The issue of whether a liquidating agent (or other estate representative) in a Chapter 11 case has standing to prosecute fraudulent conveyance claims against third-party professionals who may also have some involvement with management-led misconduct was the question presented in the case of In re Stanwich Financial Services, 2013 U.S. Dist. LEXIS 41863 (D.Conn., March 26, 2013). In the Stanwich case, the liquidating agent, as the successor to the official committee of unsecured creditors appointed in Stanwich’s Chapter 11 case, sought to recover payments received by certain professionals who allegedly brokered and otherwise assisted with the leveraged buyout of a particular entity.
Applying the Wagoner rule set forth in the Second Circuit case of Shearson Lehman Hutton v. Walter Wagoner Jr. (2d Cir. 1991)—i.e., that a claim against a third party for defrauding a corporation with the cooperation of management accrues to the creditors, not to the guilty corporation—the U.S. Bankruptcy Court for the District of Connecticut concluded that, in fact, the liquidating agent lacked the requisite standing to assert the alleged fraudulent transfer claims.
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