ABA NCBJ Caremerica

7/30/2019 ABA NCBJ Caremerica

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The King is Dead. Long Live the King.

A Primer to the Shift in the Federal Pleading Standard from Conleys No Set of

Facts Test to the Twombyl/Iqbal Plausibility Test and

its Impact on Bankruptcy Litigation1

Rafael X. Zahralddin

2

and Shelley Kinsella

3

These materials are a brief primer on the new pleading standards for federal casesfollowingBell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), andAshcroft v. Iqbal,129 S.Ct. 1937 (2009), and their application to bankruptcy avoidance actions. Followingthe summaries of the main pleading standard cases (including decisions in the Caremericabankruptcy) is a select list of recent cases applying the new pleading standard by variousbankruptcy courts.

I. The Pleading Standard Under the Federal Rules of Civil Procedure

The standard of pleading in federal cases has long been governed by Federal

Rules of Civil Procedures (the Federal Rules) 8 and 9. Rule 8 provides for the generalpleading standard: a short and plain statement showing that the pleader is entitled torelief. Rule 9 provides for the heightened pleading standard for special mattersincluding fraud (In alleging fraud a party must state with particularity thecircumstances constituting fraud) FED.R.CIV.P. 8(b), 9(b).

II. The Conley Standard: No Set of Facts Test

Under Conley, it was well settled law that: In appraising the sufficiency of thecomplaint we follow, of course, the accepted rule that a complaint should not bedismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can

prove no set of facts in support of hisclaim which would entitle him to relief. Conley v.Gibson, 355 U.S. 41, 45-46 (1957) (emphasis added). Furthermore, under Conley, theFederal Rules of Civil Procedure do not require a claimant to set out in detail the factsupon which he bases his claim. To the contrary, all the Rules require is a short andplain statement of the claim that will give the defendant fair notice of what theplaintiffs claim is and the grounds upon which it rests. Id. at 47 (emphasis added).

Plainly stated, this was a very plaintiff-friendly standard. The hurdle faced bydefendants seeking to dismiss a complaint was high. Plaintiffs, with any set of facts tosupport their claim, no matter how implausible, could proceed with their cases. Moreimportantly, they were free to impose discovery on the defendant, which would be costly

and could be potentially burdensome.

1 Special thanks to Shana Pinter and Phil Giordano of Elliott Greenleaf for their research and editing ofthese materials.2 Managing Shareholder, Elliott Greenleaf Wilmington, Delaware.3 Counsel, Elliott Greenleaf Wilmington, Delaware.


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III. Twombly/Iqbal: The New Plausibility Standard

The recent Supreme Court cases ofTwombly and Iqbal, were significantdepartures from the Conley standard and changed the manner in which federal complaintsare analyzed for sufficiency.

In place ofConleys standard, the Supreme Court has adopted a heightenedstandard which requires plaintiffs to plead claims that are "plausible," and not merely"conceivable." Twombly, 550 U.S. at 561-63. Conleys no set of facts test earned itsretirement because too many courts had allowed wholly conclusory statement[s] ofclaim to survive whenever the pleadings left open the possibility that a plaintiff mightlater establish some set of [undisclosed] facts to support recovery.Id.

Twombly and Iqbal, taken together, create a new plausibility test. The first stepof the new test questions the factual sufficiency of a complaint and then analyzes its legalsufficiency. The "no set of facts" test ofConley only tested the legal sufficiency of a

complaint by requiring that "a complaint should not be dismissed for failure to state aclaim unless it appears beyond a doubt that the plaintiff can prove no set of facts insupport of his claim." Conley, 355 U.S. at 45.

Under Twombly, the Supreme Court further interpreted Federal Rule 8 asrequiring enough factual matter to suggest plausible grounds [for the basis ofclaim upon which relief can be granted]. Twombly, 550 U.S. at 556 (emphasis added).Factual allegations now must be sufficient to raise a plaintiff's right to relief abovespeculation. The new standard of plausibility is supported by Rule 8s requirement thatthe plain statement possess enough heft to sho[w] that the pleader is entitled torelief. Id. at 557 (internal citation omitted).

The Court further bolstered its new plausibility standard by directly clarifying theno set of facts language ofConley: this language can be read in isolation as sayingthat any statement revealing the theory of the claim will suffice unless its factualimpossibility may be shown from the face of the pleadings. Id. at 561 (emphasisadded). The Court was careful to state that this new plausibility standard does notimpose a probability requirement at the pleading stage; it simply calls for enough fact toraise a reasonable expectation that discovery will reveal evidence of [the basis of thestated claim]. Id. at 556 (emphasis added).

This paradigm shift in sufficiency analysis of federal complaints was furtherreaffirmed by the Court inIqbal, published earlier this year. In the interim periodbetween Twombly andIqbal, there was speculation that Twombly should be construednarrowly and was limited to only antitrust cases (the underlying dispute in Twombly wasan antitrust matter). Iqbal confirmed that the Court intended Twombly to be a sea changefrom the Conley standard and meant to apply to all civil cases.Iqbal, _____ U.S. _____,129 S.Ct. at 1953.

Iqbal requires courts to perform a new fact-screening function at the motion todismiss stage. A claim has facial plausibility when the plaintiff pleads factual content


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that allows the court to draw the reasonable inference that the defendant is liable forthe misconduct alleged. Iqbal, _____ U.S. _____, 129 S.Ct. at 1949 (citing Twombly,550 U.S. at 556) (emphasis added). The Court further expounded upon Twombly andclarified the following two points:

(1) courts must only accept as truefactual allegations but not legal conclusions; and

(2) determining whether a complaint is plausible is a context-specific task thatrequires the reviewing court to draw on its judicial experience and common sense.

Iqbal, _____ U.S. _____, 129 S.Ct 1949-50 (internal citation omitted). An inference ofonly the mere possibility of misconduct in a complaint will not survive a motion todismiss. Id. at 1950.

There are, however, several unanswered questions left open by the SupremeCourt. The Court did not address:

(1) the threshold of plausibility a complaint must possess to survive a motion todismiss;

(2) the sources of information a court may rely on to substantiate its judicialexperience and common sense (Id.); and

(3) whether discovery is allowed at the beginning of a case before a motion to dismissis decided.

The new rule has had an effect on cases in the federal district courts, though thereis some analysis that shows the greatest impact might be on certain types of cases, such

as civil rights cases. Kendall W. Hannon,Much Ado About Twombly? A Study on theImpact of Bell Atlantic Corp. v. Twombly on 12(B)(6) Motions, 83 NOTRE DAME L.REV.1811 (2008). In addition, Professor Patricia Hatamyar has reviewed 1039 reported andunreported federal district court cases deciding motions to dismiss and found that whencourts apply the Twombly/Iqbal standard, courts are 1.5% more likely to grant a motionto dismiss than under Conley. Patricia W. Hatamyar, The Tao of Pleading: Do Twomblyand Iqbal Matter Empirically?, 59 AM.U.L.REV. (forthcoming 2010), available athttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=1487764. See also,Has the SupremeCourt Limited Americans Access to Courts?Hearing Before the Subcomm. on theJudiciary, 111th Cong. (2009) (statement of Stephen B. Burbank, Professor, Universityof Pennsylvania Law School), available athttp://judiciary.senate.gov/pdf/12-02-09%20Burbank%20Testimony.pdf.

These two cases have also the caught the attention of Congress. The NoticePleading Restoration Act of 2009, S. 1504, 111th Cong. (2009) and its House companion,the Open Access to Courts Act, H.R. 4115, 111th Cong. (2009), are recent legislativeattempts to repeal the plausability standard and reinstate notice pleading under Conley.


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IV. Twombly/Iqbaland BankruptcyThe new pleading standard enunciated in Twombly andIqbal control complaints

filed in bankruptcy courts as well, including avoidance actions in adversary proceedings.as Federal Rules of Civil Procedure 8 and 9 are made applicable to bankruptcyproceedings under Federal Rules of Bankruptcy Procedure 7008 and 7009.

A recent series of decisions in the Caremerica bankruptcy has put avoidanceactions to the Twombly/Iqbal test: Angell v. BER Care Inc., 409 B.R. 737 (Bankr.E.D.N.C. 2009) (Caremerica I);Angell v. BER Care Inc., 409 B.R. 246 (E.D.N.C.2009) (Caremerica II); andAngell v. BER Care Inc., 2009 WL 2253225 (Bankr.E.D.N.C. July 28, 2009) (Caremerica III) and makes clear that the heightened pleadingstandard is applicable to complaints filed in bankruptcy cases as well.

A. Caremerica ICaremerica Iinvolved an action for recovery of preferential and fraudulent

transfers pursuant to Sections 547 and 548 of title 11 of the United States Code, 11U.S.C. et seq. (the Bankruptcy Code), made by the debtors to a company owned by twoof the debtors shareholders/officers and subsequently transferred to other defendants inan apparent attempt to avoid attachment by creditors. The company, BER Care, Inc.,formerly known as PPS, Inc., shareholders and officers of the debtor as well as principalowners of BER Care, Inc., were named as defendants. On September 15, 2008, afterCaremericas bankruptcy was converted to chapter 7, the chapter 7 trustee commenced anadversary proceeding to avoid and recover alleged preferential and fraudulent transfersmade by the debtors to BER Care, Inc., and then subsequently transferred to thedefendants. Id.

The original complaint contained a listing of the total amount of the allegedpreferential and fraudulent transfers received by the defendants and stated whether eachdefendant was an insider or non-insider. Id. The complaint was subsequently amendedtwice to include, respectively, a bank statement for February 2006 listing PPS, Inc., as theaccount holder, and an exhibit detailing each alleged transfer by amount, date, checknumber, payee reference number, payee names, account numbers and namescorresponding to each transfer (Exhibit B). Id. The defendants filed 12(b)(6) motions,arguing that the preference and fraudulent counts were insufficiently pleaded. Judge J.Rich Leonard granted the motion as to the preferential transfer and Bankruptcy CodeSection 548(a)(1)(B) constructive fraud counts and denied the motion as to theBankruptcy Code Section 548(a)(1)(A) actual fraud counts.

In Caremerica I, II, andIIIthe trustee was given leave to amend his complaint inorder to re-plead and address the lack of detail and specificity required by the heightenedpleading standard.


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a. Preferential Transfer CountsJudge Leonard dismissed the preferential transfer counts on the grounds that,

under the new Twombly/Iqbal plausibility standard, the trustee had failed to sufficientlyplead factual support for the four out of the five elements of such actions:

i. Transfer of an interest of the debtor in propertySince both the bank statement in the name of PPS/BER and Exhibit B failed to

show the source of the funds, the court held that the trustee had failed to sufficientlyplead factual support to give rise to a reasonable inference that the funds transferredoriginated from the debtor. Id. at 751.

ii. For or on Account of an Antecedent DebtThe Court found that, the chapter 7 trustees near recitation of the language of

section 547(b)(2) of the Bankruptcy Code is fatal to the preferential transfer count.

Facts supporting the existence of an antecedent debt owed by the debtors to thedefendants are necessary and that the chapter 7 trustee is obligated to allege factsregarding the nature and amount of the antecedent debt. Id.

iii. Made While the Debtor was InsolventAs to this element, because the chapter 7 trustee was attempting to avoid and

recover alleged preferential transfers outside of the 90-day preference period and wasalleging that the defendants were insiders, there were two issues at play: (1) whether thetransfers occurred between 90 days and one year prior to the petition date; and (2)whether the defendants were insiders. Id. at 752. The court did find sufficient factual

support that the transfers occurred in the preference period based upon the informationcontained in Exhibit B. Moreover, the court held that labeling the transferees as insidersis not enough to establish a reasonable inference of insider status and that detailsregarding the relationship between the debtors and the defendants are necessary in orderto determine such status. Id. at 753.

iv. Enabled Creditor to Receive More than it Would UnderChapter 7

Finally, the court found unconvincing the chapter 7 trustees argument that theadoption of the heightened pleading standard ofTwombly/Iqbal placed an undue burdenupon the plaintiff. Essentially, the court held that since the antitrust plaintiffs in Twombly

and the Pakastani detainee inIqbal were held to the new plausibility standard, so too shallbankruptcy trustees, who are in a much more favorable position, having access to thebooks and records of the debtors and full discovery powers in the years leading up to thecommencement of such adversary proceedings. Id. at 754.

The only element that the court did find was sufficiently pled in the preferentialtransfer count was that of the alleged transfer being to or for the benefit of the creditor,reasoning that the inclusion of the names of transferees and the dates and amounts of


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each transfer in Exhibit B was sufficient factual support to pass Twombly/Iqbal. Id. at751.

b. Fraudulent Transfer CountsContinuing to the fraudulent transfer claims, Judge Leonard dismissed the

constructive fraud count. However, the court allowed the actual fraud to survive withoutreference to Twombly/Iqbal, but solely on the grounds that the particularity pleadingrequirement of Rule 9(b) was met by: (1) the assertion that the transfers were completedafter the debtor had received notice from the IRS of its intent to levy and garnish itsaccounts; and (2) the inclusion of the detailed information in Exhibit B. Id. at 755.

As to the constructive fraud count, the court applied the Twombly/Iqbal test sincethis count only need to adhere to the general pleading requirements of Rule 8(b). Underthe new plausibility standard, Judge Leonard dismissed this count because it failed toinclude an identification of the consideration received by each transferor, information asto why the value of such consideration was less than the amount transferred, and facts

supporting the debtors insolvency at the time of the transfer. Id. at 756.

B. Caremerica IIandIIIThe court applied the same analytical framework to Caremerica IIandIII,

dismissing the chapter 7 trustees complaints in their entirety.

a. Caremerica IICaremerica IIalso involved shareholders and officers of the debtors as

defendants. The trustee brought an adversary proceeding to avoid and recover allegedly

preferential transfers of at least $7,438.39 and fraudulent transfers of at least$8,369.91. Caremerica II, 409 B.R. at 349. However, the complaints failed to includeany information as to the date, amount, origination, or recipient of the transfers or thenature and amount of any antecedent debt owed by the debtor to the recipients. Id. at350-52.

i. Preferential Transfer CountThe court dismissed the preferential transfer claim as to all elements (except that

the transfer enabled the creditor to receive more than it would under chapter 7 which theCourt found was satisfied through the debtors summary of schedules) on the groundsthat the failure to include any information as to the date, amount, recipient or origination

of the transfers and the nature and amount of the antecedent debt was fatal to the trusteescase since failing to do so left the claim with no factual support as to the elements of apreference action.

ii. Fraudulent Transfer CountThe court also dismissed the fraudulent transfer count under both actual fraud and

constructive fraud theories:


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a. Actual FraudAs announced in Caremerica I, the court applied the heightened pleading standard

of Rule 9(b) and found the chapter 7 trustees complaint insufficient due to the lack ofany allegation of fraudulent conduct on behalf of the defendant transferees. Id. at 353.

b. Constructive FraudLikewise, the court dismissed the fraudulent transfer count based on the theory of

constructive fraud because the chapter 7 trustee failed to include any factual supportdescribing the consideration received by each transferor or the debtors insolvency at thetime of the transfer. Id. at 354.

b. Caremerica IIIThis case closely mirrors the facts and outcome of Caremerica II, with two

notable exceptions: (1) some of the alleged transferees were not shareholders or officers

of the debtors themselves, but a relative of those insider defendants, therefore removingthe presumption of insider status grounded in the level of control and involvementcharacteristic of insiders under Bankruptcy Code Section 101(31); and (2) the allegedpreferential transfer occurred within the one-year period prior to the petition date, ratherthan the 90-day preference period. Caremerica III, 2009 WL 2253225, at *1, *4 (Bankr.E.D.N.C.).

The trustee brought adversary proceeding to avoid and recover allegedpreferential transfers of at least $42,750.00 and fraudulent transfers of at least$62,750.00. In following the analysis ofCaremerica II& III, and citing Twombly/Iqbal,the court dismissed all counts because the trustee failed to allege sufficient factual

support regarding: (1) the origination of the transfers due to the fact that multipledefendants share very similar names which are not utilized in the complaint; (2) thenature and amount of the antecedent debt; (3) the insolvency of the debtor at the time ofthe transfers; (4) the fraudulent conduct; and (5) the consideration received by thetransferees.

i. Preferential Transfer CountAgain, as in Caremerica II, the preferential transfer count was dismissed by the

court, on the basis that the failure to include: (1) the date, amount, origination, andrecipient of the transfers was fatal to the elements of (i) whether there was a transfer of aninterest of the debtor in property, and (ii) whether the transfer was to or for the benefit ofa creditor; and (2) factual support as to the nature and amount of the antecedent debtwas fatal to that element. Id. at *2 -3. Specific to this case, because the allegedpreferential transfers occurred within the one-year period prior to the petition date andnot during the 90-day preference period, the chapter 7 trustee was not entitled to thepresumption of insolvency. Id. at *3. As such, the lack of factual support as to the


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insolvency of the debtor at the time the alleged transfer was made was fatal to thatelement. Finally, the allegation that the transfers were made to alleged insiders wasinsufficient because there was no factual support describing the control or level ofinvolvement by the defendants. Id. at *4.

ii. Fraudulent Transfer CountThe court dismissed the fraudulent transfer counts on both theories of actual and

constructive fraud for the same reasons cited above in Caremerica II.

C. Other Caremerica RulingsBelow are several other, less publicized, Caremerica cases. Each applied the

Twombly/Iqbal standards to the defendants motion to dismiss the trustees complaint.

a. Angell v. Etheridge (In re Caremerica, Inc.), 2009 WL 2253232 (Bankr.E.D.N.C.)

The trustee brought an adversary proceeding to avoid and recover allegedpreferential transfers and fraudulent transfers, both of at least $10,323.06. In followingthe analysis of Caremerica II & III, and citing Twombly/Iqbal, the court dismissed allcounts because the trustee failed to allege sufficient factual support regarding: (1) theorigination of the transfers; (2) any information relating to the date, amount, or recipientof the transfers; (3) the nature and amount of the antecedent debt; (4) the insolvency of

the debtor at the time of the transfers; (5) whether the transferees received more as aresult of the transfers than it would receive in a Chapter 7 liquidation; (6) the fraudulentconduct; and (7) the consideration received by the transferees.

b. Angell v. First Eastern, LLC (In re Caremerica, Inc.), 2009 WL2253241 (Bankr. E.D.N.C.)

The trustee filed an adversary proceeding seeking to avoid and recover allegedpreferential transfers of $389K and fraudulent transfers, on the alternative theories ofactual and constructive fraud, of an unknown amount, both of which represented rentpaid by the debtors. In following the analysis of Caremerica II & III, and citing

Twombly/Iqbal, the court dismissed all counts because the trustee failed to allegesufficient factual support regarding: (1) the origination of the transfers due to the factthat multiple defendants share very similar names which are not utilized in the complaint;(2) the nature and amount of the antecedent debt; (3) the insolvency of the debtor at thetime of the transfers; (4) the fraudulent conduct; and (5) the consideration received by thetransferees.


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c. Angell v. First Eastern, LLC (In re Caremerica, Inc.), 2010 WL 428059(Bankr. E.D.N.C.)

Following the dismissal of his complaint by the court in Angell v. First Eastern,LLC (In re Caremerica, Inc.), Adv. No. L-08-00157-8-JRL, 2010 WL 2253241 (Bankr.

E.D.N.C.), trustee filed an amended complaint seeking to avoid and recover allegedpreferential transfers of $389K and fraudulent transfers, on the alternative theories ofactual and constructive fraud, of an unknown amount, both of which represented rentpaid by the debtors. Citing the new plausibility standards ofTwombly/Iqbal, defendantsmotion to dismiss as to actual fraud was granted because the complaint failed to allegeany facts in support of that theory. As to the alternative pleading of constructive fraud,the court denied the motion to dismiss because of the uncertainty of the relationshipbetween the defendant and landlord, which would be developed during discovery.Likewise, the preference action was not dismissed because sufficient factual support wasalleged which would render plausible the possibility that the transfers were made onaccount of antecedent debt owed to the debtor.

d. Angell v. Rose Hill Enterprises, LLC, (In re Caremerica, Inc.), 2010 WL358524 (Bankr. E.D.N.C.)

Following the dismissal of his complaint by the court in Caremerica I, the trusteefiled an amended complaint which attempted to address the deficiencies cited by thecourt in that opinion. Three of the five counts were again dismissed underTwombly/Iqbal because of the trustees failure to allege sufficient factual support relatingto: (1) property rights; and (2) the existence of an antecedent debt.


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Selected List of Bankruptcy Cases Applying the Plausibility Standard4

This is not an exhaustive list of recent cases; it is only illustrative.

January 27, 2010

Walker v. Pasteur (In re Aphton Corporation),423 B.R. 76 (Bankr. D. Del 2010)

The Complaint contained six counts where a Chapter 11 trustee brought anadversary proceeding to avoid certain transfers that debtor had made prepetition, inconnection with its redemption of a debenture sold to a pharmaceutical company that hadjoined with debtor in co-promoting a new drug to fight cancer and through payment to itsformer noteholders.

Counts I through III set forth constructive fraudulent conveyance claims againstthe pharmaceutical company, Aventis. Counts V through VII set forth constructivefraudulent conveyance claims against the former noteholders. Aventis and the formernoteholders argued that the Complaint failed to state a claim upon which relief could begranted.

Counts I and V of the Complaint filed by the Trustee asserted that the Trustee wasa lien creditor pursuant to 544(b) of the Bankruptcy Code and that the $3 milliontransferred to a pharmaceutical company by the debtors to jointly promote a new drugand the $3 million transferred to the debtors former noteholders were each fraudulenttransfers under the "Pennsylvania and/or Delaware Uniform Fraudulent Transfer Act.

The defendants asserted that the Counts I and V of the Complaint were deficientlypled because they did not identify the elements of a claim under state law or even refer tothe purportedly applicable statutory provisions related to a claim of a fraudulent transfer.The Court held that the Trustee did not recite the elements of either Pennsylvania orDelawares Uniform Fraudulent Transfer Act, nor did he allege the specific facts thatmeet those elements. Hence, the Court, applying Twombly andIqbal, dismissed Counts Iand V.

Counts II and VI of the Complaint asserted fraudulent conveyance claimspursuant to 548 of the Bankruptcy Code. Both counts asserted that (i) the transfers weremade within two years of the petition date; (ii) the Debtor received less than reasonablyequivalent value for the transfer; and (iii) the transfers occurred at a time when the

Debtor was insolvent. The Court then found that the allegations in Count II and VI of theComplaint were contradicted by the documents attached and incorporated therein. TheComplaint did not assert when the Redemption Payment was made or how the twotransactions were related. Therefore, the Court found that the document controlled andthe Court did not need to accept as true the allegations of the Complaint. Moreover, theCourt held that the Complaint lacked sufficient factual allegations to determine which

4 Special thanks to Phil Giordano and Jessi Adkins for their research and editing of the case summaries.


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transactions were less than reasonably equivalent value. Counts III and VII of theComplaint sought recovery of each of the alleged fraudulent transfers pursuant to 550of the Bankruptcy Code.

The Court granted the defendants motion to dismiss and dismissed Counts I, II,

III, and V of the Complaint. The Court denied in part the former noteholders motion todismiss Counts VI and VII of the Complaint allowing part of the fraudulent conveyanceclaims to survive.

January 29, 2010

The Official Comm. of Unsecured Creditors of Midway Games Inc. v. National

Amusements Inc. (In re Midway Games Inc., et al.), 428 B.R. 303 (Bankr. D. Del. 2010)

Committee brought adversary proceeding to avoid and recover allegedpreferential and fraudulent transfers to: (1) Independent Directors for their fees; and (2)

87.2% equity owners of the debtor, referred to as the Redstone Defendants, who soldsuch interest to a third-party, prior to the debtor entering bankruptcy. Citing the newplausibility standards of Twombly and Iqbal, defendants motion to dismiss as to thefraudulent transfer counts against the Directors were granted on the grounds that theCommittee failed to allege factual support: (1) as to whether the fees paid to theIndependent Directors were extraordinary; and (2) as to whether the IndependentDirectors were liable for any wrongdoing. Likewise, the fraudulent counts against theRedstone Defendants were also dismissed on the grounds that the Committee failed toallege factual support as to: (1) any of the badges of fraud required by the court; and(2) the value received in exchange for the sale of the defendants equity interest in debtor.The preferences counts were decided on grounds unrelated to Twombly andIqbal.

February 19, 2010

Zucker v. Freeman (In re Netbank, Inc.), 424 B.R. 568 (Bankr. M.D. Fla. 2010)

Zucker, as the Liquidating Supervisor of the debtor, filed an adversary complaintseeking to avoid a transfer from debtor to the defendant, pursuant to an employmentagreement. Following Twombly and Iqbal, the Court held that the date on which thetransfer took place must be within the 90 day period, and the Complaint must allege thatit took place on an exact date, and not on or about a date. The plaintiffs failure tospecify the date warranted a dismissal of the Complaint. The Courts order to dismiss thecomplaint was without prejudice.


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March 11, 2010

Boston v. Chrysler Financial Services Americas LLC (In re Scott), 427 B.R. 123 (Bankr.S.D. Ind. 2010)

Chrysler filed a motion to dismiss and in support of the motion, offered materialoutside of the pleading, which the Court than deemed to be a motion for summaryjudgment. Chrysler raised three arguments: (i) the case should be dismissed because theTrustee failed to name an indispensable party by not naming the Trust as a defendant; (ii)that the vehicle was no longer property of the estate; and (iii) that the premise of the theirclaims is incorrect because the basis for their claim is that the lien in unperfected. Giventhe importance of the substantive issue presented, the Court chose to bypass the first twoarguments raised by Chrysler in favor of a ruling solely on the merits of the TrusteesComplaint. Thus, the determinative question was whether the Trusts lien on the Vehiclewas perfected under Indiana law. Concluding that the vehicle was perfected, the Courtgranted Chryslers motion for summary judgment and therefore chose to forego a

discussion of the Complaints sufficiency under Twombly andIqbal.

April 16, 2010

Feltman v. KeyBank, N.A. (In re Levitt and Sons, LLC, et al.) , 2010 WL 1539878 (Bankr.S.D. Fla.)

Feltman, the Plan Administrator, filed a complaint against KeyBank, whichattempted to avoid and recover allegedly preferential and fraudulent transfers on behalf ofthe Debtors. The Complaint alleged that by the time of the Petition Date, a number of theDebtors had become jointly and severally liable, through guaranties and related loan andsecurity documents, for the obligations of the other Debtors. The complaint did notspecify the extent of the total loan amounts, nature of the underlying obligations, whichentities were obligated, or which entities were the source of the funds allegedly paid toKeyBank. Using the Twombly andIqbal standards, the Court held that the evidence didnot indicate the source of the funds that entered the related entities accounts, or whichspecific entity initiated each transfer. The Court thus dismissed the complaint because itpossessed an insufficient factual basis to meet the Twombly standard for stating a claimfor relief. The Court also dismissed the complaint without prejudice.

April 20, 2010

Official Committee of Unsecured Creditors of Hydrogen, L.L.C. v. Blomen (In re

Hydrogen, L.L.C.), 2010 WL 1609536 (Bankr. S.D. N.Y.)

The Creditors Committee brought several actions against defendant, one of whichwas fraudulent transfer regarding bonuses received by defendants. The defendants fileda motion to dismiss and the Court, applying the Twombly andIqbal standards, ordered todismiss the fraudulent transfer claim because the complaint did little more than aformalistic recitation of the elements, and did not include facts supporting the allegation.


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The Committee also alleged that the Defendants received substantial transfers aspreferences, but the Court dismissed this claim because it contained few relevant facts,which, again, only amounted to a formalistic recitation of the elements.

April 24, 2010

Wahoski v. Classic Packaging Co. (In re Pillowtex Corporation), 427 B.R. 301 (Bankr.D. Del. 2010)

Wahoski, the Liquidating Trustee, brought an adversary proceeding to avoid andrecover alleged preferential and fraudulent transfers. Citing the plausibility standards ofTwombly andIqbal, defendants motion to dismiss as to the fraudulent transfer count wasgranted on the grounds that the trustee failed to allege any factual support of the fraud,and was just merely reciting the statutory language of 548 (a). The motion was alsodismissed without prejudice, allowing the Liquidating Trustee to respond with theadequate facts to support a fraudulent transfer claim.

June 9, 2010

Butler v. Anderson (In re C.R. Stone Concrete Contractors, Inc.), 2010 WL 2404198(Bankr. D. Mass.)

The estate filed several complaints alleging preferences, fraudulent conveyancesand seeking turnover of the Debtors assets which were consolidated into one actionwhen the case converted to a chapter 7. The Court did not dismiss the Debtorspreference action under Fed. R. Civ. P. 12(b)(6). Disagreeing with Valley Media Inc. v.Borders, Inc. (In re Valley Media, Inc.), 288 B.R. 189 (Bankr. D. Del. 2003) the Courtrejected a heightened pleading standard. The Court applied the Iqbal standards anddetermined that the complaint did not need detailed factual allegations. The Courtseemed to selectively apply a passage in Iqbal, while ignoring the new plausibilitystandard: In Ashcroft v. Iqbal, the Supreme Court stated that the pleading standardRule 8 announces does not require 'detailed factual allegations,' but it demands more thanan unadorned, the-defendant-unlawfully-harmed-me accusation." Id. at *10. The Courtfound that the omnibus complaint satisfied the liberal pleading standard even with afinding that the allegation lacked specificity with regard to the preference claim

June 18, 2010

Springel v. Hotel Plaza Athenee (In re Innovative Communication Corp.),2010 WL3069489 (Bankr. W.D. Pa.)

Springels complaint asserted that the transfers of Debtors funds to defendantwere made without board approval. The Court, applying Twombly, ruled that thecomplaint contained adequate well pled facts, when accepted as true, of intent to hinder,delay, and defraud creditors, to support a claim for avoidance and recovery of fraudulenttransfers. The Court continued to explain that the complaint did not provide factual


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allegations to support Count 6, which sought to avoid and recover post-petition transfers.They further stated that Exhibit A to the complaint listed the check dates of each transferthe plaintiff sought to avoid and recover, and that the most recent date among the checkslisted was June 22, 2007. The bankruptcy case was filed on July 5, 2007. Therefore, onthe face of the complaint, it was not apparent that any transfer was made post-petition.

With respect to Count 7, the Court ruled that the plaintiff failed to sufficiently plead thatthe transfers identified on Exhibit A were made while the debtor was insolvent. Onlytwo of the eleven payments identified on Exhibit A fell within the applicable 90 dayperiod. Therefore, to the extent plaintiff intended to avoid the remaining nine paymentsas preferential transfers, he had failed to sufficiently plead facts to establish how thesepayments qualify. The motions were dismissed without prejudice.

July 14, 2010

Charys Liquidating Trust v. Hades Advisors, LLC (In re Charys Holding Co..) 2010 WL2788152 (Bankr. D. Del.)

Charys Liquidating Trust filed a preference action against Hades Advisors, LLC,and also sought avoidance of transferred monies on constructive fraudulent transfertheories. The Liquidating Trust alleged that shortly before the Debtor filed for Chapter11, the Debtors CEO retained Hades Advisors, LLC without Board authorization, andthat the $100,000 transfer between the Debtor and Hades was fraudulent. ApplyingIqbaland Twombly, the Court dismissed the first count regarding the preference action becausethe complaint contained no facts from which the Court could infer that that Transfer wasmade on account of antecedent debt. On the other hand, the Court refused to dismissCount II, III, and IV, because the Plaintiffs had adequately alleged that the Transferswere made within the statutory period and at a time when the Debtors were insolvent.The Counts that were dismissed were dismissed without prejudice.

July 27, 2010

The Liquidation Trust v. Daimler AG (In re Old Carco LLC, et al.), 2010 WL 2925997(Bankr. S.D. N.Y.)

A liquidation trust filed an adversary proceeding alleging fraudulent transfersagainst the Debtors former 100% equity owner on the grounds that it orchestrated ascheme to strip away valuable assets. Citing the new plausibility standards ofTwomblyand Iqbal, the action was dismissed on the grounds that the complaint failed tosufficiently plead: (1) each element of value received; (2) lack of fair consideration; and(3) bad faith on behalf of transferee bondholders. The motions were dismissed withoutprejudice.


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Heightened Pleading Standards Under Twombly andIqbal: Special Concerns for

Preference Litigation

Written by:

Joseph L. Steinfeld, Jr.

ASK Financial, LLP; St. Paul, MN

[email protected]

In Bell Atlantic v. Twombly, 550 U.S. 544, 563, 127 S.Ct. 1955, 1969 (2007), the SupremeCourt, determining that the Conley v. Gibson standard on pleading sufficiency had earned itsretirement after puzzling the profession for 50 years, announced a new pleading standardrequired to survive a motion to dismiss. Rule 8(a)(2) of the Federal Rules requires only a short andplain statement ofthe claim showing that the pleader is entitled to relief.Id. at 555, 1965. UnderConley v. Gibson, surviving motions to dismiss required that a complaint give the defendant fairnotice of what the ... claim is and the grounds upon which is rests. Id. (quoting Conley v. Gibson,355 U.S.41, 47, 78 S.Ct. 99, (1957). Under the Conley standard, a complaint should not be

dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove noset offacts in support ofhis claim which would entitle him to relief. Id. at 561. (quoting 355 U.S.at 45-46, 78 S.Ct. 99).

In announcing the new pleading requirements, the Court stated that while factual allegationsneed not be detailed, they require more than labels and conclusions, and a formulaic recitation ofthe elements of a cause of action. Id. at 555, 1964-65. Instead, factual allegations must besufficient to raise a right to relief beyond mere speculation. Id. at 555, 1965. The Court replacedthe traditional pleading standard under Conley with requirement that complaint must state enoughfactual matter to make the claim plausible. Twombly, 127 S.Ct. 1965. The Court indicated thatthe plausibility requirement does not impose probability requirement on claims, but only called for

enough fact to raise expectation that discovery will reveal evidence of the claim. Id. at 556, 1965.

InAshcroft v. Iqbal, 129 S.Ct. 1937 (2009), the Court made clear the new pleading standardapplied beyond the scope of the antitrust issues examined in Twombly, stating that in order tosurvive a motion to dismiss in any case a complaint must contain sufficient factual matter, acceptedas true, to state a claim for relief that is plausible on its face.Id. at 1949 (citing Twombly at 570,1955). The Court emphasized that two principles underlie the Twombly decision: first, in motionto dismiss, the requirement that court must accept all allegations as true does not apply to legalconclusions, only factual allegations. Id. at 1949. Second, only complaints stating plausible claimsfor relief can survive motions to dismiss. Id. at 1950.

A. Heightened Pleading Standard in Adversary Proceedings:

The effect of Twombly and Iqbal on adversary proceedings cannot be ignored. TheBankruptcy Court for the Eastern District of North Carolina examined the heightened pleadingstandards in several adversary proceedings in the Camerica bankruptcy case. The heightenedpleading standard has now been applied in avoidance actions in the Southern District of New York,the District of Delaware, and the Eastern District of Pennsylvania. A summary of cases bothdenying and granting motions to dismiss in avoidance actions are listed below. It should be noted


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that while the Caremerica cases listed infra mainly deal with preference avoidance under 547 andfraudulent transfers under 548, several of the other cases listed are multiple-count claims involvingcomplicated issues in addition to preference avoidance. Dismissal of the preference claims in theother cases may revolve around the strength of the plaintiffs overall case or lack thereof.

1. Cases Granting Motions to Dismiss

The Caremerica Cases

InAngell v. BER Care Inc. (In re Caremerica Inc.), 409 B.R. 737, 745 (Bankr. E.D.N.C.2009) (Caremerica I), the defendants made motions to dismiss the trustees claims ofpreferential and fraudulent transfers for failure to state a claim under Fed. R. Civ. P.12(b)(6). The court went through each element of the preference claim, and found that thetrustee had failed to allege facts with requisite specificity on the elements of an avoidablepreference under 547(b). The trustee alleged that the debtors had transferred funds throughBER Care as a conduit, and the funds were then distributed to other defendants. Id. at 750.

Although the debtor attached the bank statements of BER Care to demonstrate transfers fromthe conduit to the defendant, the court determined that the trustee failed to show the transferswere of the debtors property. Id. at 750-51. Additionally, the court found that the assertionthat each transfer was made for, or on account of, an antecedent debt owed by theTransferor to the Defendant before the transfer was made was a conclusory assertion thatfailed to identify specific antecedent debt to satisfy plausibility requirements. Id. at 751.Although insolvency is presumed for the 90 days preceding filing, for transfers madebetween 90 days and one year prior to filing, a trustee must allege sufficient facts to showinsolvency. Id. at 752. The trustees assertion stating the debtor was insolvent when makingthe transfers, without factual assertions in support thereof, fell short of the plausibilityrequirement for transfers between one year and within 90 days. Id. Nor was the trustees

recitation that the defendants were insiders as described in 101(31) and 547(b), withoutsupporting facts, sufficient for plausibility. Id. at 753.

The Caremerica Icourt also examined the trustees claims alleging constructive and actualfraud.Id. at 754. Although the allegation of actual fraud survived the heightened pleadingrequirements of Fed. R. Civ. P. 9(b), the constructive fraud claim did not survive generalpleading requirements, as it did not contain alleged facts as to why the value of theconsideration received was less than of that transferred, nor did it contain facts oninsolvency.Id. at 755-56. It is worth noting that although the motion to dismiss was granted,the trustee was granted permission to amend his complaint to include factual support, andthe court deemed that the amendment related back to the date of pleading. Id. at 757.

InAngell v. Haveri (In re Caremerica Inc.), 409 B.R. 346, 351-52 (Bankr. E.D.N.C. 2009)(Caremerica II), the court also found the complaint insufficient in alleging that thedefendant was a transferor, that there was specific antecedent debt, and that the transfersoccurred within the 90 days preceding filing. The court also found the trustees actual fraudclaim lacked particularity required under Rule 9(b), as it failed to described the conduct


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constituting fraud.Id. at 353. The trustees constructive claim failed plausibility, as it failedto factually describe the consideration received by each transfer or the debtors insolvencyat the time. Id. at 354. Despite the motion to dismiss, the court granted leave for the trusteeto re-plead his claims against the defendant within 30 days of the order consistent with theorder in Caremerica I. 409 B.R. at 354.

Additional Caremerica cases follow theAngell v. BER Care, Inc. analysis when examiningthe sufficiency of the pleadings: Angell v. Burrell (In re Caremerica Inc.),409 B.R. 759 (Bankr. E.D.N.C. 2009)

(Caremerica III) (determining complaint was insufficient for preference claimwhere trustee failed to identify which of the debtors made transfer, failed to supportassertion payments benefitted a creditor, did not allege specific antecedent debt;fraudulent transfer claims both for actual and constructive fraud were alsoinsufficient).

Angell v. Day (In re Caremerica Inc.), 415 B.R. 200 (Bankr. E.D.N.C. 2009)(Caremerica IV) (adopting reasoning in Angell v. BER Care, Inc. when

determining complaint failed to identify the actual antecedent debt, failed to allegethe dates of the transfer, did not include a basis for labeling the defendants insiders;constructively fraudulent transfer claims dismissed as well for failing to identifyconsideration received or why the value of consideration was less than the amounttransferred).

Angell v. First Eastern (In re Caremerica Inc.),2009 WL 2253241 (Bankr. E.D.N.C.July 29, 2009) ( Caremerica V) ( incorporatingAngell v. BER Care, Inc. analysisand determining complaint was insufficient as to the preference count because it wasunclear which one of the debtors made the payment, the complaint failed to identifythe antecedent debt, there were insufficiently pled facts for insolvency outside of the90 day preference period, and it contained no facts concerning insider status;

constructive and fraudulent transfers insufficient as well). Angell v.Etheridge (In re Caremerica Inc.), 2009 WL 2253232 (Bankr. E.D.N.C.

July 29, 2009) ( Caremerica VI) (incorporatingAngell v. BER Care, Inc. analysisin granting motions to dismiss for preference claim as complaint failed to identifywhich one of the debtors made the transfer, contained no facts in support of assertionthat defendants were transferees, failed to state dates, amounts, and numbers oftransfers, and failed to identify the actual antecedent debt; fraudulent transfer alsoclaim insufficient as it fails to describe the fraudulent conduct alleged, andconstructive fraud claim failed to identify consideration received or why the valueof consideration was less than the amount transferred).

Angell v. Burrell, Cannon (In re Caremerica Inc.), 2009 WL (Bankr. E.D.N.C. July

28, 2009) ( Caremerica VII) (incorporatingAngell v. BER Care, Inc. analysis ingranting motions to dismiss for preference claim as complaint failed to identify thedates or amounts of each alleged transfer or which debtor made the transfers, failedto identify the antecedent debt, insufficiently pled facts for insolvency outside of the90 day preference period, and failed to plead facts sufficient to alleged that certaindefendants had a relationship sufficient to constitute insiders; fraudulent transfer also


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claim insufficient as it fails to describe the fraudulent conduct alleged, andconstructive fraud claim failed to identify consideration received or why the valueof consideration was less than the amount transferred).

Other Avoidance Actions Granting Motions to Dismiss

Charys Liquidating Trust and C&B Liquidating Trust v. Hades Advisors, LLC (In re CharysHolding Co., Inc. And Crochet & Borel Services, Inc.), Slip. Op. 2010 WL 2788152, *1(Bankr. D. Del. July 14, 2010), involved a financial advising group hired by the debtorsoutgoing CEO shortly before filing. The plaintiff alleged that the outgoing CEO employedthe advising group without the knowledge or authority of the board of directors. Id. at *2.The court determined that the plaintiffs complaint insufficiently alleged all elements of thepreference claim. The complaint didadequately identify the preferential transfer by date,transferor/tranferee, and amount. Id. at *5. However, the Court found that complaint didnot allege sufficient facts as to antecedent debt. Id. Although the complaint identified thatthe defendant had been retained prior to the transfer, the complaint did not specifically allege

that the services were rendered prior to the transfer date. Id. The preference count wasdismissed without prejudice.Id. As to the constructive fraud claim, the court determined thatbased on the facts alleged in the complaint, which included details about the hiring of thedefendant by an employee of the debtors unauthorized to do so shortly before the bankruptcyfiling, the claim survived the motion to dismiss. Id. at *7.

In Official Committee of Unsecured Creditors of Hydrogen, LLC v. Blomen (In reHydrogen), B.R., 2010 WL 1609536 (Bankr. S.D.N.Y. April 20, 2010), both a preferenceclaim and a constructive fraud claim failed to survive a motion to dismiss. As toconstructive fraud, the court determined there was a complete lack of facts supporting theallegations and the complaint set forth little more than a formulaic recitation of elements.

Id. at *10 (internal citations omitted). As to the preference claim, the complaint alleged thedefendant received preferential transfers under 11 U.S.C. 547, but other than one specifiedtransfer, the complaint failed to identify other allegedly preferential payments by amount,date, type of transfer, or the invoices the transfer paid, making it impossible to identify anyother specific transfer. Id. at *12. Despite the deficiencies in the complaint, the plaintiff wasgranted leave to replead all dismissed claims except for one claim unrelated to the preferenceor constructive fraud counts. Id. at *18.

In Wahoski v. Classic Packaging Co. (In re Pillowtex Corp.), 427 B.R 301 (Bankr. D.Del.2010), the defendant made a motion to dismiss count two of the complaint, which allegedconstructively fraudulent transfers pursuant to 11 U.S.C. 548. Id. at 304. Although the

plaintiff contended that the fraud claim needed to be preserved as an alternative claim, thecourt found the constructive fraud claim failed to meet Twombly pleading requirementswhere there was a complete lack of factual allegations and the complaint merely recitedstatutory language. Id. at 311. The court then analyzed the possibility of amendment, andrecited the normal rule that a court must give a plaintiff leave to amend a complaint that failsto state a claim, unless such amendment should be futile. Id. The court noted that the


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bare-boned drafting of the second count did not appear motivated by bad faith or an intentto delay, and although the transaction appeared to be at arms length, to ensure an adequateopportunity to respond, the trustee was given leave to file an amended complaint withinfourteen days setting forth adequate facts to support the claim.Id. at 311-12.

In Walker v. Sonafi Pasteur(In re Aphton Corp.), 423 B.R. 76 (Bankr. D. Del. 2010), thecourt held the trustees claims as a lien creditor under 544 and one of the fraud claimsunder 548 and were insufficiently pled. Although the court recognized that a trustee isgenerally afforded greater liberality in pleading fraud, it still noted that Rule 9(b) requiredthe trustee do more than merely identify the allegedly fraudulent transfers. Id. at 85. Thetrustees allegations under 544 were insufficient, as they merely pled that the trustee wasa lien creditor, and failed to identify the elements of a claim under state law or allegespecific facts meeting the elements. Id. at 87. The court dismissed one of the claims under548 for failing to allege sufficient facts to make a plausible claim the transaction was lessthan reasonably equivalent value. Id. at 91. The second count of constructive fraud survivedthe motion where the facts alleged were facially plausible. Id. at 93.

In The Official Committee of Unsecured Creditors of Midway Games Inc. v. NationalAmusements, Inc. (In re Midway Games, Inc.), 428 B.R. 303, 311 (Bankr. D.Del. 2010), theplaintiff filed a twenty-two count complaint alleging actual fraud and constructive fraudunder 544 and 548, preferential transfers, breach of fiduciary duties, aiding and abettingbreach of fiduciary duties, and equitable subrogation. The court determined that the plaintiffsufficiently plead facts to establish the debtors insolvency, an essential element to all of theavoidance claims. Id. at 321. The facts alleging the debtors insolvency during the timeperiods at issue were deemed sufficient, as the complaint stated facts concerning the debtorslosses, failure to pay debts as they came due, and fact that debtors liabilities far exceededits assets. Id. However, the plaintiff did not make sufficient factual allegations of actual

fraud against the defendants, as the complaint failed to allege secrecy or reservation ofbenefits. Id. at 325. Nor did the constructive fraud survive the motion to dismiss, as thecomplaint lacked sufficient facts alleging the debtors received less than reasonablyequivalent value in exchange for fees paid.Id.

Feldman v. Chase Home Finance (In re Image Masters, Inc.), 421 B.R. 164 (Bankr. E.D.Pa.2009) is a somewhat unusual case, as it involved the trustee attempting to recover funds fordebtors that were involved in a large home mortgage Ponzi scheme from defendants thatwere innocent as to the Ponzi scheme. For the constructive fraud claims, the facts allegedunder the heightened standard had to sufficiently allege facts showing the debtor receivedless than reasonably equivalent value in exchange for payments. Id. at 176-77. The

plaintiffs complaint and attached exhibits failed to allege facts making a facially plausibleclaim that the debtor received less than reasonably equivalent value, and the complaint wasdeemed insufficient as containing formulaic recitation of the elements of a cause ofaction. Id. at 179 (citingAshcroft, 129 S.Ct. at 1949). Due to the uniqueness of the Ponzischeme element, the actual fraud claims, even taking the allegations in the complaint as true,were dismissed due to the good faith exception of the innocent defendants. Id. at 181. The


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actual fraud claims were also deemed insufficient under Rule 9(b). Id. at 188.

2. Cases Denying Motions to Dismiss

InMiller v. Greystone Business Credit II, LLC(In re USA Detergents, Inc.), 418 B.R. 533,

541 (Bankr. D.Del. 2009), the trustee survived a motion to dismiss for failure to state aclaim. The defendants made a motion to dismiss the 547 claim on the basis that theplaintiff had not demonstrated the defendant was a creditor or that it had received more thanit would have under a Chapter 7 liquidation. First, the court concluded that the waiver of theright to collect by the guarantor-defendant was insufficient to deem the defendant a non-creditor. Id. at 541. Second, the court found the facts alleged by the plaintiff sufficient tosurvive a motion to dismiss on the element of 547(b) requiring the creditor to receive morethan it would in liquidation, as the trustee made numerous assertions about the debtorsfinancial problems that raised strong inference creditors received more than they would haveunder Chapter 7. Id. at 542.

As cited supra, in several Caremerica adversary proceedings the trustee was given leave toreplead claims that were dismissed for failure to meet the increased pleading requirements.InAngell v. First Eastern, LLC (In re Caremerica, Inc.), 2010 WL 428059 (Bankr. E.D.N.C.Jan. 5, 2010) (Caremeria VIII), the court addresses the sufficiency of the trusteesamended pleadings filed after leave was given by the court to amend. Id. at * 1. The courtdetermined that the amended preference claim rendered plausible the assertion that thetransfers were made on account of antecedent debt, as an exhibit to the complaint detailedcharges assessed and payments made, as well as showed an accumulating arrearage overtime. Id. As to the actual fraud claim under 11 U.S.C. 548(a)(1)(A), the trustee concededthat there were no facts to support such a claim, and the motion to dismiss as to actual fraudwas granted. Id. at *2. Concerning the constructive fraud claim, the trustee contended that

it was pled in the alternative to the 547 claim, and that the relationship between the debtorsand defendant that created a question as to whether the defendant gave consideration to thedebtors. Id. Despite the trustee having insufficient information as to why the defendant wasreceiving rent and whether the debtors received anything of value, the court determined thatthe issue was sufficiently pled and that the facts developed during discovery would establishwhich one of the trustees alternative claims could be pursued.Id.

B. Blunting the Impact: Motions to Amend that Relate Back. Under Fed. R. Civ.P. 15(c)

Despite the new factual specificity required in pleading, courts may grant plaintiffs leave

to amend complaint and allow the amendment to relate back to the date of filing. Under FederalRule of Civil Procedure 15(a), and party may amend once as a matter of course :

(B) if the pleading is one to which a responsive pleading is required,21 days after service of a responsive pleading or 21 days after serviceof a motion under Rule 12(b), (e), or (f), whichever is earlier.


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Fed. R. Civ. P. 15(a)(1)(B).

Under Rule 15(c), an amendment relates back to the date of the original pleading when:

(A) the law that provides the applicable statute of limitations allowsrelation back;

(B) the amendment asserts a claim or defense that arose out of theconduct, transaction, or occurrence set out or attempted to be setout in the original pleading; or

(C) the amendment changes the party or the naming of the partyagainst whom a claim is asserted, if Rule 15(c)(1)(B) is satisfied andif, within the period provided by Rule 4(m) for serving the summonsand complaint, the party to be brought in by amendment:

(i) received such notice of the action that it will not beprejudiced in defending on the merits; and

(ii) knew or should have known that the action would havebeen brought against it, but for a mistake concerning the properparty's identity.

Fed. R. Civ. P. 15(c)(1).

In CaremericaI, the trustee was granted permission to amend his complaint to include

factual support, and the court deemed that the amendment related back to the date of pleading. 409B.R. at 757. The court disagreed with the defendants assertions that a failure to state a claimprecluded amending complaints after the statute of limitations had run, stating that relation back isnot contingent on the original complaint satisfying the Rule 8(a)(2) pleading standard. Idat 757.

Plaintiffs counsel in a preference action, given sometimes less than fully completeinformation concerning the allegedly preferential transactions on tight deadlines, may have to amenda complaint after a motion to dismiss in order to avoid dismissal. The Comments to the recentamendments to the Federal Rules of Civil Procedure for Rule 15 indicate that the new 21-day timelimit to amend as a matter of course after a motion under Rule 12 was designed to allow the pleader

to address the concerns raised in the motion and potentially avoid the need for the motion be decidedby the court:

This provision will force the pleader to consider carefully and promptly the wisdomof amending to meet the arguments in the motion. A responsive amendment mayavoid the need to decide the motion or reduce the number of issues to be decided,


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and will expedite determination of issues that otherwise might be raised seriatim.

Report of the Advisory Committee on Civil Rules, Comments to Rule 15, p. 288(http://www.uscourts.gov/uscourts/RulesAndPolicies/rules/Supreme%20Court%202008/ST

09-2008.pdf).

A motion to dismiss that alleges the complaint fails to state a claim upon which relief may begranted can be countered by amending the complaint to supplement the allegedly insufficientpleadings, addressing the concerns in a way that avoids the need to decide the motion as theComments contemplated.

If the plaintiff has missed the 21-day deadline, Rule 15 indicates that if a party cannotamend as a matter of course, leave to amend should be freely granted when justice requires. Fed.R. Civ. P. 15(a)(2). Caselaw indicates that liberal leave to amend is favored. Although the decisionto grant or deny a motion to amend is within the discretion of the court, outright refusal to grantthe leave without any justifying reason appearing for the denial is not an exercise of discretion; it

is merely abuse of that discretion and inconsistent with the spirit of the Federal Rules. Foman v.Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230 (1962). Only when equitable factors suggestamendment would be unjust should leave to amend be denied. Arthur v. Maersk, Inc., 434 F.3d 196,203 (3d Cir. 2006). At least in the Third Circuit, courts have applied a liberal approach toamendment, to ensure that a claim may be heard on the merits rather than on technicalities.Dole v.Arco Chemical Co., 921 F.2d 484, 487 (3d Cir. 1990).

Motions to amend that meet the requirements of Federal Rule of Civil Procedure 15(c) aredeemed to relate back to the date of the original pleading. A plaintiff merely adding factual detailsto the same claims asserted in the original, allegedly deficient complaint has a strong argument thatunder 15(c)(1)(B), the amendment asserts a claim or defense arising from the conduct, transaction,

or occurrence set out in the original pleading, therefore qualifying for relation back. Although thenew heightened pleading standard may create a more burdensome process for plaintiffs in adversaryproceedings, a motion to dismiss should not be fatal to a party with the information and exhibitsnecessary to amend a complaint to create a facially plausible complaint that relates back to the dateof the original filing.

C. Strengthening the Initial Complaint to Avoid Twombly andIqbalConcerns

Often in avoidance actions the plaintiff is a Chapter 7 trustee or litigation trustee, and is ina different position in terms of first-hand knowledge of the facts comprising the complaint.However, after Twombly and Iqbal, trustees must take care to ensure that avoidance action

complaints contain facts sufficient to make out plausible preference claims. The following non-exhaustive list contains issues identified in the cases cited supra that counsel should consider whenfiling a complaint:

In a jointly administered case, is the debtor that actually paid each transfer identified?


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Is each transfer identified by check number or identified as a wire? Is the check date andclear date listed?

Is the actual antecedent debt identified? In many cases the invoice number and invoicedate can provide this information. In other cases other documents may have to be

identified to connect the transfer to antecedent debt.

In addition to referencing the presumption of insolvency, is there other information oninsolvency that may be included?

When alleging that the transfers allowed the defendant to receive more than it wouldhave under a Chapter 7 liquidation, are there schedules and proofs of claims thatcan be referenced that can provide support for this element?

A plaintiffs attorney would be wise to strengthen their avoidance action complaints pro-activelyso as to avoid motions to dismiss after the fact.


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1 The Debtors in these cases, along with the last four digits of each Debtor's federal tax identification number, are: AscendiaBrands, Inc. (8820); Hermes Acquisition Company 1 LLC (2347); Ascendia Brands Co., Inc. (4604); Lander Co., Inc. (2447);Lander Intangibles Corporation (8789); and Ascendia Real Estate LLC (2435). The mailing address for each of the Debtors isP.O. Box 450, Penns Park, PA 18943.

10

UNITED STATES BANKRUPTCY COURTDISTRICT OF DELAWARE

In re

Ascendia Brands, Inc., et al.1,

Debtors.

Bk. No. 08-11787-BLS(Jointly Administered)

Chapter 11

Ascendia Brands, Inc., et al., Debtors inPossession,

Plaintiff,vs.

A-1 Label Inc.,

Defendant.

Adv. No. Refer to Summons

COMPLAINT TO AVOID TRANSFERS

PURSUANT TO 11 U.S.C. 547, 548, 549AND 502 AND TO RECOVER

PROPERTY TRANSFERRED PURSUANT TO 11 U.S.C. 550

Ascendia Brands, Inc., and certain of its direct and indirect affiliates and subsidiaries, the

debtors and the debtors-in-possession in the above cases (collectively, the "Plaintiff"), by its

undersigned attorneys, in support of this complaint (the "Complaint") to avoid and recover

transfers against A-1 Label Inc. (the "Defendant"), hereby alleges upon information and belief

that:

NATURE OF THE CASE


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1. This Complaint seeks to avoid and recover from Defendant, or from any other

person or entity for whose benefit the transfers were made, all preferential transfers of property

made for or on account of an antecedent debt and to or for the benefit of Defendant by Ascendia

Brands, Inc., et al. (the "Debtors") during the ninety-day (90) period prior to the filing of the

Debtors' bankruptcy petitions pursuant to 11 U.S.C. 547 and 550. Subject to proof, the

Complaint also seeks to recover pursuant to 11 U.S.C. 549 any transfers on account of pre-

petition debt that cleared post-petition and pursuant to 11 U.S.C. 548 any transfers that may

have been a fraudulent conveyance. To the extent that Defendant has filed a proof of claim or

has a claim listed on the Debtors' schedules as undisputed, liquidated, and not contingent, or has

otherwise requested payment from the Debtors' or the Debtors' chapter 11 estates, (collectively,

the "Claims"), this Complaint is not intended to be, nor should it be construed as, a waiver of

Plaintiff's right to object to such Claims for any reason including, but not limited to, 11 U.S.C.

502 (a) through (j) ("Section 502"), and such rights are expressly reserved. Notwithstanding this

reservation of rights, certain relief pursuant to Section 502 may be sought by Plaintiff herein as

further stated below.

JURISDICTION

2. This Court has subject matter jurisdiction over this adversary proceeding, which

arises under Title 11, arises in, and relates to cases under Title 11, in the United States

Bankruptcy Court for the District of Delaware, Case No. 08-11787, pursuant to 28 U.S.C. 157

and 1334(b).

3. The claims and causes of action set forth herein concern the determination,

allowance, disallowance, and amount of claims under 11 U.S.C. 502, 547, 548, 549 and 550.


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This adversary proceeding is a "core" proceeding to be heard and determined by the Bankruptcy

Court pursuant to 28 U.S.C. 157(b)(2).

4. Venue is proper in the District of Delaware pursuant to 28 U.S.C. 1408.

BACKGROUND

5. These bankruptcy cases were commenced by the filing on August 5, 2008 (the

"Petition Date") of voluntary petitions for relief under Chapter 11 of title 11 of the United States

Code by the Debtors. Plaintiff is authorized to commence suit on behalf of the Debtors' chapter

11 estates.

6. Plaintiff is informed and believes and on that basis alleges that Defendant is a

business entity whose legal structure is presently unknown.

CLAIMS FOR RELIEF

COUNT 1

(Avoidance of Preference Transfers - 11 U.S.C. 547)

7. Plaintiff incorporates all preceding paragraphs as if fully re-alleged herein.

8. On or within ninety (90) days before the Petition Date, that is between May 7,

2008 and August 5, 2008 (the "Preference Period"), the Debtors continued to operate their

business affairs, including the transfer of property, either by checks, cashier checks, wire

transfers, direct deposit or otherwise to certain entities, including Defendant.

9. Plaintiff has completed an analysis of all readily available information of the

Debtors and is seeking to avoid all the transfers of an interest of the Debtors' property made by

one or more of the Debtors to Defendant within the Preference Period.

10. Plaintiff has determined that one or more of the Debtors made transfers to


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Defendant during the Preference Period in an amount not less than $436,642.22 (the

"Transfers"). Attached hereto as "Exhibit A" and incorporated herein by this reference is a list

identifying each known Transfer that Plaintiff seeks to avoid and recover in this Complaint.

11. During the course of this proceeding, Plaintiff may learn (through discovery or

otherwise) of additional transfers made to Defendant during the Preference Period. It is

Plaintiff's intention to avoid and recover all transfers made by one or more of the Debtors of an

interest of the Debtors in property and to or for the benefit of Defendant or any other transferee.

Plaintiff reserves its right to amend this original Complaint to include: (i) further information

regarding the Transfers, (ii) additional Transfers, (iii) modifications of and/or revision to

Defendant's name, (iv) additional defendants, and/or (v) additional causes of action (e.g., but not

exclusively, 11 U.S.C. 542, 544, 545, 548 and 549) (collectively, the "Amendments"),

that may become known to Plaintiff at any time during this adversary proceeding, through formal

discovery or otherwise, and for the Amendments to relate back to this original Complaint.

12. Defendant was a creditor of the one or more of the Debtors at the time of the

Transfers within the meaning of 11 U.S.C. 101(10)(A). At the time of the Transfers,

Defendant had a right to payment on account of an obligation owed to Defendant by one or more

of the Debtors. See "Exhibit A" attached hereto and incorporated herein by this reference, which

also identified each known invoice or debt owed to Defendant by one or more of the Debtors and

paid by the Transfers sought to be avoided and recovered in this Complaint.

13. The Transfers were to or for the benefit of a creditor within the meaning of 11

U.S.C. 547(b)(1) because the Transfers either reduced or fully satisfied a debt then owed by

one or more of the Debtors to Defendant. Id.


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14. The Transfers were for, or on account of, antecedent debts owed by one or more

of the Debtors before the Transfers were made. Id.

15. The Debtors were insolvent at all times during the ninety (90) days prior to the

Petition Date. Plaintiff is entitled to the presumption of insolvency for the Transfers made

during the Preference Period pursuant to 11 U.S.C. 547(f).

16. As a result of the Transfers, Defendant received more than it would have received

if: (i) the Debtors' cases were under chapter 7 of the Bankruptcy Code; (ii) the Transfers had not

been made; and (iii) Defendant received payment of its debts under the provisions of the

Bankruptcy Code. As evidenced by the Debtors' schedules filed in the underlying bankruptcy

case as well as the proofs of claim that have been received to date, the Debtors' liabilities exceed

their assets to the point that unsecured creditors will not receive a full payout of their claims

from the Debtors' bankruptcy estate.

17. In accordance with the foregoing, the Transfers are avoidable pursuant to 11

U.S.C. 547(b).

COUNT II

(To Avoid Fraudulent Conveyances Pursuant to 11 U.S.C. 548(a)(1)(B))


19. Subject to proof, Plaintiff pleads in the alternative that to the extent one or more

of the Transfers were not on account of an antecedent debt or a prepayment for goods

subsequently received, one or more of the Debtors did not receive reasonably equivalent value in

exchange for such transfer(s) (the "Potentially Fraudulent Transfers"); and

A. One or more of the Debtors were insolvent on the date that the Transfer(s)


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was made or became insolvent as a result of the Transfer(s); or

B. One or more of the Debtors were engaged in business or a transaction, or

was about to engage in business or a transaction, for which any property

remaining with one or more of the Debtors was an unreasonably small

capital; or

C. One or more of the Debtors intended to incur, or believed that one or more

of the Debtors would incur, debts that would be beyond one or more of the

Debtors' ability to pay as such debts matured.

20. The Potentially Fraudulent Transfers are avoidable pursuant to 11 U.S.C.

548(a)(1)(B).

COUNT III

(To Recover Unauthorized Post Petition Transfers Pursuant to 11 U.S.C. 549)


22. Subject to proof, Plaintiff pleads in the alternative that to the extent one or more

of Debtors made a transfer to Defendant on account of obligations that arose before the Petition

Date and that cleared after the Petition Date, such transfer(s) were unauthorized post-petition

transfers (the "Post Petition Transfers") and are avoidable under 11 U.S.C. 549.

COUNT IV

(Recovery of Avoided Transfers - 11 U.S.C. 550)


24. Plaintiff is entitled to avoid the Transfers pursuant to 11 U.S.C. 547(b), any

Potentially Fraudulent Transfers pursuant to 11 U.S.C. 548, and any Post Petition Transfers


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under 11 U.S.C. 549. The Transfers, any Potentially Fraudulent Transfers and any Post

Petition Transfers are collectively referred to herein as "All Avoided Transfers."

25. Defendant was the initial transferee of the All Avoided Transfers or the

immediate or mediate transferee of such initial transferee or the person for whose benefit All

Avoided Transfers were made.

26. Pursuant to 11 U.S.C. 550(a), Plaintiff is entitled to recover from Defendant All

Avoided Transfers, plus interest thereon to the date of payment and the costs of this action.

COUNT V

(Disallowance of all Claims - 11 U.S.C. 502(d) and (j))


28. Defendant is an entity from which property is recoverable under 11 U.S.C. 550.

29. Defendant is a transferee of All Avoided Transfers avoidable under 11 U.S.C.

547, 548 and/or 549.

30. Defendant has not paid the amount of the All Avoided Transfers, or turned over

such property, for which Defendant is liable under 11 U.S.C. 550.

31. Pursuant to 11 U.S.C. 502(d), any and all Claims of Defendant and/or its

assignee, against the Debtors' chapter 11 estates or Plaintiff must be disallowed until such time

as Defendant pays to Plaintiff an amount equal to the aggregate amount of All Avoided

Transfers, plus interest thereon and costs.

32. Pursuant to 11 U.S.C. 502(j), any and all Claims of Defendant, and/or its

assignee, against the Debtors' chapter 11 estates or Plaintiff previously allowed by the Debtors or

Plaintiff, must be reconsidered and disallowed until such time as Defendant pays to Plaintiff an


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amount equal to the aggregate amount of all the All Avoided Transfers.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff requests that this Court grant it the following relief against

Defendant:

As to Counts I through V, that the Court enter a judgment against Defendant:

A. That All Avoided Transfers avoidable under 11 U.S.C. 547, 548 and/or 549 in

the amount of $436,642.22 be avoided;

B. That All Avoided Transfers, to the extent that they are avoided pursuant to 11

U.S.C. 547, 548 and/or 549, be recovered by Plaintiff pursuant to 11 U.S.C.

550;

C. Disallowing, in accordance with 11 U.S.C. 502 (d), any Claims held by

Defendant and/or its assignee until Defendant satisfies the judgment;

D. Disallowing, in accordance with 11 U.S.C. 502 (j), any Claims held by

Defendant and/or its assignee until Defendant satisfies the judgment;

E. Awarding pre-judgment interest at the maximum legal rate running from the date

of each Transfer to the date of judgment herein;

F. Awarding post judgment interest at the maximum legal rate running from the date

of judgment herein until the date the judgment is paid in full, plus costs;

G. Requiring Defendant to pay forthwith the judgment amount awarded in favor of

Plaintiff ;

H. Granting Plaintiff such other and further relief as the Court deems just and proper.


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Dated: July 28, 2010

By /s/ Local Counsel [LOCAL COUNSEL]

andPrimary Counsel(Please Contact Primary Counsel) Joseph L. Steinfeld, Jr., DC SBN 297101,

MN SBN 0266292, VA SBN 18666Gary D. Underdahl, MN SBN 0301693AASAK FINANCIAL LLP2600 Eagan Woods Drive, Suite 400St. Paul, MN 55121Telephone: (651) 406-9665 ext. 857 Fax: (651) 406-9676E-Mail: [email protected]

Attorneys For Plaintiff, Ascendia Brands, Inc., et al.,Debtors in Possession


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Insolvency Financial & Collection Legal Services

16150 Hartsook Street 2600 Eagan Woods Drive, Suite 400 Los AngelesEncino, CA 91436 St. Paul, MN 55121 MinneapolisPHONE: 818/609-9268 PHONE: 651/406-9665FAX: 818/609-9686 FAX: 651/406-9676

TRANSFERS DURING PREFERENCE PERIOD

Defendant: A-1 Label Inc.Bankruptcy Case: Ascendia Brands, Inc., et al.Preference Period: May 7, 2008 - August 5, 2008

Debtor Entity/Check No.

Check Amount Clear Date Inv No. Inv Date Inv Amt (US Dollars)

Ascendia BrandsCo Inc63108

$34,142.96 May 15, 2008 062278 March 4, 2008 $3,349.50


$34,142.96 May 15, 2008 062279 March 4, 2008 $4,233.77


$34,142.96 May 15, 2008 062293 March 6, 2008 $415.62

Ascendia Brands

Co Inc63108

$34,142.96 May 15, 2008 062295 March 6, 2008 $285.00


$34,142.96 May 15, 2008 062326 March 7, 2008 $2,449.20


$34,142.96 May 15, 2008 062327 March 7, 2008 $522.12


$34,142.96 May 15, 2008 062328 March 7, 2008 $134.40


$34,142.96 May 15, 2008 062329 March 7, 2008 $185.66


$34,142.96 May 15, 2008 062330 March 7, 2008 $296.80


$34,142.96 May 15, 2008 062331 March 7, 2008 $628.10


$34,142.96 May 15, 2008 062332 March 7, 2008 $176.40


$34,142.96 May 15, 2008 062333 March 7, 2008 $260.40


$34,142.96 May 15, 2008 062334 March 7, 2008 $255.17


$34,142.96 May 15, 2008 062335 March 7, 2008 $163.62


$34,142.96 May 15, 2008 062336 March 7, 2008 $1,937.26


$34,142.96 May 15, 2008 062337 March 7, 2008 $954.46


$34,142.96 May 15, 2008 062338 March 7, 2008 $2,073.96


$34,142.96 May 15, 2008 062535 March 11, 2008 $209.55


$34,142.96 May 15, 2008 062536 March 11, 2008 $636.00


$34,142.96 May 15, 2008 062537 March 11, 2008 $165.60


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$34,142.96 May 15, 2008 062538 March 11, 2008 $602.80


$34,142.96 May 15, 2008 062539 March 11, 2008 $170.40


$34,142.96 May 15, 2008 062540 March 11, 2008 $301.40


$34,142.96 May 15, 2008 062541 March 11, 2008 $170.40


$34,142.96 May 15, 2008 062542 March 11, 2008 $628.10


$34,142.96 May 15, 2008 062543 March 11, 2008 $176.40


$34,142.96 May 15, 2008 062544 March 11, 2008 $314.05


$34,142.96 May 15, 2008 062545 March 11, 2008 $88.20

Ascendia BrandsCo Inc

63108

$34,142.96 May 15, 2008 062546 March 11, 2008 $163.62


$34,142.96 May 15, 2008 062547 March 11, 2008 $155.00


$34,142.96 May 15, 2008 062548 March 11, 2008 $284.00


$34,142.96 May 15, 2008 062549 March 11, 2008 $142.00


$34,142.96 May 15, 2008 063963 April 28, 2008 $3,497.50


$34,142.96 May 15, 2008 063965 April 28, 2008 $1,352.93


$34,142.96 May 15, 2008 063967 April 28, 2008 $1,920.71

Ascendia Brands

Co Inc63108

$34,142.96 May 15, 2008 063969 April 28, 2008 $347.29


$34,142.96 May 15, 2008 063971 April 28, 2008 $3,011.66


$34,142.96 May 15, 2008 063977 April 29, 2008 $399.78


$34,142.96 May 15, 2008 063978 April 29, 2008 $383.25


$34,142.96 May 15, 2008 063979 April 29, 2008 $700.88


$68,687.42 May 21, 2008 062582 March 13, 2008 $1,294.20


$68,687.42 May 21, 2008 062583 March 13, 2008 $299.13


$68,687.42 May 21, 2008 062584 March 13, 2008 $597.08


$68,687.42 May 21, 2008 062585 March 13, 2008 $268.80


$68,687.42 May 21, 2008 062586 March 13, 2008 $566.40


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$68,687.42 May 21, 2008 062587 March 13, 2008 $134.40


$68,687.42 May 21, 2008 062588 March 13, 2008 $522.12


$68,687.42 May 21, 2008 062589 March 13, 2008 $556.71


$68,687.42 May 21, 2008 062590 March 13, 2008 $556.71


$68,687.42 May 21, 2008 062591 March 13, 2008 $112.23


$68,687.42 May 21, 2008 062592 March 13, 2008 $466.20


$68,687.42 May 21, 2008 062593 March 13, 2008 $290.88


$68,687.42 May 21, 2008 062594 March 13, 2008 $142.00


63418

$68,687.42 May 21, 2008 062595 March 13, 2008 $126.83


$68,687.42 May 21, 2008 062596 March 13, 2008 $616.38


$68,687.42 May 21, 2008 062648 March 17, 2008 $900.60


$68,687.42 May 21, 2008 062649 March 17, 2008 $1,232.56


$68,687.42 May 21, 2008 062650 March 17, 2008 $117.16


$68,687.42 May 21, 2008 062651 March 17, 2008 $431.60


$68,687.42 May 21, 2008 062652 March 17, 2008 $537.60

Ascendia Brands

Co Inc63418

$68,687.42 May 21, 2008 062653 March 17, 2008 $399.58


$68,687.42 May 21, 2008 062654 March 17, 2008 $932.40


$68,687.42 May 21, 2008 062655 March 17, 2008 $3,136.00


$68,687.42 May 21, 2008 062656 March 17, 2008 $445.20


$68,687.42 May 21, 2008 062657 March 17, 2008 $1,205.76


$68,687.42 May 21, 2008 062658 March 17, 2008 $6,002.64


$68,687.42 May 21, 2008 062659 March 17, 2008 $96.39


$68,687.42 May 21, 2008 062660 March 17, 2008 $96.39


$68,687.42 May 21, 2008 062669 March 18, 2008 $834.90


$68,687.42 May 21, 2008 062670 March 18, 2008 $504.23


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$68,687.42 May 21, 2008 062671 March 18, 2008 $739.80


$68,687.42 May 21, 2008 062672 March 18, 2008 $472.00


$68,687.42 May 21, 2008 062673 March 18, 2008 $268.80


$68,687.42 May 21, 2008 062674 March 18, 2008 $472.00


$68,687.42 May 21, 2008 062675 March 18, 2008 $472.00


$68,687.42 May 21, 2008 062676 March 18, 2008 $197.40


$68,687.42 May 21, 2008 062677 March 18, 2008 $236.00


$68,687.42 May 21, 2008 062678 March 18, 2008 $134.40


63418

$68,687.42 May 21, 2008 062679 March 18, 2008 $522.12


$68,687.42 May 21, 2008 062680 March 18, 2008 $207.90


$68,687.42 May 21, 2008 062681 March 18, 2008 $493.50


$68,687.42 May 21, 2008 062682 March 18, 2008 $201.60


$68,687.42 May 21, 2008 062683 March 18, 2008 $923.92


$68,687.42 May 21, 2008 062684 March 18, 2008 $232.08


$68,687.42 May 21, 2008 062685 March 18, 2008 $2,385.00

Ascendia Brands

Co Inc63418

$68,687.42 May 21, 2008 062686 March 18, 2008 $662.40


$68,687.42 May 21, 2008 062687 March 18, 2008 $2,561.90


$68,687.42 May 21, 2008 062688 March 18, 2008 $681.60


$68,687.42 May 21, 2008 062689 March 18, 2008 $904.20


$68,687.42 May 21, 2008 062690 March 18,

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