Judge to Decide Whether Capmark can end its Bankruptcy Filing and Thereby Prevent Fraudulent Transfer Case

This week U.S. Bankruptcy Court Judge Christopher Sontchi is hearing on whether to approve that repayment by the financial firm Capmark Financial Group Inc. Creditors of the fund are proposing to initiate a fraudulent transfer suit against the company for a swap involving $1.5 billion in unsecured debt for a guaranteed loan months before filing for protection from creditors. The proposal if approved by Judge Sontchi, would prevent the creditors’ proposed suit and protect the lenders from legal liability. Unsecured creditors claim the loan was a fraudulent transfer that only benefited company insiders, including affiliates of Goldman Sachs Group Inc. They are seeking permission to file a lawsuit that would reduce the loan’s repayment priority. Interestingly enough, Capmark is partly owned by Goldman Sachs and the hedge fund popularly known as a buyout guru, KKR.