In Re Parkway Calabasas Ltd.

OPINION DISMISSING FRAUDULENT CONVEYANCE PROCEEDING

I. INTRODUCTION

This adversary proceeding presents the issue of whether a fraudulent conveyance cause of action is rendered moot by the substantive consolidation of two bankruptcy cases, where the fraudulent conveyance arises from one debtor’s pre-petition payment of a debt that was owed by the other.

The Court holds that the fraudulent conveyance cause of action disappears with the substantive consolidation, and that this adversary proceeding must be dismissed.

II. FACTS

A. Background

This bankruptcy case began with the filing of involuntary Chapter 7 petitions on March 30, 1984 against Parkway Calaba-sas, Ltd., a limited partnership, Marc H. Siegal and his brother Mitchell Siegal. On May 1,1984 involuntary Chapter 7 petitions were filed against the related limited partnerships Granada Calabasas, Ltd. (“Granada”), Calabasas Business Park Phase I, Ltd. (“Phase I”), and North County Place, Ltd. On May 14, 1984, all of these cases except that against Mitchell Siegal were converted to cases under Chapter 11, and David A. Gill was appointed as the Chapter 11 trustee for each debtor. The Mitchell Siegal case was subsequently…