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UNITED STATES BANKRUPTCY COURT 

SOUTHERN DISTRICT OF FLORIDA 

FORT LAUDERDALE DIVISION 

www.flsb.uscourts.gov

In re:

1 GLOBAL CAPITAL LLC, et al.,

Debtors.

-----------------------------------------------------------

1 GLOBAL CAPITAL LLC,

Plaintiff,

v.

HILLSBOROUGH RIVER PHARMACY, INC. 

and AMBROSE CHUKWUEKE, 

Defendants.

Chapter 11

Case No: 18-19121-RBR

(Jointly Administered)

Adv. Case No. 19-01636-RAM

MOTION TO VACATE DEFAULT FINAL JUDGMENT [ECF #19]

Hillsborough River Pharmacy, Inc. (“Hillsborough”) and Ambrose Uba Chukwueke 

(“Chukwueke”; collectively with Hillsborough, the “Defendants”), by and through undersigned

counsel, pursuant to Federal Rule of Bankruptcy Procedures 9024, Federal Rule of Civil Procedure 

60(b), and 11 U.S.C. Section 105(a), hereby file this Motion to Vacate Default Final Judgment 

(the “Motion”). In support of this Motion, the Defendants submit the Affidavit of Chukwueke (the 

“Affidavit”), along with the exhibits attached hereto.

FACTUAL AND PROCEDURAL BACKGROUND

1. 1 Global Capital LLC (the “Plaintiff” and/or the “Debtor”) seeks to recover funds 

totaling $30,030.00 (the “Loan Amount”) allegedly paid by it to Hillsborough pursuant to a 

Merchant Agreement (the “Merchant Agreement”). 

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The Merchant Agreement

2. On or about May 20, 2016, Hillsborough executed the Merchant Agreement 

attached as Exhibit A to the Complaint. The counter-party to the Merchant Agreement is the 

Debtor. See Affidavit. ¶4.

3. Under the Merchant Agreement, Hillsborough was supposed to receive $30,000.00 

(the “Loan Amount”) from the Debtor. See Affidavit. ¶5.

4. However, Hillsborough never received the Loan Amount from the Debtor. See

Affidavit. ¶6.

The Confession of Judgment

5. On or about May 20, 2016, Chukwueke executed the Affidavit of Confession of 

Judgment (the “Confession of Judgment”) attached as part of Exhibit A to the Complaint. The 

Confession of Judgment is dated May 20, 2015, which is erroneous. See Affidavit. ¶7.

6. On information and belief, the Confession of Judgment was never filed with the 

Supreme Court Of The State Of Florida. See Affidavit. ¶8.

The Hillsborough Bankruptcy

7. On or about July 30, 2016, Hillsborough filed a voluntary petition under Chapter 

11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Middle District of Florida. 

The bankruptcy case is In re: Hillsborough River Pharmacy, Inc. Bankruptcy Case No. 16-bk06579-RCT (the “Hillsborough Proceeding”). See Affidavit. ¶9.

8. Hillsborough’s counsels at the time, Suzy Tate and Chris Broussard of the law firm 

Suze Tate, P.A. (the “Tate Firm”), prepared a Chapter 11 Plan1 and Disclosure Statement2 that 

erroneously recognized the existence of a secured claim in favor of the Debtor. As stated above, 

1 ECF #45 of the Hillsborough Proceeding.

2 ECF #46 of the Hillsborough Proceeding.

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Hillsborough never received the Loan Amount. The Chapter 11 Plan and Disclosure Statement 

were filed on November 18, 2016. See Affidavit. ¶10.

9. On or about February 8, 2017, the Tate Firm compounded their error by executing 

a stipulation with the Debtor which allowed a secured claim in the amount of $42,175.00 in the 

Debtor’s favor (the “Stipulation”).3 A copy of the Stipulation is attached as Exhibit A to the 

Affidavit. See Affidavit. ¶11.

10. On March 3, 2017, Hillsborough’s Chapter 11 Plan was confirmed.4 A copy of the 

order confirming the Chapter 11 Plan (the “Confirmation Order”) is attached as Exhibit B to the 

Affidavit. Pages 3 and 4 of the Confirmation Order incorporated the terms of the Stipulation into 

the Chapter 11 Plan. See Affidavit. ¶12.

11. Pursuant to the Chapter 11 Plan and the Stipulation, Hillsborough paid the Debtor 

$14,840.00 as set forth in following table: 

Date Check Number Amount

04/28/2017 1101 $1,855.00

06/16/2017 1123 $1,855.00

08/09/2017 1141 $1,855.00

10/24/2017 1182 $1,855.00

01/19/2018 1225 $1,855.00

03/26/2018 1283 $1,855.00

08/23/2018 1269 $1,855.00

12/07/2018 1304 $1,855.00

See Affidavit. ¶13.

This present Adversary Proceeding

12. On or about September 27, 2019, the Plaintiff commenced the above-captioned 

adversary proceeding against Hillsborough and Chukwueke. See Affidavit. ¶14.

3 ECF #72 of the Hillsborough Proceeding. 4 ECF #77 of the Hillsborough Proceeding.

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13. On or about October 5, 2019, Chukwueke received process and brought it to the 

attention of Mr. Michael A. Saracco, Esq., who was Hillsborough’s and his lawyer at the time. See

Affidavit. ¶15.

14. Unbeknownst to Chukwueke, Mr. Saracco failed to take timely action. See

Affidavit. ¶16.

15. On or about January 21, 2020, the Clerk entered a default against Hillsborough and 

Chukwueke [ECF #11]. See Affidavit. ¶17.

16. On or about January 24, 2020, after having received notice of the Clerk’s entry of 

default [ECF #11], Chukwueke wrote a letter to the Plaintiff’s counsel, Mr. Jonathan Feldman (the 

“January Letter”). In that letter, Chukwueke explained his confusion about the notices received 

from the Court and his defenses against the Plaintiff’s claims. He specifically denied receipt of the 

Loan Amount. A copy of the January Letter and the e-mail transmitting it to Mr. Feldman is 

attached as Exhibit C to the Affidavit. See Affidavit. ¶18.

17. On or about January 24, 2020, Mr. Saracco reached out via e-mail to Mr. Feldman 

and requested a week’s extension to respond to the entry of default. A copy of the relevant e-mail 

chain is attached as Exhibit D to the Affidavit. See Affidavit. ¶19.

18. On or about January 27, 2020, Chukwueke himself reached out to Mr. Feldman. He

was under the impression that, having previously notified Mr. Saracco of the adversary proceeding, 

neither he nor Hillsborough could have defaulted. See Affidavit. ¶20.

19. On that same day, Mr. Feldman informed both Chukwueke and Mr. Saracco that 

they had to seek to vacate the Clerk’s default. However, it appears that Mr. Saracco again failed 

to take timely action on Hillsborough’s and Chukwueke’s behalf. See Affidavit. ¶21.

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20. Unfortunately, Chukwueke was under the impression that Mr. Saracco was taking 

care of the case. He was prevented from paying sufficient attention to the progress of this adversary 

proceeding because of the constant media reports during the months of February and March about 

the spread of the COVID-19 virus. He was consumed and distracted by worry of what this 

seemingly unstoppable pandemic boded for the future of his livelihood and the well-being of his

friends and family. See Affidavit. ¶22. 

21. On March 13, 2020, President Trump declared a national emergency due to the 

COVID-19 pandemic. Businesses, as well as states, began closing down. See Affidavit. ¶23.

22. The fear caused by possible contagion, and the difficulties of keeping a business 

running during the past three months, kept Chukwueke from following up on the status of this 

adversary proceeding. Critically, it kept him from finding new counsel to replace Mr. Saracco. See

Affidavit. ¶24.

23. On or about June 1, 2020, this Court adjudged that Hillsborough and Chukwueke

were in default [ECF #19]. See Affidavit. ¶25.

24. Chukwueke was only reminded that no action had been taken in this adversary 

proceeding upon receipt of the Default Final Judgment. See Affidavit. ¶26.

25. Hillsborough and Chukwueke will suffer extreme prejudice should the Default 

Final Judgment stand because the Loan Amount was never received. Neither Chukwueke nor 

Hillsborough have any obligation to pay the Plaintiff’s claim. See Affidavit. ¶27.

RELIEF REQUESTED

26. The Defendants respectfully request that this Court: (i) vacate the Default Final 

Judgment against them [ECF #19]; (ii) reopen this adversary proceeding; and (iii) permit them to 

file an Answer to the Complaint filed against them by the Plaintiff. 

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ARGUMENT

I. Legal Standard

27. There is a strong policy in favor of determining cases on their merits and defaults 

are, therefore, viewed with disfavor. In re Worldwide Web Sys., Inc., 328 F.3d 1291, 1295 (11th 

Cir. 2003). See also Gulf Coast Fans, Inc. v. Midwest Elecs. Imps., Inc., 740 F.2d 1499, 1510-11 

(11th Cir.1984); Seven Elves, Inc. v. Eskenazi, 635 F.2d 396, 401-02 (5th Cir. Unit A Jan.1981) 

(discussing Rule 60(b) balancing of the desire to preserve the finality of judgments with the desire 

that judgments reflect the merits of the case). “The entry of judgment by default is a drastic remedy 

and should be resorted to only in extreme situations. It is only appropriate where there has been a 

clear record of delay or contumacious conduct.” United States v. Varmado, 342 Fed.Appx. 437, 

441 (11th Cir. 2009), citing E.F. Hutton & Co. v. Moffatt, 460 F.2d 284, 285 (5th Cir.1972).

28. Federal Rule of Bankruptcy Procedure 9024 allows for relief from judgments for 

several causes including “excusable neglect” pursuant to Fed. R. Civ. P. 60(b)(1). 

29. Fed. R. Civ. P. 60(b)(1) provides that a judgment may be set aside on grounds of 

mistake, inadvertence, surprise, or excusable neglect. 

II. The Defendants Failure to Answer the Plaintiff’s Complaint is Excusable

30. To establish mistake, inadvertence, or excusable neglect under Rule 60(b)(1), a 

defaulting party must show that: “(1) it had a meritorious defense that might have affected the 

outcome; (2) granting the motion would not result in prejudice to the non-defaulting party; and (3) 

a good reason existed for failing to reply to the complaint.” In re Worldwide Web Sys., Inc., 328 

F.3d 1291, 1295 (11th Cir. 2003). See also E.E.O.C. v. Mike Smith Pontiac GMC, Inc., 896 F.2d 

524, 528 (11th Cir. 1990).

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31. Excusable neglect under Rule 60(b)(1) is generally an “equitable inquiry” based 

upon the particular circumstances of the case. Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. 

P’ship, 507 U.S. 380, 395, 113 S.Ct. 1489, 1495, 123 L.Ed.2d 74 (1993). In Pioneer, the Court 

stated that excusable neglect occurs when the failure to comply with a filing deadline is attributable 

to negligence. Id. at 394, 113 S.Ct. at 1497. See also Connecticut State Dental Ass’n v. Anthem 

Health Plans, Inc., 591 F.3d 1337, 1355 (11th Cir. 2009). Within the 11th Circuit, the Courts have 

historically followed Pioneer. Recently, the merits-over-default approach was restated by the 11th 

Circuit in the Greenberg case. In that case, the lawyer involved testified that he did not receive 

notice, and though perhaps he was on inquiry notice, the Court determined that he had acted in 

good faith under the circumstances and that he did not exhibit any form of disregard for the judicial 

process. Therefore, the Circuit Court reversed both the District Court and the Bankruptcy Court 

decisions and allowed the plaintiff to proceed on the merits. See In Re Greenberg, 2006 WL (Slip 

Opinion) 1594202 (11th Cir. 2006).

(a) The Defendants have a Meritorious Defense Because the Loan Amount was 

Never Received

32. The Plaintiff’s claim against the Defendants rest upon two (2) documents: the 

Merchant Agreement and the Confession of Judgment. However, the Defendants never received 

the Loan Amount. See Affidavit. ¶6.

33. Since the Defendants never received the Loan Amount, the Defendants’ obligation 

to repay the Loan Amount never arose. 

34. In order to collect on its claim, the Plaintiff must first establish that the Debtor 

conveyed the Loan Amount to Hillsborough. 

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(b) The Defendants have a Meritorious Defense Because Even if the Defendants

Received the Loan Amount, the Interest was Usurious 

35. The Plaintiff characterizes the Merchant Agreement as a purchase and receipt of 

receivables. However, it is in the nature of a disguised loan with a usurious interest rate. 

36. In Florida, a criminally usurious loan cannot be enforced. § 687.071(7), Fla. Stat. 

(2017) (specifically declaring unenforceable extensions of credit in excess of certain usury and 

loansharking limits).

i. The Merchant Agreement was a Disguised Loan

37. All Florida cases take a deep look as to the intention of the parties at the moment 

of making the contract: “Whether the parties intended to create a loan or a sale is key to a 

determination whether a purchase agreement is in fact a disguised loan.” Foster v. Weber, 578 So. 

2d 857, 858 (Fla. 5d DCA 1991). 

38. Obviously, the Courts look at the language and terms of the contracts, but “[a] 

transaction that is either entirely or partially in the form of a sale may be usurious when the intent 

is to make a loan of money for a greater profit than allowed by statute.” See, e.g., Griffin v. Kelly, 

92 So. 2d 515 (Fla. 1957). 

39. For example, in Union Secur., Inc. v. Merchants' Trust & Sav. Co., 205 Ind. 127, 

185 N.E. 150 (1933), discussed by the Florida Courts in Indian Lake Estates, Inc. v. Special Invest., 

Inc., 154 So. 2d 883, (Fla 2d DCA 1963), the court stated that: "Stripped to the verbiage with 

which the parties have sought to clothe their transaction, the naked facts disclose that what they 

were doing was not a sale, but a loan, and that leases were turned over simply by way of security. 

The [seller] needed money and the [buyer] advanced it." Id at 137. In this case, even though the 

contract explicitly stated that it was a sale, looking at the entirety of the transaction, the court found 

otherwise. Id.

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40. In the Merchant Agreement, Section 1.9 explicitly states that it is not a loan but a 

sale. However, the mere fact that it represents itself as a sale and not a loan is not enough. Courts 

look at the transactions as a whole. 

ii. The Debtor’s Substantial Recourse Against Collateral Makes the Transaction 

a Loan

41. To constitute a true loan, "it is essential to provide for repayment absolutely and at 

all events or that the principal in some way be secured as distinguished from being put in 

hazard." K9 Bytes, 56 Misc.3d at 816 (quoting Rubenstein v. Small, 273 App.Div. 102, 104, 75 

N.Y.S.2d 483 (1st Dept.1947)). “A loan of money involves an absolute agreement to return the 

sum borrowed at a future time.” Indian Lake Estates, Inc. 154 So. 2d at 890. 

42. “Where,” as here, “a buyer of accounts receivable holds substantial recourse against 

the seller, thereby shifting all risk of non-collection on the seller, courts have routinely held the 

transaction to be a financing arrangement and not a sale.” In re Burm, 554 B. R. 5,5 (D. Mass. 

2016); see also In re Qualia Clinical Service, Inc., 652 F. 3d 933, 943 (8th cir. 2011) (finding the 

purchase of receivables constituted a loan rather than a sale because the arrangement “shift[ed] all 

risk” onto the seller); In re Siskey Hauling Co., Inc., 456 B. R. 597,607 (N.D. Ga. 2011) 

(“[Buyer’s] recourse against the Debtor effectively transfers the risk of non-collection on Debtor. 

The Court therefore construes the transaction as a loan, not a sale.”); Major’s Furniture Mart, Inc. 

v. Castle Credit Corp, Inc., 602 F.2d 538, 546 (3d Cir.1979) (“It is apparent to us on the record 

none of the risks present in a true sale is present here.”); Blackford v. Commercial Credit Corp., 

263 F.2d 97, 106 (5th Cir. 1959) (finding that sale of receivables was a loan and not a sale where 

the provisions of agreement worked to “essentially guarantee [lender] that they will suffer no loss 

on the transaction.”). Further, in order to avoid a charge of usury, the debtor would have to 

establish the advanced funds were at risk. See Beausejour Corp., v. Offshores Development Co., 

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Inc. 802 F. 2d 1319 (11 Cr. 1986) (finding Florida precedent and Florida case law upon which 

precedent was based establishes that there must be a substantial risk of losing one’s whole 

investment in order for the financing transaction to be exempted from the usury statute.).

43. In the instant case, as with any loan, the Loan Amount had to be repaid with interest. 

Hillsborough was obliged to pay the Debtor fixed daily payments of $318.18 until all repayments 

totalled $42,000 (the “Usurious Return”). Hillsborough was even obliged to permit the Debtor to 

automatically debit the daily payments until the Usurious Return was paid in full. Failure to make 

any required payments constitutes a material breach under the Merchant Agreement, even if 

Hillsborough had no receivables and was unable to pay the debt. 

44. Additionally, Chukwueke personally guaranteed the loan, thereby removing all of 

the Debtor’s risk of non-payment. If the Hillsborough’s business failed or could not generate 

sufficient future receipts to pay the daily fixed repayment sum, it is a default under the agreement, 

and upon a default, Chukwueke was required to pay the Usurious Return. As such, the Debtor bore 

no risk in the transactions with the Defendant. 

45. Since there was no risk that the Debtor would not be paid, the Merchant Agreement 

was clearly a loan and not a purchase of sale of receivables. 

iii. The Interest Rate was Criminally Usurious and Renders the Merchant 

Agreement Unenforceable

46. The Loan Amount was $30,000.00. But the Defendants were obliged to repay the 

Debtor $42,000.00. The $12,000.00 difference represents a 28.6% interest rate, which exceeds the 

criminally usurious threshold of 25%. See Florida Statute Section 687.071(2).5

5 (2) Unless otherwise specifically allowed by law, any person making an extension of credit to any person, who shall 

willfully and knowingly charge, take, or receive interest thereon at a rate exceeding 25 percent per annum but not in 

excess of 45 percent per annum, or the equivalent rate for a longer or shorter period of time, whether directly or 

indirectly, or conspires so to do, shall be guilty of a misdemeanor of the second degree . . . .(Emphasis added).

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47. Criminally usurious transactions are unenforceable in Florida. See Florida Statute 

Section 687.071(7) (“No extension of credit made in violation of any of the provisions of this 

section shall be an enforceable debt in the courts of this state.”). For this reason, the Plaintiff cannot 

enforce the Defendants’ obligations under the Merchant Agreement. 

(c) The Plaintiff Will Not be Prejudiced by Vacating the Default

48. Prejudice, in the context of a motion to vacate a default judgment, is "the loss of 

evidence, increased potential for fraud or collusion, or a substantial reliance upon the judgment." 

JPMorgan Chase Bank, N.A. v. Pandolfelli (In re Pandolfelli), 2012 U.S. Dist. LEXIS 19223, 6-8 

(D.N.J. Feb. 14, 2012); see also Smith v. PAC Int'l Logistics Co. (In re Advanced Mktg. Servs.), 

448 B.R. 321, 327-330 (Bankr. D. Del. 2011). The cost of enforcing a judgment later vacated and 

the delay in realizing satisfaction on a claim rarely serves to establish the degree of prejudice 

sufficient to prevent the opening of a default judgment. The loss of an advantageous position 

cannot be used to establish prejudice. Smith v. PAC Int'l Logistics Co. (In re Advanced Mktg. 

Servs.), 448 B.R. 321, 327-330 (Bankr. D. Del. 2011).

49. The burden of proving prejudice is on the Plaintiff. Smith v. PAC Int'l Logistics Co. 

(In re Advanced Mktg. Servs.), 448 B.R. 321, 327-330 (Bankr. D. Del. 2011) ("Here, the Plaintiff 

has not shown that he would be materially prejudiced if the default judgment is vacated.").

50. The Plaintiff will not be able to assert prejudice. Based on the bill of costs [ECF 

#21] that it filed with the Court, the Plaintiff has only spent $350.00 in litigating this proceeding. 

In contrast, the Plaintiff received $14,840.00 from Hillsborough, an amount which it should not 

have received. 

51. Even if the $350.00 that the Plaintiff has spent is considered prejudice, the prejudice 

to the Defendants clearly outweighs the prejudice to the Plaintiff. 

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(d) A Good Reason Exists for the Defendants’ Failure to Respond to the 

Plaintiff’s Complaint

52. The reason that the Defendants failed to respond to the Plaintiff’s Complaint was 

due to the inaction of their previous lawyer, Mr. Saracco.

53. In addition, Chukwueke is a layman and his emails to Mr. Feldman dated January 

24, 2020 and January 27, 2020 to Mr. Feldman, where he asked the latter to consider his letter as 

a response to the Complaint and to file it, shows that he never received competent legal 

representation. 

54. Bankruptcy jurisprudence is replete with instances where lay persons with little 

knowledge of bankruptcy proceedings were accorded a less strict standard with regard to excusable 

neglect. See e.g. Collezione Europa USA, Inc. v. Dugan (In re Rhodes, Inc.), Case Nos. 04-78434 

through 04-78436, 2007 Bankr. LEXIS 4606 (Bankr. Ct. N.D. GA December 17, 2007) (court 

permitted late filing of claimant's proof of claim despite presumptive receipt of the claims bar date 

and confirmation of the debtor's plan of reorganization because, among other reasons, the claimant 

was an unsophisticated creditor); In re Grand Union Co., 204 B.R. 864, 872 (Bankr. D. Del. 1997) 

("It is reasonable to expect that the movants, unsophisticated claimants, upon receipt of the bar 

date notice, paid no attention to the notice since they could have easily believed that the same 

notice would have been sent to and received by their counsel."); In re Crazy Eddie Sec. Litig., 906 

F. Supp. 840, 846 (E.D.N.Y. 1995) (magistrate judge recommended the allowance of late filed 

proof of claims for unsophisticated creditor investors).

55. That a different standard is applicable between sophisticated and unsophisticated 

creditors was clearly stated in the case of Grubb v. Pittsburgh Nat'l Bank (In re Grubb), 169 B.R. 

341 (Bankr. W.D. Pa. 1994). In that case, Pittsburgh National Bank ("PNC") failed to file a proof 

of claim on or before the claims bar date. Id. at 343. When PNC eventually filed its claim, the 

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debtors objected. Id. The bankruptcy court disallowed PNC's claim and, in so doing, stated that 

PNC, as a sophisticated creditor "cannot claim the treatment due an unsophisticated creditor." Id. 

at 349. 

56. It is therefore clear that Chukwueke, and Hillsborough by extension, are entitled to 

a more lenient standard with regard to the application of bankruptcy procedures, such as vacating 

the default.

57. Finally, when the Defendants received notice of the Default Final Judgment, they 

immediately sprung into action. The Default Final Judgment was entered on June 1, 2020. The 

Defendant has diligently sought to retain counsel and now files this Motion to Vacate the Default 

Judgment. This evidences no intent on the part of the Defendants to delay the proceedings. 

PRAYER FOR RELIEF

WHEREFORE, for the reasons set forth above, the Defendants request that this Court 

enter an order vacating the Default Final Judgment entered against them and granting any further 

relief that this Court deems appropriate. 

Dated: June 12, 2020

Respectfully submitted,

KANIUK LAW OFFICE, P.A.

By: /s/ Ronald Scott Kaniuk

Ronald Scott Kaniuk, Esq. (FBN 0112240)

1615 S. Congress Avenue, Suite 103

Delray Beach, FL 33445

Tel: (561) 292-2127

Email: ron@kaniuklawoffice.com

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