Court Deems LLC Members Insiders for Bankruptcy Preference
by Joel R. Glucksman on April 13, 2012
In re Longview Aluminum, LLC, 657 F.3d 507 (7th Cir. 2011), the Seventh Circuit Court of Appeals recently ruled that limited liability company members are to be considered insiders for preferential transfer purposes when a business files for bankruptcy protection.
The decision stems from a case in which Longview Aluminum LLC member Dominic Forte, who held 12 percent of membership interests, was sued by the company’s bankruptcy trustee for a $200,000 settlement payment he received four months prior to the filing, according to the Real Estate Finance Journal. Earlier that year, Forte entered into a settlement agreement with the LLC after the members denied him access to the financial books and records of the company.
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