Settlement reached in case against SIST founder
Tim Ryan, firstname.lastname@example.org
A trial in a Minnesota bankruptcy court scheduled for this week was averted after a settlement was reached between the government and Samanta Roy Institute of Science and Technology Inc. founder Avraham Cohen over accusations he fraudulently transferred funds from a bankrupt subsidiary.
An adversary proceeding was filed in February by the trustee appointed to administer the Chapter 7 bankruptcy of SIST subsidiary Yehud-Monosson USA Inc., which includes two other SIST subsidiaries, Midwest Oil of Minnesota, LLC, and Midwest Oil of Anoka, LLC.
According to the adversary complaint, Yehud-Monosson transferred more than $31,000 from the insolvent company within a year of the bankruptcy filing and another $2,500 within the following year.
The transfers were made to Cohen from the Midwest Oil of Anoka bank account, according to the complaint, and were made at a time when the company was unable to pay its debts as they came due.
“The trustee believes, and therefore avers, that at the time Mr. Cohen obtained the transfers, the debtor, by and through its officers, acted with the actual intent to hinder, delay or defraud its present and future creditors,” the complaint states.
The complaint sought return of the funds to the estate for payment to the company’s debtors.
In his answer to the complaint, Cohen admitted receiving the funds, but distanced himself from how the money was transferred. He said he made loans to Yehud-Monosson president and SIST CEO Naomi Isaacson and that Isaacson repaid them using Midwest Oil as a conduit.
Cohen maintained the government’s fraud claim was not valid because the funds didn’t belong to Midwest Oil, but were loan repayments specifically earmarked to go to him.
During the bankruptcy proceedings, Isaacson testified at a Meeting of Creditors that Cohen had made either three or four unsecured loans to the debtor. However, the company’s bankruptcy filing did not list Cohen as a creditor.
The complaint alleged Cohen received more through the fund transfers than he would have as a creditor in normal bankruptcy proceedings.
The U.S. Trustee recently filed notice of settlement or compromise in the adversary proceeding.
According to the agreement, Cohen has offered to settle the matter for $27,000 and will waive any claim in the bankruptcy case.
“Because the trustee believes the settlement is in the best interests of creditors, the trustee requests that the settlement OVERSET FOLLOWS:be approved as the costs of litigation will quickly offset any recovery to the estate,” the agreement states.
The settlement was expected to be finalized by Friday unless there are objections filed with the court.
Cohen was previously known as R.C. Samanta Roy. SIST owns a number of Shawano area properties and businesses.
Yehud-Monosson filed for Chapter 11 bankruptcy in Delaware in March 2011. A federal judge ordered it converted to Chapter 7 — basically taking financial control away from SIST — and a trustee was appointed in June 2011. The case was sent to federal bankruptcy court in Minnesota.
The company is listed in its original bankruptcy petition as the owner and operator of convenience store properties. The bankruptcy was filed while a foreclosure was pending on one of its properties in Oakdale, Minn.
Yehud-Monosson listed more than $6.2 million in liabilities and nearly $7 million in assets, which included four properties in Minnesota, when the bankruptcy was filed.