In Re Hypnotic Taxi, LLC

543 B.R. 365 (2016)

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Nature of the Case

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Facts

P began this action asserting twelve causes of action against S and the other defendants. P seeks a judgment against D as guarantor of loans totaling $31.5 million to entities closely held by D. The loans are secured by taxi medallions. In the State Court Action, on May 19, 2015, the court granted P's motion for an order of seizure, allowing P to seize the Medallion Collateral. On July 22, 2015, the Medallion Loan Borrowers filed these chapter 11 bankruptcy cases. The commencement of these bankruptcy cases automatically stayed enforcement of the Seizure Order. In April 2015, after P commenced the State Court Action, and in the same month that Capital One entered the affidavit for judgment by confession, D sought the advice of a trust and estates lawyer, Michael Zimmerman. Zimmerman testified that D came to him for estate planning and asset protection. Zimmerman created four separate trusts. D placed into the trusts his interests in LLCs and corporations owning all of his personal residences and investment real estate holdings in the United States. D also transferred to the Trusts his interest in twenty-eight entities, holding investment properties in New York, Queens, Chicago, and Philadelphia. The total value of D's interests in the Real Estate Entities exceeds $60 million. On November 5, P moved by order to show cause for a temporary restraining order and order of attachment, seeking to restrain any transfer of assets in which D has an interest and to restrain any further transfer of assets transferred by D to the Trusts. A temporary restraining order (TRO) was issued restraining any transfers of D's property or property of the Trusts not in the ordinary course of business. On November 12, 2015, a hearing was held on P's motion for an order of attachment. On November 17th, an Order of Attachment and an Amended TRO were entered in favor of P. On November 19th, the Order of Attachment was stayed pending a hearing. On November 30th, an evidentiary hearing was held on P's motion for an order of attachment at which Mr. Zimmerman, the lawyer who drafted the Trusts, testified, along with one of the original trustees.