The question “Where’s the Beef?” is typically associated with the famous Wendy’s television commercial from 1984 and its lovable actress, Clara Peller. But the recent decision in the chapter 7 case of a national meat processor had an avoidance action defendant asking, “Where’s the Beef … (with me)?” after the debtor’s chapter 7 trustee attempted to avoid over $5 million in transfers made by the debtor to the defendant prepetition. This is the first of two posts on Saracheck v. Crown Heights House of Glatt, Inc., a recent decision from the Bankruptcy Court for the Northern District of Iowa that provides insight into fraudulent transfer and preference defenses. Today’s post focuses on the court’s fraudulent transfer analysis, and the next post will focus on its preference analysis.
The debtor, Agriprocessors Inc., operated a slaughterhouse and meat-packing factory in Postville, Iowa. Agriprocessors was one of the nation’s largest producers of kosher meat and poultry. Aaron Rubashkin, a Hasidic butcher from Brooklyn, and his family founded, owned, and ran the business. The Rubashkins were part of a tight-knit Lubavitch community. Prepetition, certain members of the community lent money to Agriprocessors on an unsecured basis.