10-2780 In re Longview Aluminum, LLC

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Bankruptcy
Preferential transfers; LLCs

A member of an LLC is an insider, even if he is not on good terms with the management, and a transfer to him made within a year of bankruptcy can be voided as a preferential transfer.

Forte argues that because he was prevented from managing or participating in a meaningful way in some of Longview’s affairs, he was in no way in control of Longview. Forte points out that as early as 2001, he was denied access to Longview’s books and records, and that in August 2002, before the $200,000 transfer was made, the majority of the Board executed a formal written consent excluding him from viewing Longview’s books and records. Longview responds that although the majority written consent removed Forte’s unfettered access to the books and records, this was merely a temporary suspension, and, moreover, did not remove Forte from his position as a member of Longview on the Board. The district court did not find the effect of the majority written consent to be enough to remove Forte’s status as an insider, and neither do we. There was never a formal vote or document executed that removed Forte’s member status. Forte’s surviving member status caused him to retain meaningful rights and control given to members under Longview’s LLC Agreement; significantly, Forte still retained voting rights in the company. At the time of the $200,000 transfer in November, Forte still held a formal position on the Board and did not resign until after he received the transferred funds.”

Affirmed.

10-2780 In re Longview Aluminum, LLC

Appeal from the United States District Court for the Northern District of Illinois, Der-Yeghiayan, J., Bauer, J.

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