Brandt v. Horseshoe Hammond, LLC

Dist. Ct. did not err in granting defendant-casino’s motion for summary judgment in Chapter 11 bankruptcy proceeding in which plaintiff-plan administrator sought to avoid and recover over $8 million that original owners of corporate debtor had fraudulently obtained from corporate debtor, where original owners had transferred/spent said funds at casino in form of payments on gambling debts or on chips that original owners had passed to third parties to cash in. Proper inquiry required focus on what casino knew about transfer of funds from corporate debtor to original owners, and defendant could properly raise good faith defense as set forth in 11 USC section 550(b)(1), where record showed that casino accepted said funds without knowledge of fraud committed by original owners on corporate debtor. Fact that casino was aware that one original owner had erratic gambling habits, had made false statements on credit application, and had received money from corporate debtor did not require different result.