Delaware Bankruptcy Court Grants Motion to Dismiss Deepening Insolvency and Texas Statutory Fiduciary Duty Claims With Prejudice
August 22, 2014
Publication| Bankruptcy & Corporate Restructuring
In Stanziale v. Heico Hldgs., Inc., et al., the United States Bankruptcy Court for the District of Delaware granted a motion to dismiss deepening insolvency and Texas statutory fiduciary duty claims with prejudice but granted the chapter 7 trustee 30 days to file an amended complaint sufficient to state a common law breach of fiduciary duty claim under Texas law.
Debtor Conex International, LLC was a general mechanical contractor and wholly owned by Conex Holdings, LLC. The plaintiff was duly appointed as the debtor’s chapter 7 trustee. Defendants included Heico Holding, Inc.— the 100 percent holder of interest in Conex Holdings, LLC—and certain individual defendants alleged to have been officers and/or directors of either Conex, Heico, Heico-affiliated entities, or some combination of the foregoing (collectively, the “individual defendants”).
The trustee’s complaint included a breach of fiduciary duty claim against the individual defendants. As alleged by the trustee, the individual defendants caused the insolvent debtor to cease paying certain creditors and instead to pay fraudulent and preferential transfers to Heico. The trustee alleged that the individual defendants thereby breached fiduciary duties to the debtor under the common law and Section 3.307 of the Texas Business and Commerce Code, and caused the deepening insolvency of the debtor. The individual defendants moved to dismiss these claims.