472 F.3d 943 (7th Cir. 2007), 06-1862, Creditor's Committee of Jumer's Castle Lodge, Inc. v. Jumer
|Citation:||472 F.3d 943|
|Party Name:||CREDITOR'S COMMITTEE OF JUMER'S CASTLE LODGE, INC., Plaintiff-Appellant, v. D. James JUMER, Defendant-Appellee.|
|Case Date:||January 02, 2007|
|Court:||United States Courts of Appeals, Court of Appeals for the Seventh Circuit|
Argued November 3, 2006
Appeal from the United States District Court for the Central District of Illinois, No. 05-1178—Joe Billy McDade, Judge.
Philip E. Koenig (argued), Konecky, Koenig, Kutsunis & Weng, Rock Island, IL, for Appellant.
Edward R. Durree (argued), Kingery, Durree, Wakeman & Ryan, Peoria, IL, for Appellee.
Gary T. Rafool, Rafool & Bourne, Peoria, IL, for Debtor.
Before EASTERBROOK, Chief Judge, and FLAUM and Williams, Circuit Judges.
FLAUM, Circuit Judge.
On October 13, 1999, Jumer's Castle Lodge (JCL) filed for bankruptcy. As part of the bankruptcy proceedings, JCL's Creditors' Committee (the Committee) sued James Jumer to set aside a July 31, 1998 transaction that the Committee claimed was fraudulent. The bankruptcy court granted summary judgment in Jumer's favor, and the district court affirmed. For the following reasons, we affirm as well.
In October 1997, Jumer was the principal shareholder of JCL, a financially unstable corporation that owned a central Illinois hotel chain recognizable for its historical German theme. Jumer knew that his company was struggling, so he attempted to sell it to Saranow Gaming Investors, Inc. (Saranow), through its representative, Frank Pedulla. Saranow declined to purchase JCL outright, however, because of JCL's shaky bottom line. JCL had already defaulted on loans with two different banks; its balance sheet revealed a number of past-due accounts receivable from other Jumer-owned entities; and it was paying Jumer $14,000 per month to lease property for its Galesburg Hotel.
Preferring a less risky investment, Saranow agreed to purchase thirty percent of JCL's stock for $2 million, with the condition that JCL and Jumer make a number of transfers aimed at improving JCL's balance sheet. Jumer had to transfer to JCL his ownership in the Galesberg Hotel property (to eliminate the monthly lease payments), two parcels of real property adjacent to JCL's Peoria Hotel, and $1 million in cash in partial satisfaction of numerous promissory notes and accounts receivable due and owing from Jumer's other enterprises. In exchange, Jumer had to accept all of JCL's non-hotel assets, including its inter-company accounts receivable, three automobiles, the existing cash value of Jumer's life insurance policy, and a gas station.
On July 31, 1998, Saranow, JCL, and Jumer entered into two interrelated agreements: an Agreement for Sale of Real Property (covering the transactions between Jumer and JCL) and a Securities Purchase Agreement (covering Saranow's purchase of thirty percent of JCL's stock). The agreements resulted in the following transfers:
· Jumer gave JCL the Galesberg Hotel valued at $2.1 million,1 the property adjacent to the Peoria Hotel valued at $100,000, and $1 million in cash.
· Saranow gave JCL $2 million.
· JCL or Jumer (it is not clear which) gave Saranow thirty percent of JCL's stock.2
· JCL gave Jumer an account receivable, the book value of which was $2,767,545; additional accounts receivable
valued at $1,459,110; three automobiles valued at $64,000; a number of life insurance policies valued at $100,504; and a gas station valued at $106,493.
Unfortunately for JCL, the influx of capital was not enough to keep it solvent, and on October 13, 1999, it filed for bankruptcy. The Committee then filed suit against Jumer, seeking to set aside the Agreement for Sale of Real Property under the Illinois Uniform Fraudulent Transfer Act (IUFTA), 740 ILCS 160/6. The Committee alleged that JCL did not receive reasonable equivalent value for the items it transferred to Jumer.
On June 3, 2004, Jumer filed a motion for summary judgment...
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