CASE $20\mathrm{.}2$ Kelley v$.$ Cypress Financial Trading Co$.,$ L$.$P$.,518$ B$.$R$.373($N$.$D$.$ Tex. $2014)$

FACT SUMMARY In $2009,$ Thomas Petters $($Petters$)$ was convicted of operating a $$3\mathrm{.}6$ billon Ponzi scheme and sentenced to $50$ years in jail. Using Petters Company Inc. $($PCI$)$ as a vehicle for accepting investors' money, Petters fraudulently convinced investors that he was purchasing electronic goods and selling them to large retailers. One of those investors was Cypress Financial Trading, Company, L$.$P$.($Cypress$).$ During the Ponzi scheme, Cypress was paid more than $$11\mathrm{.}4$ million. After the Ponzi scheme was uncovered, PCI filed for bankruptcy and attorney Douglas Kelley $($Kelley$)$ was appointed as bankruptcy trustee. In his attempt to recover as much as possible for the bankruptcy estate, Kelley sued Cypress and its individual partners, alleging that the funds paid to Cypress were fraudulent transfers. Cypress then filed a petition for bankruptcy, reporting that it had no assets. In response, Kelley filed a motion to have Cypress's bankruptcy petition dismissed on the basis that it was filed as a litigation delay tactic and therefore constituted a bad faith filing. The Bankruptcy Court denied the motion and Kelley appealed.