Law360 reported Aug. 31 that a Delaware bankruptcy judge has declined to throw out claims that Mike Moreno, founder and former CEO of Green Field Energy Services, stripped the company of $230 million in assets, ruling the liquidating trustee had argued a plausible enough case to move forward with his lawsuit.
In a 47-page opinion, U.S. Bankruptcy Judge Kevin Gross wrote that the trustee had fielded a “robust” complaint and had sufficiently pleaded enough so-called badges of fraud to survive Moreno’s motion to dismiss the lawsuit, the legal news service noted.
As ABiz reported earlier this year, the April 6 lawsuit, filed by the New York-based liquidating trustee charged with maximizing recoveries for Green Field Energy Service’s creditors, came a year after a court-appointed examiner similarly slammed Moreno for his role in the company’s demise. Representing the GFES Liquidation Trust, trustee Alan Halperin filed suit on behalf of Green Field’s estate — in essence, for the benefit of its creditors.
A subscription is required to read the full Aug. 31 Law360 story. ABiz was unable to immediately access the court documents.
On Aug. 20 Law360 reported that Moreno was pushing the Delaware bankruptcy court to toss the suit:
During a hearing in Wilmington, attorneys for the debtor’s founder and former CEO Michael (sic) Moreno contended that the liquidating trustee’s key allegation — accusing the ex-chief executive of moving a valuable portable electric turbine business called PowerGen to a different entity under his control and out of creditors’ reach — fails because it defines PowerGen so haphazardly, and with so many contradictions, as to make the court not be able to determine what it is and whether it was a Green Field asset.
“He says it’s worth $200 million,” Moreno attorney Alison R. Ashmore of Dykema Cox Smith said in court. “He needs to say what it was.”
Green Field Estate’s liquidating trustee Alan Halperin claims that Moreno moved Green Field away from its primary well servicing business to an unproven fracking method, and then plundered the company when he realized the strategy wouldn’t succeed.
The ex-CEO made the move around the time General Electric was thinking about investing $100 million to partner with Green Field to promote the business of selling self-powering turbines fueled with field gas extracted at well sites, but decided to take PowerGen for himself, the trustee has alleged.
But on Thursday, Moreno’s counsel argued that the trustee doesn’t really define what PowerGen actually was, vacillating back and forth between calling it a “business” and an “opportunity,” and mixing up other related terms to make it unclear what, if anything, Green Field actually owned except a right to use the technology. ...
Arguing for the trustee, James W. Stoll of Brown Rudnick LLP said there was “no question” PowerGen was adequately described and found it hard to believe there was any confusion.
“There's no requirement you have to allege with microscopic detail,” Stoll said.
The trustee also argues that much of Moreno's position bears little relevance to the pleading stage of a lawsuit and is “an aggressive effort” to mischaracterize the complaint.
Read the full Aug. 20 Law360 story here and more about Moreno's closer-to-home legal quandary here.