OSBIG SECURES $2 MILLION+ IN FRAUD CLAIM AGAINST INSIDERS
This bankruptcy case received national attention as it affected schools and school districts around the country whose 50,000 computers were not serviced and the warranties and service contracts, they purchased were worthless. On behalf of the bankruptcy trustee, we filed a complaint that alleged:
- The Debtor was in the business of selling service contracts for computers primarily to schools and school districts across the United States.
- The Debtor received upfront payments from its customers in exchange for an agreement to warrant, fix, and repair computers in the future.
- The Debtor sold service contract products to its customers in the five years preceding its bankruptcy filing.
- The Debtor failed to set aside any reserves to fund future service and warranty obligations.
- At the time of the bankruptcy filing, the Debtor had in its possession 50,000 computers in its possession that needed to be repaired.
OSBIG on behalf of the bankruptcy trustee brought an avoidance action to avoid the security interest of the insiders, to avoid fraudulent transfers to the insiders, to avoid fraudulent transfers to their legal counsel. The Complaint also brought breach of fiduciary duty claims against the insiders and their legal counsel, and a legal malpractice claim against corporate counsel. Settlement value was in excess of $2,000,000.
In re Staymobile Ventures, LLC: Bankruptcy Trustee v Eisenberg, et al., Case #24-4129.
Opposing counsel Honigman LLP and Howard & Howard Attorneys PLLC