Getty Trustee Sues Greenberg To Reclaim Pre-Ch. 11 Debt

December 3, 2013 | By Michael Lipkin | Law360

The liquidating trustee for bankrupt Getty Petroleum Marketing Inc. launched a slew of adversary complaints Tuesday against Greenberg Traurig LLP and other creditors seeking to recover more than $7.7 million in debt the fuel company paid out in the months leading up to its insolvency.

Trustee Alfred T. Giuliano filed complaints within the company's Chapter 11 filing in New York federal court in an attempt to get back payments made to 15 separate entities in the "preference period" of 90 days before Getty's December 2011 bankruptcy filing. The nearly identical complaints target law firms, insurance companies and petroleum services companies.

"The debtor received less than reasonably equivalent value in exchange for each of the fraudulent transfers," the complaints said. "The debtor was insolvent on each date on which a fraudulent transfer was made, or became insolvent as a result of such transfer(s)."

The complaints do not specify for what services Getty paid the creditors.

Most of the companies filed Monday targeted law firms such as Greenberg Traurig, Akin Gump Strauss Hauer & Feld LLP and Bleakley Platt & Schmidt LLP. The largest payments the trustee seeks to recover are $2.47 million to Greenberg Traurig, $1.15 million to Tyree Environmental Corp. and $119,221 to Akin Gump.

Two slightly different complaints, against South Jersey Fuel Inc. and Oxford Health Plans LLC, sought to recover payments made for goods and services "relevant" to Getty's refinery and petroleum products business.

"As marketers of petroleum products, the debtors regularly purchased goods and services from, and incurred debts to, various entities including, without limitation, vendors, creditors, suppliers and distributors," those complaints said.

If those two companies sought to recover money owed by Getty as general unsecured creditors through bankruptcy proceedings, they would not have been paid in full and would only have received up to 28.5 percent of their claims, according to the complaints.

Getty paid South Jersey Fuel $3.36 million in the three months leading up to its bankruptcy and paid Oxford $228,862.

In total, the adversary suits aim to recover $7.73.

Getty filed Chapter 11 bankruptcy protection in December 2011 in the wake of being ordered to pay ethanol fuel company Bionol Clearfield LLC more than $227 million following an arbitration dispute, with the company also facing claims over alleged environmental contamination.

Russian oil giant OAO Lukoil agreed in July to pay $93 million to end claims its American unit Lukoil Americas Corp., then Getty's owner, fraudulently transferred all of Getty's profitable gas stations, subleases and subsidiaries in 2009 to its sister company Lukoil North America LLC in exchange for a $120 million payment, allegedly far below what the assets were worth.

A representative for Giuliano told Law360 on Tuesday that the trustee had authorized about 70 preference payment complaints, and intends to make an interim distribution within the next calendar year to Getty creditors.

Giuliano is represented by Michael P. Morrow and John P. Leon of Subranni Zauber LLC and Eric R. Wilson, Kristin S. Elliott and Casey Boyle of Kelley Drye & Warren LLP.

Counsel information for the defendants was not immediately available.

The bankruptcy case is in re: Getty Petroleum Marketing Inc. et al., case number 1:11-bk-15606, in the U.S. Bankruptcy Court for the Southern District of New York.

--Additional reporting by Daniel Wilson. Editing by Chris Yates.

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