In the

United States Court of Appeals

For the Seventh Circuit

____________

Nos. 06-4178, 06-4179, 06-4180 & 06-4181

DANIEL L. FREELAND, Trustee,

Plaintiff-Appellee,

Cross-Appellant,

v.

ENODIS CORPORATION and WELBILT HOLDING COMPANY,

Defendants-Appellants,

Cross-Appellees,

and

MARION H. ANTONINI, et al.,

Defendants,

Cross-Appellees.

____________

Appeals from the United States District Court for the

Northern District of Indiana, Hammond Division at Lafayette.

Nos. 4:01-CV-72, 4:04-CV-64 & 4:04-CV-65—Allen Sharp, Judge.

____________

ARGUED OCTOBER 23, 2007—DECIDED SEPTEMBER 2, 2008

____________
2 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

Before BAUER, CUDAHY and SYKES, Circuit Judges.

CUDAHY, Circuit Judge. These appeals arise out of

bankruptcy proceedings in which Daniel Freeland, Trustee

for Consolidated Industries Corp. (Consolidated), sought

to recover transfers made by Consolidated to Welbilt

Corporation, a company now known as Enodis Corporation (Enodis). The bankruptcy court concluded that the

Trustee could avoid over $30 million in transfers made

by Consolidated between 1989 and 1998 and the district

court affirmed. In addition, the district court, having

withdrawn the reference on two of the Trustee’s claims,

found that the Trustee could avoid transfers made

within one year of the filing of Consolidated’s bankruptcy

petition pursuant to 11 U.S.C. §§ 547 and 548. The defendants appeal these decisions. In his cross-appeal, the

Trustee challenges the lower courts’ rejection of his alter

ego/veil piercing claims against the corporate defendants,

the district court’s refusal to enter judgment against

Welbilt Holding Company and the grant of summary

judgment for the individual defendants. We conclude

that the Trustee can avoid transfers from Consolidated

to Enodis between 1989 and 1995 as fraudulent transfers

but remand for further findings on the issue of Consolidated’s solvency after 1995. We reverse and remand the

district court’s grant of summary judgment for the Trustee

on his § 547 and § 548 claims. With respect to the Trustee’s

cross-appeal, we remand for further findings on the

Trustee’s alter ego/veil piercing claims but affirm the

remainder of the district court’s judgment.
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 3

We will refer to “Welbilt Corporation” as “Enodis” so as to 1

avoid any confusion with Welbilt Holding Company, which

will be referred to as “Welbilt Holding.”

I. Background

In the 1980s, Consolidated was a successful furnace

manufacturer. It was a subsidiary of Welbilt Holding

Company, which itself was a subsidiary of Enodis. Enodis 1

was a publicly-traded company and defendants David

and Richard Hirsch and their friend Lawrence Gross

were its primary shareholders. In 1988, the Wall Street

leveraged buyout (LBO) firm Kohlberg & Co. acquired

Enodis’ stock through a company it formed, Churchill

Acquisition Corporation (Churchill). After the leveraged

buyout, Churchill owned 63.4% of Enodis’ stock and the

Hirsches and Gross owned 36.6%. The Hirsches and Gross

became Consolidated’s directors following the LBO. They

were removed from the board in October 1990 and

were succeeded by Marion Antonini and Daniel Yih.

Enodis directed Consolidated and its other subsidiaries

to deposit its receivables in an account that Enodis controlled. Consolidated’s deposits in the account were

recorded as assets and Consolidated’s assets were

reduced by amounts that Enodis used to pay Consolidated’s expenses. In February 1989, Enodis directed

Consolidated to pay a cash dividend of $6.9 million. In

addition, Enodis directed Consolidated to issue two

dividend notes (the Notes) to Welbilt Holding. The first, a

10-year note with an interest rate of 13.75%, had a principal amount of $20 million. The second, a 10-year note
4 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

with an interest rate of 13.75%, had a principal amount

of $10 million.

Both dividend notes provided that:

The principal of this Note represents the payment of a

dividend declared by the maker’s board of directors

and therefor is payable only out of funds legally

available for the payment of a dividend. If this Note

is not paid in full when due, the undersigned hereby

agrees to pay all costs and expenses of collection,

including reasonable attorneys’ fees.

The Notes provided that if Consolidated failed to make

an interest payment, they would “become immediately

due and payable at the option of the payee.” The Notes

also stated that they were governed by Indiana law. Enodis

collected the interest payments on the Notes by taking

funds from Consolidated’s deposits in Enodis’ accounts

and directing that Consolidated make the appropriate

book entries. Between 1989 and the end of 1997, Enodis

took $23,671,421.32 in interest payments from Consolidated.

Meanwhile, Consolidated began to design a new product

line, a project dubbed “Project 92.” In 1987, Congress

set new standards affecting the furnace manufacturing

industry that were to take effect in 1992, and Consolidated’s management believed that the company would

have to redesign its furnaces in order to comply with the

new standards. To this end, Consolidated borrowed

$7 million from Tippecanoe County in order to purchase

new equipment that was required to manufacture the
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 5

“Project 92” furnace. Enodis guaranteed the loan. As it

worked to get its new furnace line off the ground, Consolidated began to confront problems with its horizontal

furnaces. A defect in the furnaces was causing fires and

warranty claims were not covered by Consolidated’s

insurance. In 1990, North Carolina’s Attorney General

investigated Consolidated’s furnaces and concluded that

they were defective. In 1993, the Consumer Product

Safety Commission (CPSC) began investigating another

defect in Consolidated’s furnaces. About this same time

a group of consumers in California threatened to file a

class action law suit, further threatening Consolidated’s

prospective financial health.

By 1994, Enodis had begun trying to sell Consolidated. In

1995, perhaps to make Consolidated more attractive to

prospective purchasers, Enodis cancelled the $30 million

in dividend notes. Enodis found an interested buyer in

William Hall. Hall could not secure financing to purchase Consolidated, however, and the sale to Hall did not

close. Consolidated’s problems continued to grow. The

California class action was certified and in 1997, the CPSC

asked Consolidated to recall all of its furnaces in California. In January 1998, Hall, Welbilt Holding and Enodis

entered into a Stock Purchase Agreement pursuant to

which Welbilt Holding agreed to sell Hall the common

stock of Consolidated. In connection with the transaction,

Consolidated borrowed $7.5 million from Finova Capital

Corporation (Finova) and granted Finova a lien on all of

its assets. On January 5, 1998, Enodis loaned Consolidated

$108,500 to purchase insurance. On January 6, 1998, the
6 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

Hall sale closed. Consolidated directed Finova to wire

$7,108,500 of the money it borrowed from Finova to

Enodis. Seven million dollars corresponded to the purchase price of Consolidated’s stock pursuant to the Stock

Purchase Agreement. The rest represented repayment

of Enodis’ January 5 loan to Consolidated. On May 28,

1998, almost five months after the Hall transaction, Consolidated filed for bankruptcy under chapter 11 of the

United States Bankruptcy Code.

On May 10, 1999, Consolidated filed this lawsuit. A

trustee was appointed and was substituted as the plaintiff. The bankruptcy case was subsequently converted to

chapter 7. Section 544(b) of the Bankruptcy Code allows

the Trustee to “avoid any transfer of an interest of the

debtor in property . . . that is voidable under applicable

law.” 11 U.S.C. § 544(b). The Trustee sought to recover the

$6.9 million cash dividend and the interest paid on the

Notes, asserting a right to recover these sums under

state and federal law governing fraudulent transfers,

Indiana common and corporate law and the law of unjust

enrichment. In addition, the Trustee brought breach of

fiduciary duty claims against the Hirches, Gross, Antonini

and Yih, asserted alter ego/veil piercing claims against

Enodis and Welbilt Holding and argued that Enodis’ claim

should be disallowed or equitably subordinated. The

Trustee also sought to recover the value of the transfers

made in connection with the Hall transaction. The

district court withdrew the reference as to Counts VIII

and IX of the Trustee’s Third Amended Complaint,

which related to the Hall transaction.
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 7

Some of the Trustee’s claims were disposed of on summary judgment. In October 2001, the bankruptcy court

granted summary judgment for the Hirsches and Gross on

the Trustee’s breach of fiduciary duty claims, finding that

the claims were barred by the applicable statute of limitations. On December 9, 2002, the district court granted

summary judgment against Enodis and Welbilt Holding

on the Trustee’s claims arising from the Hall transaction.

The court concluded that the Trustee could recover

$7,369,559.35 as fraudulent transfers pursuant to 11 U.S.C.

§ 548. This amount represented $7 million that Consolidated directed Finova to transfer to Enodis on January 6,

1998 as well as $369,559.35 that Consolidated transferred

to Enodis between May 28, 1997 and December 30, 1997.

The district court also concluded that the Trustee could

recover the $108,500 that Consolidated transferred to

Enodis on January 6, 1998 as a preference under 11 U.S.C.

§ 547.

The bankruptcy court conducted a 22 day trial on the

remaining counts. After hearing testimony from 19 witnesses and weighing the evidence, which included

457 exhibits, the court concluded that the Trustee was

entitled to avoid $30,608,990.69 in transfers from Consolidated to Enodis between 1989 and 1998. This amount

comprised the $6.9 million cash dividend as well as

$23,671,421.32 in interest charged on the Notes between

1989 and 1998. The bankruptcy court found that the

Trustee could recover the entire $30,608,990.69 under

theories of actual fraud and unjust enrichment as well as

under Indiana common law. The court also concluded

that the Trustee could avoid $10,058,731 of those transfers
8 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

as constructively fraudulent conveyances. In addition,

the court disallowed Enodis’ proof of claim. The court

rejected the Trustee’s alter ego/veil piercing claims against

Enodis and Welbilt Holding on standing grounds. The

court awarded the Trustee $12,780,302.10 in prejudgment interest for a total recovery of $43,389,292.79. Enodis

appealed the bankruptcy court’s decision and the

Trustee filed a cross-appeal. The district court affirmed the

bankruptcy court’s proposed findings of fact and conclusions of law in their entirety. Both parties appeal that

decision. We have jurisdiction pursuant to 28 U.S.C.

§ 158(d).

II. Discussion

The parties raise many challenges to the conclusions of

the courts below. We group the issues raised in these

appeals as follows: (1) Enodis’ appeal of the district court’s

avoidance of the 1989 $6.9 million cash dividend and the

interest payments on the Notes; (2) Enodis’ appeal of the

district court’s grant of summary judgment for the Trustee

in connection with the Hall transaction; and (3) the

Trustee’s cross-appeal.

A. Avoidance of interest payments and the $6.9 million

cash dividend

We review the bankruptcy court’s factual findings for

clear error and its legal conclusions de novo. In re Rivinius,

Inc., 977 F.2d 1171, 1175 (7th Cir. 1992). “If the bankruptcy

court’s ‘account of the evidence is plausible in light of the
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 9

record viewed in its entirety,’ we will not reverse its

factual findings even if we ‘would have weighed the

evidence differently.’ ” In re Lifschultz Fast Freight, 132

F.3d 339, 343 (7th Cir. 1997) (quoting Anderson v. City of

Bessemer City, 470 U.S. 564, 573-74 (1985)). Mixed questions

of law and fact are subject to de novo review. Mungo v.

Taylor, 355 F.3d 969, 974 (7th Cir. 2004).

1. The Notes rendered Consolidated insolvent

Enodis’ primary challenge to the avoidance of the

interest payments and the cash dividend is that the courts

below improperly valued the Notes, which led them to

conclude that Consolidated was insolvent after the

Notes were issued in 1989. The bankruptcy court’s

finding that Consolidated was insolvent from the time

the Notes were issued to the date it filed its bankruptcy

petition was central to its conclusion that the Trustee

can recover all transfers made by Consolidated to Enodis

under each theory of recovery asserted by the Trustee.

Enodis does not dispute that at the time the Notes were

issued, the amounts of the principal of the Notes exceeded

Consolidated’s assets. Rather, the parties’ dispute centers

on how to value the Notes for the purposes of determining

Consolidated’s solvency between 1989 and the time the

Notes were cancelled in 1995. The Trustee contends that

the Notes represented liabilities in the amount of

$30 million. For its part, Enodis argues that the restrictive

language on the Notes prohibited Consolidated from

paying any principal on the Notes if doing so would render

Consolidated insolvent. Thus, Enodis contends, the fair
10 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

value of the Notes could not be $30 million unless Consolidated had $30 million in funds available for a shareholder distribution, i.e., unless Consolidated could pay

the full principal on the Notes and remain solvent. We

review the interpretation of the Notes de novo. See Rizzo v.

Pierce & Assocs., 351 F.3d 791, 793 (7th Cir. 2003) (“Interpretation of an unambiguous contract is a question of

law.”).

Under Indiana and federal law, a debtor is insolvent if

the fair value of its debts exceeds the fair value of its

assets. IND. CODE § 32-18-2-12; 28 U.S.C. § 3302. Before the

bankruptcy and district courts, Enodis contended that the

Notes represented contingent liabilities. A contingent

liability is “one that depends on a future event that may

not even occur[ ] to fix either its existence or its amount.”

In re Knight, 55 F.3d 231, 236 (7th Cir. 1995); see also In re

Mazzeo, 131 F.3d 295, 303 (2d Cir. 1997); In re Nicholes,

184 B.R. 82, 88 (9th Cir. BAP 1995); In re McGovern, 122 B.R.

712, 715 (Bankr. N.D. Ind. 1989). Because an entity’s

liability on a contingent debt may never come into being,

a contingent liability is not valued at its full amount when

assessing the entity’s solvency. Rather, a contingent

liability is valued at its face amount multiplied by the

probability that it will become due. In re Xonics Photochemical, Inc., 841 F.2d 198, 200 (7th Cir. 1988).

We agree with the courts below that Consolidated’s

obligation on the Notes was not contingent. The creation

of Consolidated’s debt to Welbilt Holding did not depend

on the occurrence of an extrinsic future event. Consolidated promised to pay a sum certain on a date certain. The
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 11

only question was whether Consolidated would have the

funds available to pay the amount due on the Notes.

Enodis attempts to rely on Delphi Industries, Inc. v. Stroh

Brewery Co., 945 F.2d 215 (7th Cir. 1991), to support its

argument that the Notes were conditional or contingent

liabilities. That case involved several loans that, according

to the parties’ unwritten understanding, were to be paid

out of the cash flow or proceeds from the sale of a company. We considered whether the loans could be

breached if the funds from which they were to be paid

did not exist and concluded that they could be breached.

Id. at 217-18. Rather than bolstering Enodis’ argument,

Delphi Industries supports our conclusion that a limitation

on the source from which an obligation can be paid does

not render that obligation contingent.

On appeal, Enodis attempts to reframe the issue, asserting that the restrictive language on the Notes constitutes

a condition precedent that, if unsatisfied, would have

nullified Consolidated’s obligation. This argument too is

unavailing. “A condition precedent is either a condition

which must be performed before the agreement of the

parties becomes binding, or a condition which must be

fulfilled before the duty to perform an existing contract

arises.” Barrington Mgmt. Co. v. Paul E. Draper Family Ltd.

P’ship, 695 N.E.2d 135, 141 (Ind. Ct. App. 1998). In this

case, Consolidated’s obligation on the Notes arose when

it executed and delivered them. By their terms, the Notes

are unconditional promises to pay the principal amount

on a date certain as well as interest accruing quarterly.

The Notes provided that they would “become immediately due and payable at the option of the payee” upon
12 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

the occurrence of certain specified events, including

Consolidated’s failure to make an interest payment. If

the Notes were not paid in full when due, Consolidated

was bound “to pay all costs and expenses of collection.”

Interpreting each Note as a whole, Beanstalk Group, Inc. v.

AM Gen. Corp., 283 F.3d 856, 860 (7th Cir. 2002), we

agree with the courts below that the Notes created unconditional, noncontingent obligations on the part of Consolidated. Although we believe this conclusion emerges

from the language of the Notes themselves, id. at 859, we

note that Enodis charged Consolidated interest pursuant

to the Notes and Consolidated performed its obligation

to pay that interest, indicating that the parties themselves

did not intend Consolidated’s obligation on the Notes

to be subject to the fulfillment of a condition at some

future date.

Enodis also argues for the first time on appeal that the

Notes were essentially declared but unpaid dividends

and should be treated as other courts have treated stock

redemption obligations or accrued but unpaid dividends.

In general, arguments not raised before the district court

are waived. Prymer v. Ogden, 29 F.3d 1208, 1215 (7th Cir.

1994). Further, this case is distinguishable from the

cases cited by Enodis because Consolidated delivered the

Notes, which by their terms included express promises

to pay the principal amount and interest, in payment of

the dividends it declared. In addition, in one case on

which Enodis seeks to rely, In re Joshua Slocum Ltd., 103

B.R. 610 (Bankr. E.D. Pa. 1989), the court adopted the

debtor’s treatment of redeemable stock as stockholders’

equity and concluded that the redemption value of the
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 13

stock was not required to be treated as debt in determining solvency. Here, as in In re Joshua Slocum, the courts

below accepted the parties’ accounting treatment of the

Notes as well as expert testimony as to how the Notes

should be valued. In sum, we find that the courts below

properly included the full value of the Notes as liabilities in their solvency analyses.

2. Consolidated’s solvency after the Notes were

cancelled

The Notes were cancelled in September 1995 and prior

to their cancellation, they rendered Consolidated insolvent.

We turn our attention to the bankruptcy court’s solvency

finding after the Notes were cancelled. In order to conclude that Consolidated was insolvent after the Notes

were cancelled, the bankruptcy court had to find that the

fair value of Consolidated’s liabilities continued to

exceed its assets. In its proposed findings of fact and

conclusions of law, the bankruptcy court did not specifically value Consolidated’s assets or liabilities after the

Notes were cancelled. Rather, it stated simply that “[b]y

the time the dividend notes were cancelled in 1995,

the contingent claims had become so numerous, so potentially expensive and so severe that—even after being

discounted for their contingent nature—they were sufficient to render Consolidated insolvent.” Appellants’ App.

at 38.

On appeal, Enodis argues that the bankruptcy court

erred by failing to estimate Consolidated’s contingent

liabilities—a catch-all term used by the court that
14 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

includes product liability and warranty claims. In Xonics,

we stated that it is necessary to discount a contingent

liability “by the probability that the contingency will

occur and the liability become real.” 841 F.2d at 200. It

“must be reduced to its present, or expected, value before

a determination can be made whether the firm’s assets

exceed its liabilities.” Id. We reaffirmed the importance

of discounting analysis in Covey v. Commercial Nat’l Bank

of Peoria, 960 F.2d 657 (7th Cir. 1992), noting that

“[d]iscounting a contingent liability by the probability

of its occurrence is good economics and therefore good

law.” Id. at 660. While “[a]bsolute precision . . . is not

required,” a bankruptcy court must calculate an appropriately discounted value for contingent liabilities. In re

Advanced Telecomm. Network, Inc., 490 F.3d 1325, 1336

(11th Cir. 2007).

In the present case, the bankruptcy court did not

value the contingent liabilities, merely comparing them

to “an impending storm that initially looks small when it

is on a distant horizon but grows ever darker and more

dangerous as it approaches.” Appellants’ App. at 38.

This description, although imaginative, does little to

illuminate our understanding of the claims’ value. The

district court accepted the bankruptcy court’s finding.

Neither court placed a value on the claims, performed

the required discounting analysis or indicated that it

relied on any record evidence that purported to perform

the required discounting.

The Trustee urges us to conclude that the bankruptcy

court followed Xonics based on the court’s statement
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 15

that Consolidated’s contingent liabilities rendered the

company insolvent “even after being discounted for

their contingent nature.” Id. But Federal Rule of Civil

Procedure 52(a), made applicable to bankruptcy proceedings by Bankruptcy Rule 7052, requires a bankruptcy

court to make findings that supply a clear understanding

of the grounds underlying the court’s decision. See

Andre v. Bendix Corp., 774 F.2d 786, 801 (7th Cir. 1985)

(“Rule 52(a) necessitates that the findings of fact on the

merits include as many of the subsidiary facts as are

necessary to disclose to the reviewing court the steps by

which the trial court reached its ultimate conclusion

on each factual issue.”) (quoting Denofre v. Transp. Ins.

Rating Bureau, 532 F.2d 43, 45 (7th Cir. 1976) (per curiam)).

Although Rule 52(a) does not require a court to discuss

the relevance and importance of each piece of evidence,

Mozee v. Jeffboat, Inc., 746 F.2d 365, 370 (7th Cir. 1984), it

does require a court to clearly state the factual basis for

its ultimate conclusion. Kelley v. Everglades Drainage

Dist., 319 U.S. 415, 422 (1943). In this case, the issue of

solvency was highly contested by the parties and the

absence of adequate subsidiary findings prevents us from

being able to conduct a meaningful review as to whether

the court’s conclusion that Consolidated was insolvent

after 1995 is clearly erroneous. The Trustee seeks to rely

on the testimony of its expert and on Consolidated’s

internal financial statements to support the conclusion

that Consolidated was insolvent after the Notes were

cancelled, but it is not our station to weigh the evidence

and make the findings that are necessary to support

the decision. Mozee, 746 F.2d at 370; In re Cesari, 217 F.2d
16 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

The Indiana and federal statutes provide that in the case of 2

actual fraud, a cause of action does not begin to accrue until

the transfer has been or could reasonably have been discovered.

IND. CODE § 32-18-2-19(1)(B); 28 U.S.C. § 3306(b)(1). The bankruptcy court concluded that Consolidated’s creditors could

not have discovered the transfers when they occurred because

the transfers only appeared on Consolidated’s internal financial statements and in inter-company memoranda directing

that the transfers be made. Thus, the bankruptcy court tolled

the statute of limitations to allow the Trustee to recover all of

the transfers made between 1989 and 1998.

424, 428 (7th Cir. 1954). Remand is required for further

subsidiary findings that indicate the factual basis for

the bankruptcy court’s solvency determination after the

Notes were cancelled in 1995.

3. The transfers made prior to the cancellation of the

Notes are recoverable as actual fraudulent transfers

The lower courts found that the Trustee could avoid all

transfers made pursuant to the Notes between 1988 and

1998 as well as the $6.9 million cash dividend under a

theory of actual fraud. A finding of fraudulent intent is a 2

finding of fact that we review for clear error. See In re

Acequia, Inc., 34 F.3d 800, 805 (9th Cir. 1994); In re Jeffrey

Bigelow Design Group, Inc., 956 F.2d 479, 481 (4th Cir. 1992);

Springmann v. Gary State Bank, 124 F.2d 678, 681 (7th Cir.

1941). It is not our station to review factual issues de

novo, and we will reverse the findings of the bankruptcy

court only if we are “left with the definite and firm con-
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 17

viction that a mistake has been committed.” Anderson, 470

U.S. at 573 (quoting United States v. United States Gypsum

Co., 333 U.S. 364, 395 (1948)). “Where there are two permissible views of the evidence, the factfinder’s choice between them cannot be clearly erroneous.” Id. at 574.

Under Indiana law, present and future creditors can

avoid transfers that were made “with actual intent to

hinder, delay, or defraud any creditor of the debtor.” IND.

CODE § 32-18-2-14. “Proof of fraudulent intent need not

be made by direct evidence under Indiana law” and can

be inferred from the presence of certain “badges of

fraud.” United States v. Denlinger, 982 F.2d 233, 236 (7th

Cir. 1992). These badges include a transfer of property

that renders the debtor insolvent or greatly diminishes

his estate; a transaction whereby the debtor retains the

benefit of the transferred property; a transfer that is

made while litigation is pending; secret transactions

outside the usual mode of business; a transfer conducted

in a manner different from ordinary methods; and a

transfer made in exchange for little or no consideration.

Otte v. Otte, 655 N.E.2d 76, 81 (Ind. Ct. App. 1995). Although “[n]o one badge of fraud constitutes a per se

showing of fraudulent intent,” Buffington v. Metcalf, 883

F. Supp. 1198, 1200 (S.D. Ind. 1994), the presence of a

number of badges of fraud “is said to ‘create . . . an overwhelming presumption of fraud’ or to ‘raise . . . a strong

inference of fraudulent intent.’ ” Denlinger, 982 F.2d at 236

(citations omitted). Once a Trustee establishes the presence

of a number of badges of fraud, the burden shifts to the

debtor to provide a legitimate purpose for the challenged
18 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

transfers. In re Acequia, 34 F.3d at 806; Jones v. Cent. Nat’l

Bank of St. Johns, 547 N.E.2d 887, 890-91 (Ind. Ct. App.

1989), superseded by statute on other grounds as recognized

by Gipperich v. State, 658 N.E.2d 946, 950 (Ind. Ct. App.

1995).

In this case, the bankruptcy court found the presence of

several badges of fraud: the transfers were made to an

insider; they occurred when Consolidated was being

sued and threatened with suit; Consolidated did not

receive reasonably equivalent value for the transfers;

Consolidated was insolvent when the transfers were

made; the transfers were made outside the normal mode

of doing business; the transfers were secret; and Consolidated was left without the assets needed to pay its

debts.

Enodis attacks the bankruptcy court’s actual fraud

conclusion on several grounds. First, it asserts that the

court misapplied the badges of fraud. Enodis contends

that the bankruptcy court erred in finding that the

transfers made pursuant to the Notes were concealed

and made outside the usual mode of doing business.

Although we do not dispute Enodis’ assertion that a

dividend may be paid in the form of a note, the Notes

in the present case were issued for value in excess of

Consolidated’s assets. See Litton Indus., Inc. v. Comm’r, 89

T.C. 1086, 1099 (Tax Ct. 1987) (where company had earnings and profits in excess of $30 million, a $30 million

distribution in the form of a note constituted a dividend).

In addition, the bankruptcy court found that the

$6.9 million dividend paid in February 1989 was never
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 19

declared by Consolidated’s board of directors. Enodis

contends that this conclusion is clearly erroneous because

a former director of Consolidated testified that the dividend was declared at a board meeting. But it is for the

bankruptcy court to assess the credibility of witnesses

and weigh evidence, and we will not second guess the

court’s resolution of conflicting evidence. See Anderson, 470

U.S. at 575. Enodis also faults the bankruptcy court for

stating that “the transfers were secret in the sense that

they were discernable only by reviewing bookkeeping

entries concerning inter-company transfers,” arguing that

Consolidated was privately-held and had no duty to

publicly disclose its finances. Appellants’ App. at 41. But

the court also noted that creditors who inquired about

Consolidated’s “finances would have been given only

financial information for [Enodis], which did not reflect

any information concerning the transfers from Consolidated.” Id. at 43. The bankruptcy court’s findings thus

support its conclusion that the transfers were secret and

outside the usual mode of doing business.

Enodis also contends that there was insufficient evidence to support the conclusion that the transfers were

made at a time when Consolidated was being sued or

threatened with suit. Whether a transfer is fraudulent

“must be judged by the circumstances existing at the time

of the conveyance and not by subsequent events having

no actual connection with the transaction.” United States v.

Smith, 950 F. Supp. 1394, 1404 (N.D. Ind. 1996) (citing

Stamper v. Stamper, 83 N.E.2d 184 (Ind. 1949); Deming

Hotel Co. v. Sisson, 24 N.E.2d 912 (Ind. 1940)). Contrary to

Enodis’ assertions, the bankruptcy court did not base its

finding of the litigation badge of fraud on the CPSC and
20 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

Enodis also contends that the courts below used improper 3

hindsight analysis in making their fraudulent intent determinations. This argument reiterates Enodis’ points relating to the

litigation badge of fraud and we reject it for the same reasons

we reject its challenges to the litigation badge of fraud.

California class action lawsuit, which occurred after 1992.

The court heard testimony from Consolidated’s former

president, Richard Weber, that Consolidated began to

see an increase in warranty and litigation claims in the

mid-1980s and that he notified Consolidated’s other

directors about these claims. The court’s reference to

lawsuits against Consolidated by 1990 shows that the

possible furnace-related claims against Consolidated that

existed when the Notes and $6.9 million dividend were

paid were more than the hypothetical lawsuits to which

every corporation may be subject. It was reasonable for

the court to infer from Consolidated’s awareness of

serious problems with its furnaces and the existence of

lawsuits following fast on the heels of the Notes’

being issued that Consolidated knew it faced significant

furnace-related claims when it issued the Notes. As for

Enodis’ contention that the furnace-related liabilities

were not viewed as a significant problem and that Consolidated had insurance to cover product liability claims,

we decline Enodis’ invitation to reweigh the evidence and

testimony on this point. See Anderson, 470 U.S. at 574-75.3

We also reject Enodis’ challenge to the bankruptcy

court’s finding that the transfers left Consolidated

without assets to pay its debts. Enodis argues that any
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 21

finding of actual fraud is negated by a good faith belief

on the part of Consolidated’s management as to the company’s financial future. But the Trustee elicited testimony

from Weber that Consolidated was unable to make expenditures that were crucial to its prospective economic

stability because it transferred all of its cash to Enodis

in the form of interest payments, undermining the

claim that management believed in good faith that Consolidated would continue to be profitable into the 1990s.

Enodis argues that the lower courts’ conclusion that

Consolidated did not receive reasonably equivalent value

in exchange for the interest paid on the Notes is inconsistent with their conclusion that the Notes rendered

Consolidated insolvent. Under Indiana law, “[v]alue is

given for a transfer or an obligation if, in exchange for

the transfer or obligation, property is transferred or an

antecedent debt is secured or satisfied.” IND. CODE § 32-18-

2-13(a). The bankruptcy court concluded that although

in general interest paid on an obligation constitutes

reasonably equivalent value, because the Notes were

issued as dividends, and because dividends do not return

value to the company, the Notes and the interest paid on

the Notes lacked reasonably equivalent value. We agree

with Enodis that there is inconsistency in the bankruptcy

court’s solvency and reasonably equivalent value conclusions. Since the court treated the Notes as contractual

obligations of Consolidated, Consolidated was obligated

to pay the interest that accrued on the Notes. Consolidated’s payment of the accrued interest constituted

“dollar-for-dollar forgiveness of a contractual debt,” which
22 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

is “reasonably equivalent value.” In re Carrozzella &

Ricardson, 286 B.R. 480, 491 (D. Conn. 2002).

Despite this inconsistency, we affirm the court’s

actual fraud finding based on the presence of the other

badges of fraud. The transfers were to an insider at a

time when Consolidated was insolvent and facing mounting furnace-related liabilities. They were concealed from

creditors and were outside the normal mode of doing

business. See, e.g., Brandon v. Anesthesia & Pain Mgmt.

Assocs., Ltd., 419 F.3d 594, 600 (7th Cir. 2005) (criticizing

district court for concluding that five badges of fraud

were insufficient to support liability); Denlinger, 982 F.2d

at 236 (presence of four badges of fraud created presumption of fraudulent intent). The transfers occurred to ensure

that Enodis received the bulk of Consolidated’s cash

during a time when Consolidated was likely going to

be facing increasing warranty and liability claims related

to its furnaces. Although another court might weigh the

evidence differently, we cannot say that the bankruptcy court’s finding of actual fraudulent intent is

clearly erroneous.

Enodis raises several other challenges to the lower

courts’ actual fraud analysis, which we will address briefly.

It argues that the courts below improperly based their

rulings on Enodis’ intent rather than on Consolidated’s

intent. But the bankruptcy court’s recognition of the

sizable benefits Enodis derived from the transfers is

insufficient to prove that the court failed to consider

Consolidated’s intent. Nor do we agree with Enodis that

evidence adduced at trial shows the bankruptcy court’s
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 23

fraudulent intent finding to be implausible “in light of the

record viewed in its entirety.” Anderson, 470 U.S. at 574; see

also Malachinski v. Comm’r, 268 F.3d 497, 506 (7th Cir. 2001).

Enodis also contends that the lower courts’ determination

that Messrs. Antonini and Yih did not act recklessly or

willfully in allowing the transfers to continue after

they joined Consolidated’s board of directors in 1990 and

1991 undermines the courts’ actual fraud findings. It

argues that because corporations can act only through

individuals, the absence of intentional misconduct on the

part of Antonini and Yih negates the possibility that

Consolidated effected the transfers with fraudulent

intent. But Antonini and Yih were not directors when the

Notes were issued so the fact that they may have acted

negligently, as the bankruptcy court suggested, in allowing

Consolidated to continue making interest payments on

the Notes does not negate the lower courts’ determination that the Notes were devised as a scheme to hinder,

delay or defraud Consolidated’s creditors.

Finally, Enodis contends that the courts below misconstrued the purpose of the Notes, asserting that they

represented a way for Consolidated to distribute money

to its shareholder in a way that would result in tax savings. The fact that Consolidated saved $465,000 in state

income taxes by making the distributions as interest

payments does not negate the court’s determination that

Consolidated intended to hinder, delay or defraud its

creditors by making the transfers. Further, the bankruptcy

court found that Consolidated transferred $9.5 million

more than was necessary to save on its state income

taxes, a finding that Enodis does not dispute. We affirm

the judgment of the courts below with respect to the
24 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

The lower courts concluded that the Trustee could avoid over 4

$10 million in transfers as constructively fraudulent conveyances. Constructive fraud requires the trustee to show that the

debtor transferred its property within the statutory look-back

period, that it did not receive reasonably equivalent value in

exchange for the transfer and that the debtor was insolvent at

the time of or as a result of the transfer. IND. CODE. § 32-18-2-15;

28 U.S.C. § 3304. Our conclusion that the lower courts’ solvency

analysis is inconsistent with their conclusion that Consolidated

did not receive reasonably equivalent value in exchange for the

interest payments leads us to conclude that the courts below

erred in finding that the Trustee could avoid the transfers as

constructively fraudulent. This does not affect our conclusion

that the Trustee can recover the transfers since they are recoverable as actually fraudulent transfers. Because we conclude that

the transfers are recoverable as actually fraudulent, we need not

discuss whether they could also be recovered under the law of

unjust enrichment or Indiana common law, as the courts below

held.

$6.9 million cash dividend and transfers made pursuant

to the Notes before the Notes were cancelled in 1995.4

B. Hall transaction

The Trustee sought to avoid transfers that Consolidated

made to Enodis within one year of its bankruptcy filing

under 11 U.S.C. §§ 547 and 548. The district court withdrew

the reference on these claims. Under § 548, the Trustee

sought to recover $7,000,000 that Consolidated transferred

to Enodis in connection with Hall’s purchase of Consoli-
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 25

The Trustee also argued in the alternative that the $7,000,000 5

transfer should be avoided as a preference under § 547. Because

the court concluded that the transfer could be avoided pursuant

to § 548, it never reached the Trustee’s § 547 argument.

dated in January 1998. The Trustee also alleged that 5

between May 28, 1997 and December 30, 1997, Consolidated transferred $15,815,582.36 into accounts controlled

by Enodis. During this period, Enodis made transfers

from its accounts on Consolidated’s behalf, and the

Trustee sought to recover $369,559.35, the difference

between Consolidated’s deposits and the amount Enodis

spent on its behalf. In order to prevail on a fraudulent

transfer claim under § 548(a), a trustee must establish

that the debtor transferred an interest in property within

one year of the petition date, that the debtor received

less than reasonably equivalent value in exchange for

the transfer and that the debtor was insolvent or was

rendered insolvent as a result of the transfer. 11 U.S.C.

§ 548(a)(1)(B).

The Trustee also sought to avoid Consolidated’s January

6, 1998 transfer of $108,500 to Enodis as a preference

under § 547. A trustee may avoid a transfer under § 547 if

it (1) was made to or for the benefit of a creditor, (2) was

for or on account of an antecedent debt, (3) was made

while the debtor was insolvent, (4) was made between

ninety days and one year before the petition was filed

and (5) allowed the creditor to receive more than it otherwise would have. 11 U.S.C. § 547(b).

Both parties moved for summary judgment on these

claims and the court granted judgment for the Trustee.
26 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

Summary judgment is appropriate where, viewing the

evidence and construing all reasonable inferences in

favor of the non-moving party, the court concludes that

there is no genuine issue for trial. Jordan v. Summers, 205

F.3d 337, 341-42 (7th Cir. 2000). “A genuine issue for trial

exists only when a reasonable jury could find for the party

opposing the motion based on the record as a whole.”

Roger v. Yellow Freight Sys., Inc., 21 F.3d 146, 149 (7th

Cir. 1994). We review the grant of summary judgment

de novo. Moser v. Ind. Dep’t of Corr., 406 F.3d 895, 900 (7th

Cir. 2005).

The district court concluded that when Consolidated

transferred money to Enodis in connection with the Hall

transaction several months before Consolidated filed

for bankruptcy, it was insolvent. In re Consolidated Indus.

Corp., 292 B.R. 354, 359-61 (N.D. Ind. 2002). The court also

concluded that Consolidated received no value as a

result of the transaction. Id. at 359. Therefore, the court

concluded, the Trustee could avoid the $7 million and

the $369,559 amounts under § 548. The court also determined that the $108,500 transfer from Consolidated

to Enodis in January 1998 was a voidable preference

under § 547.

On appeal, Enodis challenges the court’s determination

that Consolidated was insolvent at the time of the transfers, claiming that the district court improperly weighed

evidence in granting summary judgment for the Trustee.

We agree. In concluding that Consolidated was insolvent,

the court relied on Consolidated’s internal financial

statements. Id. at 360. In opposing summary judgment,
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 27

Enodis proffered a draft audit as evidence that Consolidated was solvent prior to the Hall transaction. The

district court rejected the audit’s evidentiary value, stating

that “[a]n uncompleted draft is not better evidence of

the fair value than the statements prepared by Consolidated and sworn to by the highest manager of accounting

of Consolidated.” Id. at 361. Enodis also submitted a

report by its expert, Keith Gardner. The court noted that

inconsistencies existed between Gardner’s deposition

testimony and the conclusion he reached in his expert

report and appears to have disregarded his report. Id.

at 360.

On appeal, the Trustee defends the district court’s

solvency ruling, asserting that the draft audit had not

been authenticated and was excludable as unreliable

hearsay evidence. But the Trustee did not make this

argument before the district court and thus has waived it.

Zayre Corp. v. S.M. & R. Co., 882 F.2d 1145, 1150 (7th Cir.

1989) (“An evidentiary objection not raised in the

district court is waived on appeal . . . and this rule holds

as true for a summary judgment proceeding as it does for

a trial.”) (internal citation omitted). The Trustee also

argues that remand would be pointless because during

the trial before the bankruptcy court, the author of the

draft audit testified that if he had completed it, it would

have shown that Consolidated was insolvent. When we

review a district court’s grant of summary judgment, our

review is limited to the information that was before the

court when it made its ruling. Hildebrandt v. Ill. Dep’t of

Natural Res., 347 F.3d 1014, 1024 (7th Cir. 2003) (citing
28 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

Harrods Ltd. v. Sixty Internet Domain Names, 302 F.3d 214,

242 (4th Cir. 2002); Chapman v. AI Transp., 229 F.3d 1012,

1028 (11th Cir. 2000)). Thus, we will not consider the

testimony that was elicited at trial. With respect to the

district court’s treatment of the defendant’s expert’s report,

the court appears to have discredited his report in part

because of inconsistencies with his deposition testimony.

But credibility determinations are not a matter for summary judgment. Washington v. Haupert, 481 F.3d 543, 550

(7th Cir. 2007). Viewing the evidence in the light most

favorable to Enodis, as we must on summary judgment,

we conclude that Enodis adduced evidence sufficient to

raise a genuine issue of material fact as to Consolidated’s

solvency in the year prior to the filing of the bankruptcy

petition.

Enodis contends that the district court should have

entered summary judgment for Enodis on the fraudulent

transfer issue because Consolidated received reasonably

equivalent value in exchange for the challenged transfers

and that we should enter judgment in its favor. Enodis

faults the district court for failing to view Consolidated’s

transfers to Enodis and transfers made by Enodis as

part of a single, integrated transaction in which Consolidated received reasonably equivalent value in exchange

for the Hall transaction transfers. But Enodis did not

make this argument before the district court and we will

not consider it for the first time on appeal. See Republic

Tobacco v. N. Atl. Trading Co., 381 F.3d 717, 728 (7th Cir.

2004); 10A WRIGHT, MILLER & KANE, FEDERAL PRACTICE

AND PROCEDURE § 2716 (3d ed. 1998). Moreover, the Trustee
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 29

We note that the district court purported to avoid the same 6

$369,559.35 transfer twice—once in affirming the bankruptcy

court’s conclusion that the Trustee could avoid transfers made

between 1989 and 1998, and once in granting summary judgment for the Trustee on his § 548 claims. The Trustee is entitled

to recover this amount once and the district court should ensure

that this amount is not awarded twice again following remand.

raised alternative theories of recovery, namely, that he

could recover the transfers as preferences or as actual

fraudulent transfers. The district court did not address

these theories, precluding entry of summary judgment for

Enodis. Chicago College of Osteopathic Med. v. George A.

Fuller Co., 719 F.2d 1335, 1340-41 (7th Cir. 1983). We

reverse the court’s entry of summary judgment for

the Trustee and remand for trial as to the Trustee’s preference and fraudulent transfer claims.6

C. Trustee’s Cross-Appeal

1. Alter ego/veil piercing claims

The Trustee brought alter ego/veil piercing claims against

Enodis and Welbilt Holding, seeking a judgment that

the Trustee could collect from Enodis and Welbilt Holding

any amounts needed to satisfy Consolidated’s creditors.

The bankruptcy court concluded that the Trustee lacked

standing under §§ 541(a) or 544(a) of the Bankruptcy

Code to bring these claims. On appeal from the bankruptcy court, the district court concluded that the

Trustee did in fact have standing to bring alter ego/veil

piercing claims against Enodis and Welbilt Holding under
30 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

The district court affirmed the bankruptcy court’s ruling that 7

the Trustee lacked standing to assert alter ego/veil piercing

claims under § 544(a). The Trustee does not appeal this determination.

§ 541. However, the court stated that it agreed with the 7

bankruptcy court’s “ultimate legal conclusion that the

Trustee’s claims fail under that section.” Appellants’ App.

at 87. The Trustee contends that the district court erred

in concluding that the Trustee was not entitled to judgment on his alter ego/veil piercing claims by purporting

to adopt a ruling that the bankruptcy court never made

and by failing to review de novo the merits of the Trustee’s

claims.

In order to prevail on an alter ego/veil piercing claim

under Indiana law, a court will consider whether the

plaintiff has adduced evidence showing:

(1) undercapitalization; (2) absence of corporate records; (3) fraudulent representation by the corporation’s shareholders or directors; (4) use of the corporation to promote fraud, injustice, or illegal activities;

(5) payment by the corporation of individual obligations; (6) commingling of assets or affairs; (7) failure

to observe required formalities; or (8) other shareholder acts or conduct ignoring, controlling or manipulating the corporate form.

Nat’l Soffit & Escutcheons, Inc. v. Superior Sys., Inc., 98 F.3d

262, 265-66 (7th Cir. 1996) (citing Aronson v. Price, 644

N.E.2d 864, 867 (Ind. 1994)). As we have already noted,

Rule 52(a) requires that the court in a bench trial set forth

“findings, stated either in the court’s opinion or
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 31

separately, which are sufficient to indicate the factual

basis for the ultimate conclusion.” Rucker v. Higher Educ.

Aids Bd., 669 F.2d 1179, 1183 (7th Cir. 1982) (citation

omitted). Doing so serves two purposes: “(1) to provide

appellate courts with a clear understanding of the basis of

the trial court’s decision, and (2) to aid the trial court in

considering and adjudicating the facts.” Bartsh v. Nw.

Airlines, Inc., 831 F.2d 1297, 1304 (7th Cir. 1987).

In the present case, the district court’s opinion does

not indicate the factual basis for its conclusion that the

Trustee has not presented evidence to support his alter

ego/veil piercing claims. Although “findings on every

issue presented in a case are unnecessary if the trial court

has found such essential facts as lay a basis for the decision,” In re Lemmons & Co., 742 F.2d 1064, 1070 (7th Cir.

1984), in the present case, the courts below did not

include any factual findings relating to the merits of the

Trustee’s alter ego/veil piercing claims. The decision to

disregard the corporate form is a “highly fact-sensitive

inquiry,” Winkler v. V.G. Reed & Sons, Inc., 638 N.E.2d 1228,

1232 (Ind. 1994), and in light of the district court’s

cursory treatment of the Trustee’s claims, we are unable to

discern the basis of the court’s “ultimate conclusion on

each factual issue.” Denofre, 532 F.2d at 45. Thus, we

vacate and remand with directions to the district court

to comply with Rule 52(a).

2. Judgment against Welbilt Holding

The Trustee argues that the district court should have

entered judgment against Welbilt Holding under 11
32 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

U.S.C. § 550(a)(1), which allows a trustee to recover

transfers that have been avoided “from the initial transferee of such transfers or the entity for whose benefit the

transfers were made.” The district court declined to

enter judgment against Welbilt Holding on the grounds

that judgment in the entire amount had been entered

against Enodis and that 11 U.S.C. § 550(d) entitled the

Trustee to only a single satisfaction of the judgment

amount. Section 550(d) provides that “[t]he trustee is

entitled to only a single satisfaction under subsection

(a) of this section.” The Trustee contends that the district

court misconstrued § 550(d) and that although § 550(d)

precludes the Trustee from collecting more than once,

it does not prevent a court from entering judgment

against more than one party. There is some support for

the Trustee’s position. As defined in the Bankruptcy

Code, “or” is not exclusive. See 5 COLLIER ON BANKRUPTCY

¶ 550.02[4] at 550-16 (Alan N. Resnick et al., eds., 15th ed.

rev. 2007) (citing 11 U.S.C. § 102(5)). “Thus, the trustee

can recover from any combination of the entities mentioned [in § 550] subject to the limitation of a single satisfaction.” Id. Even if the district court erred, however, in

order for the Trustee to be entitled to judgment against

Welbilt Holding, he must establish that Welbilt Holding

was an entity for whose benefit the transfers were made.

The bankruptcy court found that “[t]he record does not

indicate that any of Consolidated’s money went to

[Welbilt] Holding. . . . None of the transfers from Consolidated to [Enodis] were advantageous to [Welbilt]

Holding.”Appellants’ App. at 50. The Trustee does not

challenge that finding, arguing that because the transfers
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 33

were actually owed to Welbilt Holding, it is an entity

for whose benefit they were made.

Although a few courts have found that an entity need

not actually obtain a benefit in order to be an entity for

whose benefit a transfer was made, see, e.g., In re Richmond

Produce Co., 118 B.R. 753 (Bankr. N.D. Cal. 1990), requiring

that the entity actually receive a benefit from the

transfer is consistent with the “well-established rule that

fraudulent transfer recovery is a form of disgorgement,

so that no recovery can be had from parties who participated in a fraudulent transfer but did not benefit from it.”

In re McCook Metals, L.L.C., 319 B.R. 570, 591 (Bankr. N.D.

Ill. 2005); see also In re Meredith, 527 F.3d 372, 376 (4th Cir.

2008) (“[A] person must actually receive a benefit from

the transfer in order to be an ‘entity for whose benefit’

the transfer was made.”); In re Compton Corp., 831 F.2d 586,

595 (5th Cir. 1987). Imposing liability on a nontransferee

based on the debtor’s intent to benefit him, without

requiring proof that the nontransferee actually benefitted

from the transfer, “bears no relationship to the theory of

cancellation that historically underlies avoidance remedies.” Larry Chek & Vernon O. Teofan, The Identity and

Liability of the Entity for Whose Benefit a Transfer Is Made

under Section 550(a): An Alternative to the Rorschach Test,

4 J. BANKR. L. & PRAC. 145, 156 (1995). Because Welbilt

Holding did not derive a benefit from the transfers, we

affirm the district court’s refusal to enter judgment

against Welbilt Holding.
34 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

It is unclear whether the adverse domination doctrine applies 8

in Indiana, City of E. Chi. v. E. Chi. Second Century, Inc., 878

(continued...)

3. Hirsch defendants

The courts below concluded that the Trustee’s claims

against defendants Hirsch, Hirsch and Gross were barred

by Indiana’s two-year statute of limitations on breach of

fiduciary duty claims and granted their motion for summary judgment. Under Indiana law, a claim for breach

of fiduciary duty is subject to the two-year statute of

limitations that applies to tort claims for injury to personal

property. Shriner v. Sheehan, 773 N.E.2d 833, 846 (Ind. Ct.

App. 2002). The Trustee filed this action on May 10, 1999.

Although the filing date was almost nine years after the

Hirsch defendants left Consolidated’s board, the Trustee

argues that the two-year limitations period should have

been tolled under the adverse domination doctrine. The

doctrine of adverse domination allows the tolling of the

statute of limitations

where the entity [to whom the cause of action belonged] is controlled by or dominated by wrongdoers.

The statute of limitations begins to run again when

the wrongdoers lose control of the entity. The

rationale behind the adverse domination doctrine is

premised upon the principle that officers and directors

who have harmed the entity cannot be expected to

take legal action against themselves.

Resolution Trust Corp. v. O’Bear, Overholser, Smith & Huffer,

840 F. Supp. 1270, 1284 (N.D. Ind. 1993) (citation omitted)

(alteration in original). The courts below concluded 8
Nos. 06-4178, 06-4179, 06-4180 & 06-4181 35

(...continued) 8

N.E.2d 358, 381 n.22 (Ind. Ct. App. 2007), although one court has

assumed that it does. Resolution Trust Corp., 840 F. Supp. at 1284

(basing its decision on the “supposition” that an Indiana court

would apply the adverse domination doctrine to toll the statute

of limitations until the defendants no longer dominated the

board of directors). We assume for the purposes of this discussion that the doctrine was available to the Trustee.

that Marion Antonini, who replaced Hirsch, Hirsch and

Gross in October 1990, was “a disinterested outsider

from the standpoint of any wrong which his predecessors

may have committed.” Appellants’ App. at 90. Thus, any

claim the Trustee had against the Hirsch defendants

accrued in October 1990 and the applicable statute of

limitations required Consolidated to bring its breach of

fiduciary duty claims against the Hirsch defendants by

October 1992.

When the Hirsch defendants moved for summary

judgment, they asked the court to accept the facts in the

Trustee’s Third Amended Complaint as true. In the Third

Amended Complaint, the Trustee alleged that Enodis

controlled the composition of Consolidated’s board of

directors through January 1998. But this allegation is

insufficient to create a genuine issue of material fact as to

whether the Hirsches exerted any control over Consolidated after they left the board such that they would be in

a position to prevent the company from suing them for

breach of fiduciary duty. Celotex v. Catrett, 477 U.S. 317, 331

(1986). We affirm the bankruptcy court’s conclusion that

the statute of limitations for the Trustee’s claims against
36 Nos. 06-4178, 06-4179, 06-4180 & 06-4181

the Hirsch defendants began running in 1990 and had

lapsed by the time the bankruptcy petition was filed

in 1998.

III. Conclusion

To summarize, we affirm the district court’s judgment

allowing the Trustee to recover the $6.9 million dividend

and transfers made pursuant to the Notes prior to the

cancellation of the Notes in 1995. We remand for further

findings on the court’s solvency determination after the

Notes were cancelled. We reverse and remand the court’s

entry of summary judgment for the Trustee on the

transfers related to the Hall transaction. We vacate the

judgment against the Trustee on his alter ego/veil

piercing claims and remand for further proceedings

consistent with this opinion. Finally, we affirm the district

court’s refusal to enter judgment against Welbilt Holding

and its entry of summary judgment for the Hirsch defendants. AFFIRMED in part, REVERSED in part, VACATED in

part and REMANDED with directions. Each party shall

bear its own costs of these appeals.

9-2-08