PWM debtors’ plan intentionally diverts assets, creditor says

By Sarah Lizee

Olympia, Wash., Oct. 21 – PWM Property Management LLC’s Chapter 11 plan drew an objection from creditor 245 Park Member LLC, according to court documents filed with the U.S. Bankruptcy Court for the District of Delaware.

“The third amended plan seeks to perpetrate an actual fraud upon creditors, including 245 Park Member, by intentionally diverting assets, and as such is not proposed in good faith,” 245 Park Member said in its objection.

245 Park Member is a judgment creditor for over $185 million against HNA Group (International) Co. Ltd. (Hong Kong), which indirectly owns 100% of PWM, which in turn owns 100% of the interests in non-debtor Eternal Fame Investment Ltd. (BVI).

Eternal Fame is the parent of debtors 181 West Madison Holding LLC and 181 West Madison Property LLC, which owns the 181 West Madison office building.

245 Park Member said a new provision in the third amended plan provides that debtor PWM Property will assign its equity interests in Eternal Fame, the immediate parent company of 181 West Madison Holding LLC, to HNA Capital Leasing & Holding LLC, a non-debtor affiliate of some of the debtors and HNA Group.

“This proposed transfer is without any consideration and constitutes an intentional fraudulent transfer because it is a blatant attempt to divert value away from HNAI and impede 245 Park Member’s efforts to collect on its judgment against HNAI and its subsidiaries,” the creditor said.

“Indeed, should this transfer be authorized pursuant to the third amended plan, 245 Park Member’s rights as a judgment creditor of HNAI may be significantly impaired, as HNA Capital Leasing is not subject to the judgment, is not a direct or indirect subsidiary of HNAI (as is PWM), and is not under the jurisdiction of this court.”

As previously reported, the Chapter 11 plan was proposed as a joint plan of reorganization of the debtors for administrative purposes only and constitutes a separate Chapter 11 plan of reorganization for each debtor.

The Park Avenue debtors’ plan was confirmed and has gone into effect. However, the hearing to consider the West Madison debtors’ plan is scheduled for Oct. 27.

New York-based PWM is a property management company. It filed Chapter 11 bankruptcy on Oct. 31, 2021 under case number 21-11445.

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