MEMORANDUM ORDER1

Re: AP Docket No. 49

BRENDAN LINEHAN SHANNON, Bankruptcy Judge.

Upon consideration of the Trustee's Motion for Summary Judgment (the "Motion")2 and the accompanying memorandum of law filed by the Trustee3; the opposition to the Motion filed by Defendant AMI Morton Fabrication, LLC ("AMI Morton")4; the Trustee's Reply5; the Court hereby FINDS and CONCLUDES as follows:

1. Prior to filing its Chapter 11 petition, the Debtor Revstone Industries, LLC ("Revstone" or the "Debtor") operated a number of manufacturing facilities in the Midwest serving the automotive industry. During all relevant times, George S. Hofmeister ("Hofmeister") served as Revstone's Chairman and sole member of its Board of Managers.

2. Between 2009 and 2011, Revstone made three payments to AMI Morton totaling $180,000 (the "Transfers"). AMI Morton is an entity that is owned entirely by three irrevocable trusts established for Hofmeister's children.

3. Revstone filed for Chapter 11 relief on December 3, 2012 and eventually reached a confirmed Plan.6 The Plan established a Litigation Trust and authorized a Litigation Trustee (the "Trustee") to pursue claims on behalf of Revstone's estate.

4. On December 1, 2014, Revstone commenced this adversary proceeding seeking to recover the Transfers under a theory of fraudulent conveyance. Pursuant to the terms in the confirmed Plan, this adversary proceeding was transferred and assigned to the Litigation Trust and the Trustee became the Plaintiff in this matter [AP Docket No. 22].

STANDARD

5. Pursuant to 11 U.S.C. §§ 544(b)(1) and 550, and 6 Del. C. § 1305, the Trustee must prove the following in order to avoid the Transfers:

6. Under Rule 56 of the Federal Rules of Civil Procedure, a court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56; see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986) ("Under Rule 56(c), summary judgment is proper `if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'").

THE PARTIES' POSITIONS

7. The Trustee argues that he is entitled to summary judgment against AMI Morton on his claim for relief pursuant to 11 U.S.C. §§ 544, 550, and 6 Del. C. § 1305. In support, the Trustee has shown Revstone transferred $180,000 through three separate payments to AMI Morton on February 23, 2009, April 3, 2009, and April 12, 2011. [AP Docket No. 53, exhibits D, E, and F]. In addition, the Trustee has presented an expert report that attests Revstone was insolvent at the time of the Transfers, that it had two predicate creditors with allowed unsecured claims, and that it did not receive anything of value in return. [AP Docket No. 52, exhibit C ("Lukenda Report")].

8. The Trustee therefore asserts that he has proven the elements of a constructively fraudulent conveyance: Revstone was insolvent at the time of the Transfers, it had at least one predicate creditor, and Revstone did not receive reciprocal value.

9. AMI Morton argues that there are remaining issues of material fact. Specifically, AMI Morton posits the Trustee has not met its burden in showing (1) Revstone was insolvent at the time of the Transfers and (2) that Revstone had at least one predicate creditor. In addition, AMI Morton suggests that Revstone received value in return for Transfers. However, it did not submit any evidence to that effect and has affirmatively stated it reserves that question for trial.

JURISDICTION

10. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334(b) and (e). This adversary proceeding is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2)(H).7 Venue is proper in this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

ANALYSIS

11. In order to recover under a theory of fraudulent conveyance, the Trustee has the burden of establishing each element of § 544 and 6 Del. C. § 1305 by a preponderance of the evidence. In re MDIP Inc., 332 B.R. 129, 132 (Bankr. D. Del. 2005) (holding the preponderance of the evidence standard also applies to Delaware fraudulent conveyance claims brought pursuant to § 544(b) of the Bankruptcy Code). The only elements meaningfully contested in this matter are solvency at the time of the Transfers, the presence of predicate creditors, and whether AMI Morton provided value in exchange for the Transfers.

12. As noted, the parties do not dispute that the $180,000 was Debtor's property and it was transferred to AMI Morton. The Trustee has met his burden under that prong. The remaining elements are addressed in turn.

SOLVENCY

13. The Trustee alleges Revstone was insolvent at the time of the Transfers and in support has presented an expert report from James Lukenda. In response, AMI Morton has filed declarations from Hofmeister and Scott McClarty, each offering lay opinions attesting that Revstone held valuable assets at the time of the Transfers that may have rendered the enterprise solvent. [AP Docket No. 56, exhibits 1 and 2].

14. The Court finds that the Trustee has affirmatively established insolvency by presenting the expert report of James Lukenda and has met his burden under this prong. The Lukenda Report asserts that Revstone was insolvent when value was transferred to AMI Morton. Mr. Lukenda's report reflects that he is qualified to perform the analysis and render an opinion as to solvency.8 The record further reflects that Mr. Lukenda applied generally accepted methodologies in reaching his conclusion that Revstone was insolvent at the time of the Transfers. [Lukenda Report at A023-A032].

15. AMI Morton relies on the lay opinion testimony of Hofmeister and Homer W. McClarty.9 The Court acknowledges that Federal Rule of Evidence 701 and case law permit opinion testimony by lay witnesses. Fed.R.Evid.701; See Glosband v. Watts Detective Agency, Inc., 21 B.R. 963 (D.Mass. 1981); In re Biddiscombe Int'l, LLC, 392 B.R. 909, 919 (Bankr.M.D.Fla. 2008) ("[M]ost courts allow an owner or officer of a business to testify as to its value or projected profits without the need to qualify the owner as an expert because such lay opinion testimony is based on a type of personal knowledge—the `particularized knowledge that the witness has by virtue of his or her position in the business'.") (citing Fed.R.Evid. 701 Advisory Committee Notes).

16. Although lay witness opinions may be admissible, the Court will nevertheless assess and assign the weight they should be given in light of their character and persuasiveness. Glosband, 21 B.R. at 981 (D.Mass. 1981). Considering the complexity of a solvency analysis, particularly in this large Chapter 11 case, the Court assigns little weight to the lay opinions of Hofmeister and McClarty. The declarations from Hofmeister and McClarty each offer values to some of Revstone's assets, but neither explains how the declarant reached the number. They provide a dollar value without any explanation or supporting evidence. It would appear Hofmeister and McClarty's opinions on value are just that—opinions, uninformed by any generally accepted valuation methodology.

17. Meanwhile, the Lukenda Report contains a detailed analysis of Revstone's assets and an explanation of Mr. Lukenda's methodology. Mr. Lukenda relied on the fair market transaction values paid by Hofmeister for the assets and the values assigned to those assets by independent auditors. [Lukenda Report at A024]. Mr. Lukenda notes that substantially all of Revstone's assets were acquired between January 1, 2009 and December 3, 2012, so the historic values paid by Hofmeister and assessed by the auditors reflect recent transactions that are reasonably reliable.

18. AMI Morton argues other circumstantial evidence suggests Revstone was solvent at the time of the Transfers. In particular, it underlines statements from an Unqualified Audit Opinion for 2010 prepared by a public accounting firm.10 [Docket No. 56, exhibit 4]. The Audit Opinion, Turnberry argues, lacks a statement that there was substantial doubt about Revstone's ability to continue as a going concern and therefore "a reasonable jury could conclude that Revstone was solvent" through 2012 [AP Docket No. 56]. The Court is not persuaded by this argument. The fact that an Audit Opinion lacks a going concern statement is not sufficient to rebut the detailed and specific findings in the Lukenda Report. Additionally, even if Revstone had a going concern value at the time of the Transfers, it does not necessarily follow that Revstone was solvent.11

19. Given Mr. Lukenda's experience and his thorough analysis of Revstone's financial history, the Court is persuaded by his conclusion that Revstone was insolvent at the time of the Transfers. The lay opinions and various reports filed by AMI Morton fall short of creating a genuine dispute as to a material fact. The Trustee has met his burden of proving insolvency and is entitled to summary judgment on that issue.

PREDICATE CREDITOR

20. AMI Morton argues that Revstone did not have the necessary predicate creditor at the time the Transfers were made. The Trustee presented two creditors it alleges held claims against Revstone at the time of the Transfers: Kentucky IU Division ("Kentucky") and the Indiana Collections Unit ("Indiana"). AMI Morton argues the Kentucky claim is ineligible to serve as a predicate creditor because Kentucky filed its proof of claim after the bar date and the Indiana claim is ineligible because it is inaccurate and filed in error.

21. The Trustee has met his burden in showing Revstone had at least one predicate creditor at the time of the Transfers. The Kentucky and Indiana claims were not objected to and were deemed allowed in the bankruptcy proceeding. See 11 U.S.C. § 502(a) ("A claim or interest . . . is deemed allowed, unless a party in interest . . . objects."). The Court agrees with the Trustee that the filing of the claim made the claimant an eligible predicate creditor. The Trustee has met its burden of proof and is entitled to summary judgment on this issue.

REASONABLY EQUIVALENT VALUE

22. Finally, the Trustee argues that AMI Morton did not receive reasonably equivalent value in exchange for the Transfers. In support, the Trustee relies on the Declaration and Report of Mr. Lukenda, wherein he states that based on his review of Revstone's records "[t]here is nothing to indicate that Revstone was obligated to make the [Transfers], or that Revstone ever received any benefit from making the [Transfers]." [AP Docket No. 51].

23. AMI Morton does not contest the assertions made by the Trustee or Mr. Lukenda. Rather, it states that it will "reserve for trial the issue of reasonably equivalent value." [AP Docket No. 59 at 1]. Furthermore, AMI Morton has filed no evidence that would suggest Revstone received anything in return for the Transfers.

24. For purposes of Summary Judgment, once the moving party has met its burden in showing there is no genuine issue of fact, the burden shifts to the non-moving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). See also Fed. R. Civ. P. 56(e).

25. The Court finds Revstone did not receive reasonably equivalent value for the Transfers. As noted above, Mr. Lukenda is knowledgeable in his field and qualified to conduct an analysis of Revstone's financial history. Based on his thorough review of Revstone's records, he has concluded that Revstone did not receive reasonably equivalent value. AMI Morton has failed to satisfy its burden and the Trustee is entitled to Summary Judgment on the question of reasonably equivalent value.

26. For the foregoing reasons, the Court will GRANT the Trustee's Motion. Accordingly, it is hereby:

ORDERED, that the Trustee's Motion for Summary Judgment against AMI Morton is GRANTED; and it is further

ORDERED, that the Trustee is directed to submit a form of judgment order consistent with the Court's ruling within 14 days of the date hereof.