where a secure creditor is proceeding like we are here is under the u s d a i don't believe that means they don't exist i just don't have them pretty today but what i would point you to is the fact that in a bankruptcy context if a trustee or a debtor in possession is would be satisfied first one more question who has the burden of proof to show reasonable acquittal of value i believe that we have the initial burden to prove reasonably equivalent value and we did that here and we have put forth an expert report that showed that the services rendered were not reasonably equivalent to the transfers but that does not mean that we have to bend disprove every other theory that the dependents come up with when the defendant then puts in alleged services provide and i just want to quickly touch on this as well the services that the district court relied on were negotiations with a vendor called centrelink and those negotiations were consideration for the original point i want to know that one of the last units present in the room is wearing a hat and if you if the lists are some medical or other reason that you need to be wearing a hat i'm going to ask that you remove it  we it may say that that's a silly rule but courts are traditionally slices and traditional customs are respect o appropriate in a courtroom setting i mean we don't allow people to eat or drink or do any of the other things that people might be accustomed to doing if they're in the position of being a spectator to something