Opinion ID: 2737436
Heading Depth: 2
Heading Rank: 2

Heading: The ATN bankruptcy

Text: On January 10, 2003, ATN filed for Chapter 11 bankruptcy protection in the Florida Bankruptcy Court. ATN also filed an adversary proceeding against the Allens on April 28, 2003, seeking, inter alia, to avoid the $6 million transfer pursuant to §§ 544 and 550 2 of the Bankruptcy Code, as well as the New Jersey Uniform Fraudulent Transfer Act (the “New Jersey UFTA”), N.J. Stat. Ann. § 25:2-20 et seq. The adversary complaint alleged that the $6 million payment to the Allens on June 1, 1999, was fraudulent insofar as ATN did not receive reasonably equivalent value in exchange. After commencing the adversary proceeding in the Florida Bankruptcy Court, ATN sought a preliminary injunction to freeze the funds at issue. The Allens moved for a continuance, which the court granted. In the interim, the Allens took the following actions: “Daniel Allen transferred the the [sic] Assets under his control to a Cook Islands selfsettled asset protection trust known as the Shingle Oak Family Trust . . . and . . . David Allen . . . transferred approximately $150,000 to a Cook Islands self settled [sic] asset protection trust known as the Southern Breeze Trust.” App. at 124. The Florida Bankruptcy Court found that, as a result of these actions, “[g]ood cause exists to believe that 2 Section 544 of the Bankruptcy Code allows a trustee to “avoid any transfer of an interest of the debtor in property . . . that is voidable under applicable law by a creditor holding an unsecured claim . . . .” 11 U.S.C. § 544(b)(1). Section 550 provides: “to the extent that a transfer is avoided under section 544 . . . the trustee may recover, for the benefit of the estate, the property transferred, or, if the court so orders, the value of such property, from . . . the initial transferee of such transfer.” 11 U.S.C. § 550(a). 5 Defendants acted in bad faith in twice requesting a continuance of the Preliminary Injunction Hearing,” thus allowing them time to transfer the money to the Cook Islands trusts. App. at 129. The court granted preliminary injunctive relief and ordered that the funds be repatriated. When the Allens failed to comply with the court order, the Florida Bankruptcy Court twice held Daniel Allen in contempt of court. When the case proceeded to trial, the Allens prevailed. The Florida Bankruptcy Court found that ATN’s claim was barred by the applicable statute of limitations and that its fraudulent transfer claims failed on the merits under the New Jersey UFTA. The Court of Appeals for the Eleventh Circuit reversed. Advanced Telecomm. Network, Inc. v. Allen (In re Advanced Telecomm. Network, Inc.), 490 F.3d 1325 (11th Cir. 2007). The Eleventh Circuit held that ATN had proved a fraudulent transfer under the New Jersey UFTA insofar as: (1) it was insolvent at the time of the $6 million transfer; and (2) it received no reasonably equivalent value for the transfer. Id. at 1332-38. On remand, the Florida Bankruptcy Court avoided the transfers to the Allens and entered a $6 million judgment on January 15, 2010, in favor of ATN on its fraudulent transfer claims. ATN then sought to collect on its judgment pursuant to Federal Rule of Bankruptcy Procedure 7069. In response, the Florida Bankruptcy Court entered an order directing Daniel Allen: “(i) to repatriate all monies currently held in his Shingle Oak Trust to counsel for ATN within 30 days of the entry of [the] order, (ii) to provide an accounting of all monies deposited in and transferred from the Shingle Oak Trust within 60 days of the entry of [the] order, and (iii) to otherwise immediately freeze any other use or transfer of any monies in the Shingle Oak Trust.” App. at 208. When Allen failed to comply with the second 6 repatriation order, ATN brought a motion to hold Allen in contempt on August 30, 2011. No action was taken on that motion because on September 21, 2011, Allen filed a Chapter 7 bankruptcy petition in the Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court”).