John Huber, Trustee of Sagecrest Liquidating Trust v. Agricap Financial Corporation et al., USDC Del

09/18/13

John Huber, Trustee of the Sagecrest Liquidating Trust v. Agricap Financial Corporation et al., USDC Del.

Plaintiff John Huber filed a motion for a temporary restraining order (“TRO”) seeking to enjoin Agricap Financial Corporation from proceeding with a $10 million real estate transaction that would have resulted in the compromise of a multi-million dollar, non-conforming commercial real estate loan.   Plaintiff, a subordinated lender, opposed the real estate transaction on the grounds that it was a commercially unreasonable, fraudulent conveyance which if consummated would allegedly have caused plaintiff to sustain significant financial losses.

As a threshold matter, Agricap, together with its senior secured lender, argued that the motion for a TRO violated the subordination agreement that was entered by plaintiff and Agricap’s senior secured lender, which among other things, barred collection efforts until the senior secured lender had been paid.

Agricap also opposed the TRO on the grounds that the proposed real estate sale was commercially reasonable given the use and condition of the real property collateral, past and unsuccessful marketing efforts, and the fact that, when consummated, the challenged real estate transaction would result in a partial payoff of a non-conforming loan and avoidance of significant and monthly principal and interest charges to the senior secured lender.

Agricap also argued that the granting of the injunction would have caused it to sustain significant harm by forcing it to finance a likely protracted collection effort and because it would probably have faced a lawsuit by the parties to the underlying real estate transaction if the sale was prevented by the TRO.  Finally, Agricap also argued that its private individual investor, who was also a defendant, would face additional prejudice if the TRO prevented the real estate transaction from closing because Agricap’s senior lender might then seek to collect the debt under its personal guarantee.

Following briefing and oral argument, Judge Leonard P. Stark refused to issue the TRO due to plaintiff’s failure to meet his burden of likely success on the merits due to the absence of evidence either that the motion for a TRO would likely be permitted by the subordination agreement and that the challenged real estate transaction would likely be found to be a fraudulent transfer.

The motion was argued for Agricap and the individual defendants by David I. Rosenbaum, Esquire, who was assisted in briefing by Art Keppel, Esquire and Angela Heim, Esquire.

David I. Rosenbaum is the Chairperson of the Commercial Litigation and Commercial Transaction Practices Group.  During his over 20 year legal career, Mr. Rosenbaum’s litigation practice has focused on commercial litigation and the defense of product liability matters.  David graduated from Temple University’s Law School in 1988 and he has been admitted to the state and federal courts of Pennsylvania and New Jersey as well as the U.S. Supreme Court.  Mr. Rosenbaum is also a member of the prestigious Product Liability Advisory Council and has served as an Adjunct Professor of Law at Temple University’s Law School.