Bankruptcy Trustee Sues Over Insider Loans

Former Montgomery Ward department store. Origi...

The family of the now bankrupt Fair Finance company owner is facing a lawsuit brought by the bankruptcy trustee in an attempt to recover more than $1 million which was allegedly looted from the estate through “insider loans.”The lawsuit is part of the ongoing effort to try and recover some of the more than $200 million dollars lost by more than 5,000 investors in Durham’s now bankrupt Fair Finance company.

The two named in the lawsuit may sound familiar because they own a Geist area gym. Dana and Jeffrey Osler, Tim Durham’s sister and brother-in-law, owe Fair Finance $1.2 million, claims a lawsuit filed Friday by the Fair Finance bankruptcy trustee.This lawsuit is the latest attempt by the bankruptcy trustee to try and get back some of the more than $200 million dollars lost by Fair Finance investors. In this filing, the bankruptcy trustee says Fair Finance was “utterly looted through insider loans.” The bankruptcy trustee’s attorney said more lawsuits are expected against those who got those loans and never paid the money back.

The lawsuit in this Chapter 11 bankruptcy is another example of how illegal asset transfers between insiders can impact a bankruptcy case.  Just as in the case of the Tribune bankruptcy, when a company engages in behavior that is just about guaranteed to push the company into insolvency; those actions might come under the suspicions of the bankruptcy trustee.  Fair Finance gave loans to insiders within the company that it allegedly knew had no intention of repaying.  The company knew that they were headed for bankruptcy and allegedly used the loans as way to cover what was essentially illegal asset transfers designed to keep assets from creditors.

By | 2017-12-13T01:04:36+00:00 January 31st, 2011|High-Profile Bankruptcies|Comments Off on Bankruptcy Trustee Sues Over Insider Loans