A U.S. trustee is suing the co-owner of a bankrupt Armonk gas station and convenience store for $508,000 for alleged improper transfers of assets to insiders.
Gregory M. Messer, Chapter 7 trustee for Armonk Snack Mart Inc., filed an adversary proceeding Nov. 1 in federal bankruptcy court against Musa Eljamal, America Petroleum LLC and Courtesy Properties LLC, all of Thornwood.
Messer seeks to recover assets “so that Armonk’s bankruptcy estate is restored to where it would have been had such debts been repaid, wrongful conduct not occurred, improper transfers had not been made, and property … (had) remained in the estate.”
The causes of action against Eljamal “lack merit,” White Plains attorney Anne Penachio said in an email. “A motion to dismiss is forthcoming.”
Armonk Snack Mart was formed in 2001, by Musa Eljamal and his son, Sammy Eljamal, with each holding a 50% interest.
They paid Robert Porpora Inc. $550,000 for his Armonk Garage business on Main Street. They leased the property from Robert Porpora Real Estate Corp., beginning at $60,000 a year.
The location was “highly desirable” and profitable, according to Messer’s complaint. But the Eljamals battled with their landlord and last year the business closed.
Armonk Snack Mart had filed for Chapter 11 bankruptcy reorganization in 2015, declaring $31,000 in assets and nearly $143,000 in liabilities. When the business closed, the case was converted to Chapter 7 liquidation and Messer was appointed as trustee to administer the estate.
Sammy Eljamal is not named as a defendant. Initially, according to Messer, he appeared to be in charge of the bankruptcy case, but by September 2015 his father had taken over.
Messer questions four transactions.
After Armonk Snack Mart filed for bankruptcy protection in 2015, it made a deal with America Petroleum, “owned by some combination of the Eljamals or their spouses,” to supply petroleum products.
Musa Eljamal listed $312,858 in credit card revenue that America Petroleum had collected on behalf of Armonk Snack but never remitted. The asset was listed on Armonk Snack’s balance sheet but later removed.
The supply agreement and the balance sheet revision were never approved by bankruptcy court, Messer charges, and America Petroleum still owes the estate.
Operating reports for the estate had also listed an “insider” asset, a $134,716 loan from Armonk Snack to “stockholder.” Shortly before the case was converted to Chapter 7 liquidation, the asset was removed from the balance sheet.
Last year, Armonk Snack transferred $40,000 to Courtesy Properties, a company owned by the Eljamals that had no business relationship with Armonk Snack. But operating reports do not show a loan or money due to Courtesy Properties, Messer says, and Armonk Snack never got bankruptcy court permission to borrow or transfer money to Courtesy.
Messer also cites a $20,000 general ledger entry described as cash inventory in an ATM machine. That money, the trustee claims, has never been accounted for.
The trustee is asking the court to order the defendants to account for the insider transactions, cancel improper transfers and allow Armonk Snack to recover the assets.
Messer also is asking for a $507,574 judgment against Musa Eljamal for alleged breach of fiduciary duty.
The complaint was filed for Messer by Manhattan attorneys Fred Stevens and Stephanie R. Sweeney.