A Reasonable Measure Of Unreasonably Small Capital
Law360, New York (October 28, 2014, 10:37 AM EDT) -- On Sept. 30, 2014, in In re SemCrude LP,[1] the United States District Court for the District of Delaware, affirming the bankruptcy court's decision, held that direct partnership distributions by debtor SemGroup LP and indirect partnership distributions by its general partner, SemGroup G.P. LLC, to certain limited and general partners could not be avoided as constructive fraudulent transfers. The district court rejected the argument of the trustee of the SemGroup Litigation Trust that the debtor's line of credit should not be allocated significant value because the debtor's risky options trading activity violated the terms of its credit agreement and, therefore, the debtor was left with unreasonably small capital after the distributions were made....
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