Getty Petroleum claims fraud in two adversary actions against Lukoil

By Jim Witters

Wilmington, Del., Dec. 30 - Getty Petroleum Marketing Inc. claims its former owner, Lukoil Americas Corp., breached its contract and engaged in fraudulent business practices resulting in unjust enrichment, according to documents filed Thursday with the U.S. Bankruptcy Court for the Southern District of New York.

First litigation

Getty claims that Lukoil Americas and its wholly owned subsidiary Lukoil North America LLC ignored the fact that Getty was insolvent in November 2009 when the companies engaged in a series of actions to defraud Getty's creditors.

According to court documents:

• On Nov. 13, 2009, Lukoil sold all Getty's stock to Lukoil NA;

• On Nov. 16, 2009, virtually all the valuable Getty assets were transferred to Lukoil NA; and

• On Nov. 30, 2009, Lukoil NA transferred all its shares of Getty back to Lukoil as a dividend.

"It is patently obvious that the transfer of Getty's ownership" back and forth, all within 17 days, "had no legitimate business purpose. Rather, in a glorification of form over substance, the structure of the transaction plainly was intended to insulate Lukoil's other assets from Getty's defrauded creditors," court documents state.

"These conveyances were made without Getty receiving a fair consideration and are fraudulent to Getty's creditors."

Getty is seeking to recover property for the benefit of its creditors.

Second litigation

In the other adversary action, Getty claims Lukoil Americas Corp. failed to pay a $6.3 million income-taxes receivable "that Lukoil repeatedly has represented was due and owing at the time Lukoil sold Getty to Cambridge Petroleum Holding Inc."

Cambridge bought Getty in a February 2011 stock purchase agreement.

On Feb. 28, 2011, Michael Hantman, Getty's chief financial officer, drew up a balance sheet reducing the receivable from $6.3 million to zero, according to court documents.

When asked in early March 2011 by controller Donna Baumgartner for an explanation, he responded that Getty should write it off, court documents state.

Getty claims Lukoil is guilty of breach of contract, unjust enrichment and fraudulent transfer.

Getty is seeking monetary damages.

No hearing has been scheduled in either action.

Getty Petroleum, an East Meadow, N.Y., distributor of motor and heating fuels, filed for bankruptcy on Dec. 5. Its Chapter 11 case number is 11-15606.

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