The liquidation trust for bankrupt television manufacturer Syntax-Brillian Corp. can revive a lawsuit against Preferred Bank for its role in an allegedly fraudulent scheme by company directors to transfer Syntax-Brillian’s corporate finances to an Asian affiliate, the U.S. Court of Appeals for the Third Circuit has ruled.
The Third Circuit’s opinion reversed a July 2011 U.S. Bankruptcy Court for the District of Delaware decision dismissing the trust’s fraudulent transfer claims because it could not prove that Preferred Bank knew it was participating in the alleged malfeasance. However, the appellate court concluded Delaware bankruptcy law does not require culpability by the party conducting a transfer for a plaintiff to pursue such claims.
