Gary M. Kushner and Scott D. Simon pursued the personal guarantor of an unpaid corporate debt across a chapter 11 bankruptcy case and into Nassau County Supreme Court, where their efforts resulted in a summary judgment decision for $3.3 million, plus attorneys’ fees and 14% default interest running from April 2010, for a total judgment in excess of $6.7 million.
Kushner and Simon represented a distributor of licensed sporting goods and toys that agreed to sell its assets to the company’s comptroller. The comptroller obtained bank financing for $7 million and personally guaranteed a promissory note of $3 million for the balance of the $10 million purchase price. The comptroller then ran the company into the ground, resulting in an involuntary bankruptcy case filed by the company’s creditors.
The Bankruptcy Court ruled that Goetz Fitzpatrick’s client had an allowed claim against the comptroller’s insolvent company. When the allowed claim was not paid by the corporate debtor, Kushner and Simon brought suit in state court for a judgment against the comptroller on his guarantee, and moved for summary judgment at the close of all evidence.
The comptroller opposed the summary judgment motion, alleging that he was fraudulently induced to enter into the loan documents. But Kushner and Simon meticulously presented affidavits, Bankruptcy Court determinations, correspondence and deposition testimony to convince the state court that our client committed no fraud, the business failed due to the comptroller’s fraud and mismanagement, and the comptroller could not avoid his obligations under the multimillion-dollar personal guarantee.
Read the Nassau County Supreme Court’s full decision here.