April 29, 2012

The First Rule Of Maclaren Bankruptcy Club

brad-pitt-maclaren_justjared.jpgSo on Wednesday I was all excited because it looked like at least somebody still cared about the reports of financial shenanigans in Maclaren's stealth bankruptcy liquidation. And I figured I'd get around to posting about it, because that somebody was the court-appointed bankruptcy trustee, who had filed two motions seeking documents related to Maclaren USA's tangled web of executives, creditors, and wholly owned subsidiaries posing as separate, unrelated companies, all of which are nonetheless owned by Farzad Rastegar, and always have been, since the company's last creditor-dodging bankruptcy.

Then BAM, late Friday night Alice Hines reported on the filings for the Huffington Post, and wow. Not only have Maclaren's folks not responded to the media about their bankruptcy filing; they haven't responded to the bankruptcy court, either:

The motion "is an ordinary procedure when people aren't being cooperative with trustees," said Elizabeth Austin, [trustee Roberta] Napolitano's counsel. "As she got no response, the only choice is to go to the court and make them provide the information that she's requested or explain why they don't have it."
Napolitano says she needs the Maclaren documents "to determine whether she may pursue actions under Chapter 5 of the Bankruptcy Code," which is the section dealing with bankruptcy fraud.

Fraud, people. International stroller fraud sprinkled with amputated toddler fingertips and an offshore shell game chaser. I'm working on the screenplay now. I see Brad Pitt as Farzad Rastegar. Brad Pitt and Ed Norton.

Maclaren USA Evades Court Investigation Of Its Puzzling Bankruptcy [huffingtonpost]
image ganked from justjared


Nice to see Daddytypes getting the billing it deserves on this story (listed ahead of Huff Po, WSJ and NYT).
If I remember from earlier posts the vast majority of the creditors (in numbers and dollar amount) was a collection of other Rasteger-owned businesses. For sure, they aren't making too many calls to the bankruptcy trustees. That would probably indicated that Netto and the lawyers for the amputees are applying some pressure.

When they say fraud, they're probably talking about fraudulent transfers. That's not the same thing as regular fraud.

Fraudulent transfers include just about any transfer of assets that occurred at a time when the company was insolvent (or in the "zone of insolvency") even if the transfers weren't done with fraudulent intent. The theory is that when a company is insolvent, its assets effectively belong to its creditors and not to the company itself, so if the company makes dividends to its owners or sells assets for less than fair value to third parties, the creditors can avoid those transfers and recover equivalent value. See, e.g., the Madoff case, where innocent former investors are getting sued by the trustee to recover their profits because they cashed out their Madoff accounts at a time when Madoff's funds were actually insolvent.

The big question here is going to be whether anything was transferred out of MacUSA for less than fair value. You've highlighted a bunch of examples of things the trustee should be looking into (domain names, Shady Baby inventory, etc.). But there isn't yet a smoking gun that screams fraudulent transfer let alone outright fraud.

The smoking gun is there...keep looking. Transfers...

IANAL, obviously, but I think another issue is the nature of the claimed debts and the no-arms-length relationship between MacUSA and many of its creditors. If they were starving or bleeding or transferring assets out of MacUSA in anticipation of a bankruptcy, or loading it up with debt to other Rastegar-owned entities, then I'd think those claims could be disallowed or canceled, or those transactions could be subject to some ch. 5 fraud test.

It would not be the first time Rastegar's been implicated in less-than-arms-length debt transactions. I've got a bit more digging to do on it, but there's a related post coming up about such a deal.

Just like the name implies, girls are trying
things out. I could not lend a hand but look nice in comparison.
Asus Transformer Pad TF300 Asus Transformer Pad TF300  has a 10.

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