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Consolidated Indus v. Enodis Corporation
Citation: Not availableDocket: 06-4178
Court: Court of Appeals for the Seventh Circuit; September 2, 2008; Federal Appellate Court
Original Court Document: View Document
In the appeals before the Seventh Circuit, Daniel Freeland, Trustee for Consolidated Industries Corp., sought to recover over $30 million in transfers made to Enodis Corporation (formerly Welbilt Corporation) between 1989 and 1998 during bankruptcy proceedings. The bankruptcy court ruled that these transfers could be avoided as fraudulent, which the district court affirmed. The district court also determined that the Trustee could avoid transfers made within one year of the bankruptcy filing under 11 U.S.C. §§ 547 and 548. The defendants appealed these rulings. In his cross-appeal, the Trustee contested the dismissal of his alter ego/veil piercing claims against the corporate defendants and the granting of summary judgment in favor of individual defendants. The appellate court agreed that the Trustee could avoid the transfers from Consolidated to Enodis from 1989 to 1995 as fraudulent, but it remanded for further findings regarding Consolidated’s solvency after 1995. The court also reversed the district court's summary judgment on the Trustee's claims under sections 547 and 548, remanding for further proceedings. Regarding the Trustee's cross-appeal, the court remanded for additional findings on the alter ego/veil piercing claims while affirming other aspects of the district court's decision. Background details reveal that in the 1980s, Consolidated was a successful subsidiary of Welbilt Holding Company, which was controlled by Enodis. Following a leveraged buyout by Kohlberg & Co., ownership of Enodis transitioned, leading to significant financial transactions directed by Enodis, including a $6.9 million cash dividend and two dividend notes totaling $30 million, which were contingent on available funds for dividends. If the Note is not fully paid by the due date, the undersigned agrees to cover all collection costs, including reasonable attorneys' fees. The Notes stipulate that failure to make an interest payment results in immediate demand for payment at the payee's option, and they are governed by Indiana law. Enodis collected $23,671,421.32 in interest payments from Consolidated between 1989 and 1997 by withdrawing funds from Consolidated's accounts and requiring appropriate book entries. Consolidated initiated "Project 92" to comply with new furnace manufacturing standards set by Congress in 1987, borrowing $7 million from Tippecanoe County for necessary equipment, with Enodis guaranteeing the loan. Consolidated faced issues with its horizontal furnaces, including defects leading to fires and uninsured warranty claims. Investigations by North Carolina's Attorney General in 1990 and the Consumer Product Safety Commission (CPSC) in 1993 revealed further defects, culminating in a class action threat from California consumers. In 1994, Enodis attempted to sell Consolidated, canceling $30 million in dividend notes to attract buyers. An interested buyer, William Hall, failed to secure financing, and the sale did not proceed. Problems persisted, with the CPSC requesting a recall of all furnaces in California in 1997. On January 5, 1998, Enodis loaned Consolidated $108,500 for insurance, and the next day, a Stock Purchase Agreement was executed with Hall, involving a $7.5 million loan from Finova Capital Corporation, which secured a lien on Consolidated's assets. Upon closing the sale on January 6, 1998, Consolidated directed Finova to wire $7,108,500 to Enodis, covering the stock purchase and repaying the loan. Consolidated filed for Chapter 11 bankruptcy on May 28, 1998, and initiated a lawsuit on May 10, 1999, which led to the appointment of a trustee and conversion to Chapter 7. The Trustee invoked Section 544(b) of the Bankruptcy Code to recover $6.9 million in cash dividends and interest payments on the Notes, alleging fraudulent transfers and citing state and federal laws, as well as unjust enrichment. Additional claims included breach of fiduciary duty against individuals and alter ego/veil piercing claims against Enodis and Welbilt Holding, with arguments for disallowing or equitably subordinating Enodis’ claim. The Trustee aimed to recover the value of transfers related to the Hall transaction. The district court withdrew reference for Counts VIII and IX of the Trustee’s Third Amended Complaint concerning this transaction. Summary judgment was granted in October 2001 for the Hirsches and Gross on the Trustee’s breach of fiduciary duty claims due to the statute of limitations. On December 9, 2002, the district court ruled against Enodis and Welbilt Holding, allowing the Trustee to recover $7,369,559.35 in fraudulent transfers under 11 U.S.C. § 548, which included $7 million transferred to Enodis on January 6, 1998, and an additional $369,559.35 transferred between May and December 1997. The court also acknowledged a preferential transfer of $108,500 under 11 U.S.C. § 547. A 22-day trial determined the Trustee could avoid $30,608,990.69 in transfers to Enodis from 1989 to 1998, comprising a $6.9 million cash dividend and $23,671,421.32 in interest on Notes. The bankruptcy court allowed recovery based on actual fraud, unjust enrichment, and Indiana common law, as well as recognizing $10,058,731 as constructively fraudulent conveyances. Enodis’ proof of claim was disallowed, and the Trustee's alter ego/veil piercing claims were rejected. The Trustee was awarded $12,780,302.10 in prejudgment interest, totaling $43,389,292.79. Enodis appealed, and the Trustee cross-appealed. The district court upheld the bankruptcy court's findings. Key issues raised on appeal include Enodis' challenge to the avoidance of the cash dividend and interest payments, and the summary judgment for the Trustee related to the Hall transaction. The bankruptcy court’s findings on Consolidated's insolvency were pivotal, influencing the recovery decisions made under various legal theories. Enodis acknowledges that when the Notes were issued, their principal amount exceeded Consolidated's assets. The crux of the dispute is how to value the Notes to assess Consolidated's solvency from 1989 until their cancellation in 1995. The Trustee claims the Notes constituted $30 million in liabilities, while Enodis argues that the restrictive language in the Notes prohibited any principal payments that would lead to Consolidated's insolvency. Thus, Enodis insists that the Notes' fair value cannot be $30 million unless Consolidated had sufficient funds to cover this amount and remain solvent. The interpretation of the Notes is reviewed de novo, and it is established under Indiana and federal law that a debtor is insolvent if its debts' fair value exceeds that of its assets. Enodis previously characterized the Notes as contingent liabilities, defined as those depending on future events for their existence or amount. However, the courts determined that the obligation on the Notes was not contingent since Consolidated had a definitive promise to pay a specific sum on a specified date, contingent only upon having the funds available. Enodis' reliance on the Delphi Industries case is countered by the courts' conclusion that limitations on the payment source do not render obligations contingent. On appeal, Enodis reinterprets the restrictive language as a condition precedent nullifying Consolidated's obligation, but this argument fails as the obligation arose upon execution and delivery of the Notes, which are unconditional promises to pay the principal amount and interest. The Notes stipulated that they would become payable at the payee's option upon specific events, including failure to make interest payments. Consolidated was obligated to cover all costs of collection if the Notes were not fully paid when due, creating unconditional obligations under the Notes. The courts affirmed that the language of the Notes did not imply a future condition for payment, as evidenced by Consolidated's payment of interest, indicating both parties viewed the obligations as immediate. Enodis’ argument that the Notes should be treated as unpaid dividends was deemed waived since it was not raised at the district court level. The distinction was made that, unlike previous cases cited by Enodis, Consolidated had delivered the Notes with explicit promises to pay. The bankruptcy court's assessment of Consolidated's solvency post-cancellation of the Notes found that the fair value of liabilities exceeded assets, leading to insolvency. However, the bankruptcy court did not specifically value these assets or liabilities after cancellation but noted that numerous contingent claims rendered Consolidated insolvent. Enodis contested that the bankruptcy court erred by not estimating these contingent liabilities. Past legal precedents emphasize the necessity of discounting contingent liabilities to assess solvency accurately, asserting that while precision is not mandatory, an appropriately discounted value is essential for determining if assets exceed liabilities. The bankruptcy court failed to assign a value to the contingent liabilities of Advanced Telecommunications Network, Inc., likening them to an approaching storm without providing clarity on their actual worth. The district court affirmed this lack of valuation, and neither court conducted the necessary discounting analysis or cited evidence to support their conclusions. According to Federal Rule of Civil Procedure 52(a), applicable to bankruptcy proceedings, courts must offer detailed findings of fact that explain their decisions, particularly in contested matters like solvency. The absence of such findings obstructs a meaningful review of the bankruptcy court's conclusion that Consolidated was insolvent post-1995. The Trustee's reliance on expert testimony and financial statements to argue for insolvency is insufficient without adequate subsidiary findings. A remand is necessary for the bankruptcy court to clarify the factual basis for its insolvency determination following the cancellation of the Notes in 1995. Additionally, the lower courts determined that the Trustee could recover all transfers made under the Notes from 1988 to 1998 as actual fraudulent transfers. The determination of fraudulent intent is a factual finding subject to clear error review, with the court noting that it will only reverse if convinced a mistake was made. Under Indiana law, transfers made with the intent to defraud creditors can be avoided by present and future creditors. Under Indiana law, fraudulent intent can be established through indirect evidence by identifying specific “badges of fraud.” These include transfers that lead to debtor insolvency, the debtor retaining benefits from transferred property, transactions occurring during pending litigation, secret dealings, unusual transfer methods, and exchanges for minimal consideration. While no single badge alone proves fraudulent intent, a combination creates a strong presumption of fraud. When a Trustee identifies multiple badges, the burden shifts to the debtor to justify the transfers. In the current case, the bankruptcy court identified several badges of fraud related to Consolidated's transfers: they were made to insiders, during litigation, without equivalent value, when the company was insolvent, outside typical business practices, and were secretive, leaving the company unable to pay debts. Enodis challenged this conclusion, arguing improper application of badges and disputing the secret nature of the transfers. However, the bankruptcy court maintained that the transfers were not appropriately disclosed, especially to creditors. Enodis also contested the timing of the transfers in relation to ongoing litigation, asserting that fraudulent intent should be assessed based on circumstances at the time of the transfer rather than subsequent events. The court emphasized that findings of fact, including witness credibility and evidence weighing, are within its purview and will not be second-guessed. The bankruptcy court did not rely on the CPSC and California class action lawsuit in its finding of a litigation badge of fraud against Enodis. Testimony from Richard Weber, Consolidated's former president, indicated that warranty and litigation claims began increasing in the mid-1980s, and he informed the board about these issues. By 1990, there were existing lawsuits against Consolidated, suggesting that the company was aware of significant furnace-related claims when it issued the Notes and paid a $6.9 million dividend. Enodis' argument that these liabilities were not significant and that insurance mitigated the risks was dismissed, as the court found no reason to reweigh the evidence. Furthermore, the bankruptcy court determined that the transfers left Consolidated without assets to pay its debts. Enodis contended that a good faith belief in financial stability negated findings of actual fraud. However, Weber testified that the company could not make essential expenditures due to transferring cash to Enodis as interest payments, undermining the belief in continued profitability. Enodis also challenged the bankruptcy court's conclusions regarding the lack of reasonably equivalent value for the interest paid on the Notes, arguing it conflicted with the finding of insolvency. Under Indiana law, value is recognized for a transfer if property is transferred or an antecedent debt is satisfied. The court concluded that interest payments, typically considered value, lacked equivalence because the Notes were treated as dividends, which do not return value to the company. Despite this inconsistency, the court's finding of actual fraud was upheld based on multiple badges of fraud: the transfers were made to an insider while Consolidated was insolvent, concealed from creditors, and deviated from normal business practices. The transfers were designed to prioritize Enodis' financial interests during a period of anticipated rising liability claims. The court's determination of fraudulent intent was not seen as clearly erroneous, even if another court might weigh the evidence differently. Enodis challenges the lower courts’ analysis of actual fraud, arguing that the courts focused improperly on Enodis' intent rather than Consolidated's. The bankruptcy court's acknowledgment of substantial benefits received by Enodis from the transfers does not indicate a failure to consider Consolidated's intent. Enodis contends that evidence presented at trial renders the bankruptcy court's finding of fraudulent intent implausible, but this claim is rejected, referencing precedent. Additionally, Enodis asserts that the lower courts’ conclusion that board members Antonini and Yih did not act with recklessness undermines actual fraud findings, claiming that their lack of intentional misconduct negates any fraudulent intent by Consolidated. However, since Antonini and Yih were not directors during the issuance of the Notes, their negligence does not negate the determination that the Notes were part of a scheme to defraud creditors. Enodis further argues that the Notes served merely to distribute funds to shareholders for tax benefits, yet the courts found that Consolidated's actions were intended to hinder or defraud creditors, a conclusion supported by the discovery that Consolidated transferred $9.5 million more than necessary for tax savings. The judgment affirming the $6.9 million cash dividend and related transfers before the cancellation of the Notes in 1995 is upheld. In relation to the Trustee's efforts to avoid transfers made to Enodis within one year of Consolidated's bankruptcy filing, the district court withdrew the reference for these claims. The Trustee seeks to recover $7 million linked to Hall's purchase of Consolidated. Enodis argues that the Notes should be seen as unpaid dividends, but this argument is waived as it was not raised in the lower court. Moreover, the situation differs from those cited by Enodis since Consolidated issued the Notes with explicit promises to repay principal and interest as part of declared dividends. Enodis references the case In re Joshua Slocum Ltd., where the court accepted the treatment of redeemable stock as stockholders’ equity, determining that its redemption value should not be treated as debt in solvency assessments. The lower courts similarly accepted the accounting treatment and expert testimony regarding the value of the Notes, concluding that their full value should be included as liabilities in solvency analyses. Following the cancellation of the Notes in September 1995, which had contributed to Consolidated's insolvency, the bankruptcy court needed to establish whether Consolidated remained insolvent by assessing whether its liabilities exceeded its assets. However, the court did not provide specific valuations for Consolidated’s assets or liabilities post-cancellation, instead asserting that the increasing number of contingent claims was sufficient to establish insolvency. On appeal, Enodis contends that the bankruptcy court erred by not estimating the contingent liabilities, which encompass product liability and warranty claims. Citing the precedent set in Xonics, the need for a discounted value of contingent liabilities based on the probability of their occurrence was emphasized. The bankruptcy court's failure to perform this required discounting analysis or to provide a clear valuation of the claims was criticized, as the metaphor used to describe the claims did not substantively clarify their value. The district court upheld the bankruptcy court’s finding, but both courts neglected to conduct the necessary financial analysis or rely on evidence for such discounting. Federal Rule of Civil Procedure 52(a), applicable to bankruptcy through Bankruptcy Rule 7052, mandates that bankruptcy courts make explicit findings that clarify the rationale behind their decisions. The rule requires the inclusion of necessary subsidiary facts to enable a reviewing court to understand how the trial court reached its conclusions on factual issues. While it does not require a discussion of the significance of each piece of evidence, it does necessitate a clear articulation of the factual basis for the court's ultimate conclusions. In this case, the solvency of Consolidated was heavily contested, and the lack of sufficient subsidiary findings hampers meaningful review of the bankruptcy court's determination of Consolidated's insolvency post-1995. The Trustee's reliance on expert testimony and internal financial statements to assert insolvency is not the role of the reviewing court, which cannot weigh evidence or make findings. Therefore, remand is necessary for the bankruptcy court to provide additional findings related to the solvency determination after the cancellation of the Notes in 1995. Additionally, the lower courts determined that transfers made pursuant to the Notes from 1988 to 1998, including a $6.9 million cash dividend, could be avoided as actual fraudulent transfers. A finding of fraudulent intent is a factual matter subject to clear error review. The bankruptcy court found that creditors could not have discovered these transfers at the time because they were only recorded internally, leading to a tolling of the statute of limitations for the Trustee to recover these transfers. Under Indiana law, creditors can invalidate transfers made with the intent to hinder, delay, or defraud creditors. Proof of fraudulent intent in Indiana law does not require direct evidence; it can be inferred from specific "badges of fraud." These include transferring property that leaves the debtor insolvent, retaining benefits from the transferred property, making transfers during litigation, conducting secret transactions, using unusual methods of transfer, and exchanging property for inadequate consideration. No single badge is definitive; however, multiple badges can create a strong presumption of fraud. Once such badges are established, the burden shifts to the debtor to justify the transfers. In the case at hand, the bankruptcy court identified several badges of fraud: transfers to insiders, actions taken while Consolidated faced lawsuits, inadequate compensation for the transfers, insolvency at the time of transfers, deviation from normal business practices, secrecy of the transactions, and insufficient assets remaining to settle debts. Enodis challenged the bankruptcy court’s findings, claiming misapplication of the fraud indicators and contesting the characterization of the transfers as secret and outside ordinary business practices. Enodis pointed out that a dividend could be paid in the form of a note, but the bankruptcy court noted that the notes exceeded Consolidated's asset value. It also cited that a significant dividend was never officially declared by the board. Although a former director testified to the declaration, the bankruptcy court has the authority to evaluate witness credibility and evidence, and its findings on conflicting testimony are typically upheld. Enodis also criticized the characterization of the transfers as secret, arguing they were only discernible through bookkeeping reviews. Consolidated, a privately-held entity, argued it had no obligation to disclose financial information publicly. However, the court found that creditors seeking financial details would only receive data related to Enodis, which did not include information about transfers from Consolidated. The bankruptcy court concluded that these transfers were secretive and deviated from standard business practices. Enodis claimed insufficient evidence showed that transfers occurred while Consolidated was facing lawsuits or threats of litigation. The court clarified that fraudulent transfers must be evaluated based on the circumstances at the time of the transfer, not by later events unrelated to the transaction. Testimony from Consolidated’s former president indicated an increase in warranty and litigation claims starting in the mid-1980s, with awareness of such claims by 1990. The court inferred that Consolidated was aware of significant furnace-related claims when it issued $6.9 million in dividends and other notes. Enodis' argument that these liabilities were not significant due to existing insurance was dismissed, and the court did not re-evaluate evidence on this matter. The bankruptcy court also found that the transfers left Consolidated without assets to meet its debts, countering Enodis’ claims of good faith belief in the company’s financial future. Testimony revealed that Consolidated could not make necessary expenditures because it had transferred cash to Enodis as interest payments, contradicting management’s assertion of expected profitability. Enodis contested the lower courts' finding that Consolidated did not receive reasonably equivalent value in exchange for interest on the Notes, arguing it conflicted with the insolvency conclusion based on Indiana law. Value is exchanged in a transfer if property is given or an antecedent debt is satisfied, as per IND. CODE. 32-18-2-13(a). The bankruptcy court determined that although interest payments on obligations typically constitute reasonably equivalent value, the issued Notes, considered as dividends, did not provide value back to Consolidated. Consequently, the Notes and their interest were deemed to lack reasonably equivalent value. The court's treatment of the Notes as contractual obligations indicated that Consolidated's payment of accrued interest represented a "dollar-for-dollar forgiveness of a contractual debt," qualifying as reasonably equivalent value as per In re Carrozzella, 286 B.R. 480, 491 (D. Conn. 2002). Despite inconsistencies in the court's findings, the actual fraud finding was upheld due to several indicators of fraud: the transfers were made to an insider while Consolidated was insolvent, concealed from creditors, and deviated from standard business practices. Citing precedent, the court noted that the timing of the transfers, aimed at benefiting Enodis during a period of rising warranty and liability claims, further supported the fraud finding. Enodis' arguments, including the focus on its intent rather than that of Consolidated and challenges to the credibility of the fraud findings based on the actions of directors Antonini and Yih, were rejected. The court maintained that the absence of intentional misconduct by these individuals at the time of the Notes issuance did not preclude the conclusion that the transfers were designed to defraud creditors. Enodis argues that the lower courts misinterpreted the purpose of certain Notes, claiming they facilitated tax-efficient distributions to shareholders. However, the courts found that Consolidated intended to hinder, delay, or defraud creditors, evidenced by a $465,000 state tax saving and an undisputed $9.5 million excess transfer beyond tax savings. The judgment regarding the $6.9 million cash dividend and transfers related to the Notes prior to their cancellation in 1995 was affirmed. The Trustee aimed to reverse transfers to Enodis made within one year of Consolidated's bankruptcy under 11 U.S.C. §§ 547 and 548, seeking $7 million tied to Hall's purchase and alleging $15.8 million in transfers into Enodis-controlled accounts. The Trustee also claimed $369,559.35, representing the difference between Consolidated's deposits and Enodis's expenditures on its behalf. For a successful fraudulent transfer claim under § 548(a), the Trustee must show that the transfer occurred within a year of the bankruptcy filing, lacked reasonably equivalent value, and rendered the debtor insolvent. Additionally, the Trustee sought to avoid a $108,500 transfer to Enodis made on January 6, 1998, as a preference under § 547, which allows avoidance if the transfer benefited a creditor, was for an antecedent debt, and occurred while the debtor was insolvent. The lower courts concluded that while the transfer was recoverable as actually fraudulent, there were inconsistencies in their solvency analysis related to constructive fraud claims. Thus, the focus shifted away from unjust enrichment claims under Indiana law. The court granted summary judgment for the Trustee regarding a $7,000,000 transfer made by Consolidated to Enodis prior to Consolidated’s bankruptcy filing. The Trustee sought to avoid the transfer on the grounds that it constituted a preference under 11 U.S.C. § 547 and that it could be avoided under § 548 due to Consolidated's insolvency at the time. The district court found that Consolidated received no value from the transaction, justifying the avoidance of both the $7 million and an additional $369,559. Additionally, a $108,500 transfer to Enodis was deemed a voidable preference under § 547. On appeal, Enodis contested the insolvency ruling, suggesting the district court mishandled evidence. Specifically, Enodis presented a draft audit indicating Consolidated's solvency, which the court dismissed as unreliable. The court also found inconsistencies in expert testimony from Enodis' witness, Keith Gardner, and disregarded his report. The Trustee defended the insolvency ruling but failed to raise an evidentiary objection regarding the draft audit in the district court, thus waiving that argument on appeal. The Trustee additionally claimed that remand would be futile since the author of the draft audit indicated it would ultimately confirm Consolidated's insolvency, but the appeal was limited to the evidentiary record before the district court at the time of its ruling. The court will not consider the trial testimony and noted that the district court discredited the defendant's expert report due to inconsistencies with his deposition. However, credibility determinations should not influence summary judgment. Viewing evidence favorably for Enodis, it was determined that there was sufficient evidence to raise a genuine issue regarding Consolidated's solvency before bankruptcy. Enodis argued for summary judgment on the fraudulent transfer issue, claiming Consolidated received reasonably equivalent value for the challenged transfers, but this argument was not presented in the district court and hence cannot be considered on appeal. The Trustee raised alternative recovery theories, including claims for preferences and actual fraudulent transfers, which the district court did not address, preventing summary judgment for Enodis. Regarding the Trustee's cross-appeal on alter ego/veil piercing claims against Enodis and Welbilt Holding, the bankruptcy court initially found the Trustee lacked standing. However, the district court later determined the Trustee did have standing but agreed with the bankruptcy court that the claims failed under the relevant section of the Bankruptcy Code. The Trustee contended that the district court erred by adopting a ruling not made by the bankruptcy court and by not reviewing the claims de novo. Under Indiana law, to succeed on an alter ego/veil piercing claim, a plaintiff must demonstrate several factors, including undercapitalization, lack of corporate records, fraudulent representation, and commingling of assets. The court noted that the Trustee is entitled to recover certain amounts only once, and this must be ensured upon remand. Rule 52(a) mandates that courts in bench trials provide findings of fact in their opinions to clarify the basis for their decisions, which aids appellate review and assists trial courts in future adjudications. In this case, the district court failed to provide a factual basis for its conclusion that the Trustee did not present sufficient evidence for alter ego or veil piercing claims, which are fact-sensitive inquiries. Consequently, the appellate court vacated the district court's decision and remanded for compliance with Rule 52(a). Regarding the judgment against Welbilt Holding, the Trustee argued that the district court incorrectly denied entering judgment against Welbilt under 11 U.S.C. § 550(a)(1), which allows recovery from the initial transferee or the entity benefiting from the transfers. The district court ruled that a judgment had already been entered against Enodis, limiting the Trustee to a single satisfaction of judgment under § 550(d). The Trustee contended this interpretation was flawed and maintained that multiple judgments could be entered against different parties, provided only one satisfaction is received. However, the Trustee must demonstrate that Welbilt Holding benefitted from the transfers, which the bankruptcy court found not to be the case, as there was no evidence that any money from Consolidated went to Welbilt Holding. The Trustee did not contest this finding. Welbilt Holding is not liable for the transfers in question since it did not actually benefit from them. Several courts support the view that only entities that receive a benefit from a transfer can be considered as having benefited from it, aligning with the principle that fraudulent transfer recovery is a form of disgorgement. The district court's decision to deny judgment against Welbilt Holding was affirmed. In a separate matter regarding the Hirsch defendants, the court ruled that the Trustee's breach of fiduciary duty claims were barred by Indiana’s two-year statute of limitations, which applies to tort claims. Despite the Trustee’s argument for tolling the statute under the adverse domination doctrine—claiming that the board was controlled by wrongdoers—the court found that the statute began to run again when Marion Antonini, a disinterested outsider, replaced the Hirsch defendants in October 1990. Consequently, the claims should have been filed by October 1992, well before the Trustee initiated action in May 1999. The Hirsch defendants' request for summary judgment was based on accepting the Trustee's allegations as true. The Trustee's Third Amended Complaint alleges that Enodis controlled the board of directors of Consolidated until January 1998. However, this claim does not demonstrate that the Hirsches maintained control over Consolidated after their departure from the board, which would have allowed them to obstruct a lawsuit regarding breach of fiduciary duty. The bankruptcy court's ruling on the statute of limitations for the Trustee's claims against the Hirsch defendants is upheld, noting that while one court speculated that the adverse domination doctrine might toll the statute of limitations, it did not apply here as the relevant period had lapsed by the time the bankruptcy petition was filed in 1998. The judgment allows the Trustee to recover $6.9 million in dividends and transfers related to the Notes prior to their cancellation in 1995. The court remands for further findings on the solvency determination after the cancellation of the Notes. The entry of summary judgment for the Trustee concerning the Hall transaction transfers is reversed, and the judgment against the Trustee on alter ego/veil piercing claims is vacated, with further proceedings ordered. The district court's refusal to enter judgment against Welbilt Holding and the summary judgment for the Hirsch defendants are affirmed. The decision concludes with a mixed ruling: affirmed in part, reversed in part, vacated in part, and remanded with directions, with each party bearing its own appeal costs.