In re Adamson Apparel, Inc., No. 12-57059 (9th Cir. 2015)Annotate this Case
Adamson manufactures and sells clothing and accessories. Arnold H. Simon, Adamson's president and CEO, entered into two separate agreements with CIT to guarantee a loan. Adamson subsequently filed for bankruptcy and a Committee was appointed to represent the interests of Adamson's unsecured creditors. The Committee filed this adversary action against Simon under a preference-liability theory. The bankruptcy court entered judgment in favor of Simon, holding that he was exempt from preference liability because he was not a creditor of Adamson. The district court affirmed. The court affirmed, holding that a corporate insider who personally guaranteed his corporation’s loan is absolved of any preference liability to which he might otherwise have been subjected, where he had previously waived his indemnification rights against the corporation, he had a bona fide basis for doing so, and he took no subsequent actions to negate the economic impact of that waiver. The court declined to join several bankruptcy courts in stepping away from the plain language of the Bankruptcy Code and subjecting an insider guarantor to preference liability where a transfer works to his benefit, even if he had unconditionally waived all claims against the debtor.