The Trustee has thus re-written the history of SIPA in a futile search for SIPA standing just as he has re-written the history of section 544(a) in his futile search for bankruptcy standing.9

Moreover, even to the extent that the Trustee could effect an attachment to seize property (the causes of action) already in his possession, they would still be subject to the doctrine of in pari delicto. * * * For all of these reasons, the Trustee’s new-found argument under section 544 of the Bankruptcy Code fails to establish standing to pursue the common law claims here. II.

For the reasons set forth herein, GT respectfully requests that the Court grant the Motion and dismiss all claims in the Plan Agent’s Amended Complaint. Alternatively, and solely in the event that the Court does not dismiss all claims in the Amended Complaint, GT 9 Although some courts have permitted attorneys’ fees for claims under section 544, they have done so without analysis and ignored the distinction between avoidance under section 544 and the incorporated applicable state law, on the one hand, and the separate and independent inquiry of remedy under section 550, which does not incorporate any state law fraudulent transfer provisions, on the other hand. Case 4:16-cv-00536 Document 23 Filed in TXSD on 05/13/16

On the Sixth Claim for Relief, pursuant to DCL sections 275, 278 and/or 279, sections 544(b), 550(a) and 551 of the Bankruptcy Code, and section 78fff-2(c)(3) of SIPA: (a) avoiding and preserving the Six Year Transfers, (b) directing that the Six Year Transfers be set aside, and (c) recovering the Six Year Transfers, or the value thereof, from Defendant NTC and/or FBO Defendant for the benefit of the estate of BLMIS; Case 1:11-cv-08574-JSR Document 1 Filed 11/28/11 Page 24 of 28 22 vii. On the Seventh Claim for Relief as a result of the avoidance of the within Transfers, pursuant to DCL section 278 and/or 279, sections 544(b), 548, 550(a) and 551 of the Bankruptcy Code, and section 78fff-2(c)(3) of SIPA: (a) avoiding and preserving the Subsequent Transfers, (b) directing that the Subsequent Transfers be set aside; and (c) recovering the Subsequent Transfers, or the value thereof, from FBO Defendant for the benefit of the estate of BLMIS; viii. On all Claims for Relief, pursuant to federal common law and N.Y. CPLR 5001 and 5004 awarding the Trustee prejudgment interest from the date on which the Transfers were received; ix. On all Claims for Relief, establishment of a constructive trust over the proceeds of the Transfers in favor of the Trustee for the benefit of BLMIS’ estate; x. On all Claims for Relief, assignment of income tax refunds of Defendant NTC and/or FBO Defendant from the United States, state and local governments paid on fictitious profits during the course of the scheme; xi. On all Claims for Relief, awarding the Trustee all applicable interest, costs, and disbursements of this acti

The Bankruptcy Code makes clear that only the “trustee” may pursue creditor state-law fraudulent transfer claims when a debtor files for bankruptcy and that the trustee must do so under “[§] 544.” See 11 U.S.C. § 544(b)(1). It is not surprising, therefore, that when Congress sought to bar the avoidance of settlement payments under state fraudulent transfer law in § 546(e), it placed those limits on the single party expressly authorized to bring them in the first place, the “trustee” acting pursuant to “[§] 544.”

Here, Smartmatic, as a creditor of Sequoia, seeks to recover transfers made by Sequoia, who is not presently a debtor. Accordingly, § 544 does not presently grant the SVS Trustee exclusive authority to recover the fraudulent transfers made by Sequoia. Case 1:13-cv-05349-KBF Document 34

Case 1:11-cv-00913-CM Document 57 Filed 08/01/11 Page 84 of 92 -69- Section 544(b) of the Bankruptcy Code authorizes the avoidance of “obligations” and “transfers.” 11 U.S.C. § 544(b)(1). A setoff is neither.

13 The text of section 548(a)(1) is set forth in the Statutory Addendum. 14 Section 544(b) provides in pertinent part that “[t]he trustee may avoid any transfer of . . . property . . . that is voidable under applicable law . . .” 11 U.S.C. § 544(b)(2011). Under the Alabama Fraudulent Transfer Act, claims for constructive fraudulent transfer have substantially similar elements to those set forth in section 548(a)(1) of the Bankruptcy Code.

The Trustee commenced an adversary proceeding on September 15, 2011 against Seyfarth to avoid as a constructive fraudulent transfer the 3 In the proceedings in District Court, the Unfinished Business Waiver is referred to as the “Jewel Waiver.” 9 {00005873v2 } execution by Thelen’s partners and the partnership of a waiver of Thelen’s right to recover the value of its unfinished business upon dissolution, pursuant to 11 U.S.C. §§ 544(b)(1) and 548(a) and California state law. (A 7).4 The District Court (Pauley, J.) withdrew reference to the Bankruptcy Court pursuant to 28 U.S.C. § 157(d).

See Compl., Exh. B. No further elaboration is provided there or elsewhere in the amended complaint as to the nature of 26 Section 544(b) provides in pertinent part that “[t]he trustee may avoid any transfer of . . . property . . . that is voidable under applicable law . . . .” 11 U.S.C. § 544(b)(2011). Under the Alabama Fraudulent Transfer Act, claims for constructive fraudulent transfer have substantially similar elements to those set forth in section 548(a)(1) of the Bankruptcy Code.