A bankruptcy trustee is demanding $11.1 million from companies that did business with JPR Mechanical Inc. shortly before the New Rochelle heating and air conditioning contractor petitioned for bankruptcy protection.
Marianne T. O’Toole says the companies benefited from preferential payments ”“ and potentially fraudulent payments ”“ in 47 adversary proceedings filed Aug. 13 to Aug. 16 in U.S. Bankruptcy Court, White Plains.
JPR Mechanical filed for Chapter 7 liquidation in 2019, declaring $47.7 million in assets and nearly $23 million in liabilities.
Since then, 229 claims have been filed for more than $335 million. JPR President Timothy Schmidt also has admitted that the assets were overstated by $7.2 million, according to O’Toole.
Companies that received preferential payments did not necessarily do anything wrong. They simply did business with a troubled company in the 90 days before bankruptcy was filed.
Such payments are treated as preferential because bankruptcy is designed to distribute the debtor’s assets fairly among all creditors, and companies that receive payments shortly before a case is filed could end up with more than if they had gone through the bankruptcy process.
The trustee must show that the pre-bankruptcy payments were for actual debts and were made while the debtor was already insolvent.
O’Toole also wants to cancel potentially fraudulent payments, where, for example, transfers were not made for actual debts or where JPR Mechanical did not receive comparable value in the transactions.
She seeks to claw back as much as $3 million from Radium2 Capital of Uniondale, and as little as $41,000 from Mason Industries Inc. of Hauppauge.
Three Westchester companies were sued: Anvil Mechanical Inc., Mount Vernon, for nearly $1.3 million; Axis Piping Inc., New Rochelle, $210,000; and Dolphin Equipment Corp., Pelham, $72,878.
O’Toole, whose job is to manage the sale of assets and distribute the proceeds, wants the court to cancel the preferential payments and order the companies to return the money to JPR’s bankruptcy estate.
She is represented by Wantagh attorney Holly R. Holecek.
