Tonkon Torp is pleased to announce a seven-figure win in its bankruptcy proceeding against Riverside Capital NY LLC, a large merchant cash advancer. The Tonkon Torp team was led by partners Danny Newman, Co-Chair of the firm’s Bankruptcy & Restructuring Practice Group, and Christopher Pallanch, with key assistance from attorneys Eric Levine and Rosie Fatta. The team successfully represented debtor Water Station Management, LLC in its Chapter 11 adversary proceeding to secure a nearly $7 million damages award on summary judgment.
At issue was whether the release and transfer of funds from Water Station’s bank account to Riverside in the few months before a receivership (which led to a chapter 11 bankruptcy) constituted an avoidable constructive fraudulent transfer. The basis of the claims was that Ryan Wear—owner and operator of Water Station, Creative Technologies, LLC, and Refreshing USA, LLC—entered into agreements between several of his entities and Riverside Capital. As alleged in the complaint, although Riverside’s agreements did not include Water Station, Riverside eventually collected $6,908,522 from Water Station in exchange for a release from claims on the agreements of Water Station’s affiliates, including its eventual co-debtors. Tonkon Torp effectively argued that there were no genuine issues of material fact on the claim for fraudulent transfer. The U.S. Bankruptcy Court for the Eastern District of Washington agreed, granting the motion and awarding almost $7 million in damages to the Refreshing Liquidating Trust (Water Station’s successor in interest) that will be available for the benefit of creditors, substantially all of whom were victims of Mr. Wear’s vast Ponzi scheme that defrauded investors of approximately $400 million over a six-year period.
