Opinion ID: 4553073
Heading Depth: 2
Heading Rank: 1

Heading: The alleged asset-plundering scheme

Text: On appeal from the District Court’s dismissal, we accept the complaint’s allegations as true: Several years ago, Artesanias Hacienda Real S.A. de C.V. sold wares to Wilton Armetale, Inc. But Wilton never paid for them. So Artesanias sued Wilton and its then-owner, who had guaranteed the purchase. Artesanias obtained a judgment for around $900,000 3 and all the owner’s shares in Wilton, which he transferred to an affiliate of Artesanias. Soon after, Artesanias recorded its judgment as a lien on a valuable warehouse that Wilton owned. Once Artesanias took over Wilton, it got access to privileged documents held by Leisawitz Heller, a law firm that had represented Wilton and its previous owner. Those documents showed that Wilton was insolvent and that its previous owner and North Mill Capital, another creditor had plotted with Leisawitz Heller to plunder the company’s remaining assets. Among other things, the previous owner, Leisawitz Heller, and North Mill had engineered a sale of Wilton’s non-realestate assets to an entity that North Mill chose, even though that entity paid hundreds of thousands of dollars less than what other bidders had offered. The previous owner and Leisawitz Heller had also let North Mill file inflated judgments against Wilton on its debts to North Mill, which gave North Mill a competing lien on the warehouse. In exchange, Wilton’s owner received a 20% cut of the proceeds from the warehouse sale and Leisawitz Heller got tens of thousands of dollars in outstanding and future legal fees. After striking this deal, North Mill tried to foreclose on the warehouse. When it discovered this scheme, Artesanias sued North Mill and Leisawitz Heller. It alleged that by “divert[ing]” Wilton’s remaining assets, they had “hinder[ed] . . . Artesanias’ ability to enforce and collect obligations [owed to it] from Wilton.” App. 56. Artesanias sought damages, an order setting aside the purportedly fraudulent asset transfers, and an order stopping the warehouse foreclosure. 4