Adv. No. 23-03026 (Southern District of Illinois)

Case No. 23-30045 (Southern District of Illinois)

Adversary complaint filed by Chapter 11 Debtor against creditor and related entity dismissed in part with leave to replead. The Debtor asserted claims for breach of contract, promissory estoppel, avoidance of transfers as preferential and constructively fraudulent, and equitable subordination. Defendants moved to dismiss all counts for failure to state a claim upon which relief could be granted. Breach of contract count survived as to both defendants based in part on their admission of a valid contract in answer to previous iteration of complaint. Promissory estoppel count dismissed as to both defendants because the allegations relied on the existence of an express contract which would preclude relief under equitable principles. Preference avoidance count dismissed as to one defendant because the allegations did not support inference that the transfer was made to or for the benefit of or on account of a debt owed to that defendant. Count seeking to avoid transfer as constructively fraudulent dismissed as to both defendants because the Debtor received reasonably equivalent value for payment in the form of a dollar-for-dollar reduction of outstanding debt owed to the creditor defendant. And equitable subordination claim dismissed as to defendant that was not a creditor of the estate because it did not have a claim or interest to subordinate.

Fed. R. Civ. P. 12(b)(6); Fed. R. Bankr. P. 7012

11 U.S.C. §§510, 547, 548, 550