Fraudulent Conveyance/Valuation of a Repair Warranty Company

The Situation

A subsidiary of a larger firm selling auto repair warranties filed for bankruptcy. The bankruptcy trustee sued one of the bankrupt company’s lenders alleging fraudulent conveyance at the time of the loan.

NERA's Role

NERA was engaged to provide analysis of the solvency and the value of the subsidiary selling repair warranties at the time of the loans as well as an analysis of the events that caused the subsidiary to file for bankruptcy. While the subsidiary was not a regulated insurance company, its warranty business required many of the same types of accounting and analysis issues as insurance companies. The analysis included working with several actuarial studies of the firm's expected liabilities, loss reserves, and reinsurance questions. NERA provided an expert report, deposition testimony, and trial testimony.

The Result

The case was resolved in favor of the defendant.