FIU Contractor MCM Accused of Acting in Bad Faith
The bankrupt bridge contractor MCM has been accused of acting in bad faith after attempting to transfer assets owned by the company to another company owned by the current owner’s children and wife. During a bankruptcy any asset transfers must be approved by the bankruptcy trustee. Companies are expected to get a fair market value in return for assets moved out of the company. Simply transferring assets to another company you own or control while in bankruptcy can be cause for charges of bankruptcy fraud.
The company, which is owned by family members of the five Munilla brothers who own MCM, if called Frigate Holdings, LLC. As part of the company’s Chapter 11 filing, the reorganization plan included the moving of assets out of the MCM company that was attempting to reorganize their debt after the fatal bridge collapse. The bankruptcy trustee rejected the plan saying that the separation of the two companies was “largely illusory” and that this was an attempt to hide assets from injured victims and others with claims against the bankruptcy company.
Attorney for MCM Rejects that Claim
The Munillas hit back saying that the attempt to move assets to the new company included contributions made by the Munillas themselves backed by real estate holdings. Meanwhile, MCM’s attorney claims that there is “no money” to provide unsecured creditors.
Unsecured creditors include those with personal injury verdicts and settlements against the company. If that’s true, the bankruptcy could be converted into a Chapter 7 in which the entire holdings of the company would be liquidated for the purpose of repaying creditors. However, if the company manages to move holdings out MCM and into a new company, those assets would not be available to personal injury victims with claims against the bridge company.
If the whole thing reeks of a kind of accounting hocus pocus, that’s because it is. MCM is trying to get out of repaying victims of the FIU Bridge Collapse by transferring their assets out of the company before the Chapter 11 is converted into a Chapter 7.
Part of the problem for MCM is that the company was stripped of its FDOT certification essentially preventing it from taking on new clients. So the owners had a good reason for creating a new company. However, MCM is still responsible for the numerous deaths and injuries that their bridge caused and, although there are other companies named in pending lawsuits, MCM bears a large amount of the responsibility.
The judge agreed that MCM’s plan left a bad taste in his mouth. Chapter 11 bankruptcies protect creditors from debtors who wish to discharge all of their debt in Chapter 7, but it also protects debtors from liquidating their company to repay creditors. Those around the case seem to think that MCM is trying to get the best of both worlds by transferring assets from the debtor company to the new company while simultaneously not having to pay any money into debtor company which would be used to repay creditors.
Talk to a Miami Personal Injury Attorney Today
The Miami personal injury attorneys at the office of Alan Goldfarb, P.A. currently represents victims of the FIU Bridge Collapse. While the bankruptcy is bad news, millions of dollars have been contributed by insurers of MCM as well as the other named defendants. Talk to us today for a free consultation.