![]() Tops’ pension plan liabilities increased to $515 million by 2013 while its secured debt load more than doubled to ~$650 million, with capital expenditures also materially reduced. Initially, the PE Group offered to pay an additional $115 million, but decreased its offer because the seller declined to indemnify the PE Group against Tops’ pension plan liabilities. In 2007, the PE Group acquired Tops for $300 million, contributing $100 million in equity and funding the balance of the purchase price with $200 million of secured debt. ![]() ![]() The Court largely denied the defendants’ motion to dismiss, in which they asserted that the dividends were safe harbored under Bankruptcy Code section 546(e) and the breach of fiduciary duty claims were time-barred, and held that the litigation trustee could proceed with the majority of the stated causes of action, most notably the constructive and actual fraudulent conveyance claims and damages against the director-defendants for unlawfully approving certain dividend payments. The decision came in an adversary proceeding seeking to avoid four dividend payments totaling $375 million from 2009–2013 paid to the Tops’ private equity investors (the “PE Group”) as constructive and actual fraudulent transfers and also hold the director-defendants responsible for breaching their fiduciary duties. Bankruptcy Judge for the Southern District of New York, issued his final decision from the bench in the bankruptcy cases of supermarket chain Tops Holdings II Corporation (“Tops”). JUDGE DRAIN TACKLES PRIVATE EQUITY AND FRAUDULENT TRANSFERS IN ‘TOPS’ DECISION
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