UNITED STATES BANKRUPTCY COURT (AJR-4016) EXHIBIT 10.1
SOUTHERN DISTRICT OF NEW YORK
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Chapter 7
In Re:
CHIEF EXECUTIVE OFFICERS CLUBS, INC., Case No: 02-14829(SMB)
Debtor. Honorable Stuart M. Bernstein
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KENNETH P. SILVERMAN, ESQ. as Trustee
for the Estate of CHIEF EXECUTIVE Adv. Proc. No.: 04-04719-smb
OFFICERS CLUBS, INC.,
Plaintiff,
-against- COMPLAINT
CEO CLUBS CHINA LIMITED AND CHINA
WORLD TRADE CORPORATION, SIMON GUO,
AND JP LI,
Defendants.
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KENNETH P. SILVERMAN, ESQ. as Trustee for the Estate of CHIEF EXECUTIVE
OFFICERS CLUBS, INC. ("Trustee" and/or "Plaintiff"), by its attorneys, the Law
Offices of Avrum J. Rosen, as and for its complaint in this adversary
proceeding, respectfully represents as follows:
BANKRUPTCY HISTORY
1. CHIEF EXECUTIVE OFFICERS CLUBS, INC. ("the Debtor") filed a voluntary
petition pursuant to Chapter 11 of Title 11 of the United States Code ("the
Bankruptcy Code") on September 30, 2002.
2. Prior to and at the time of the filing of the petition, the Debtor was and
is a domestic not-for-profit corporation in the State of New York and filed
with the New York Department of State on July 2, 2003.
3. On November 18, 2002, the Bankruptcy Court ordered the appointment of a
Chapter 11 operating Trustee.
4. On November 27, 2002, Kenneth P. Silverman was appointed the Chapter 11
Operating Trustee for this Debtor's bankruptcy estate.
5. By Order dated March 11, 2003, this case was converted to one under Chapter
7 of the Bankruptcy Code.
6. By Order dated March 24, 2003, the Court appointed the Plaintiff as Chapter
7 trustee.
7. By Complaint dated June 18, 2003 and filed with the Bankruptcy Court on
June 19, 2003, the Trustee commenced Adversary Proceeding No. 03-4315
against Joseph Mancuso, the principal of the Debtor ("Mancuso Adversary
Proceeding"). A copy of the Complaint is on file with the Court's
Electronic Case Filing System under Adv. Proc. No.: 03-4315.
8. By Complaint dated July 2, 2004, the Trustee commenced an Adversary
Proceeding against CEO Clubs International, Inc. and several other
successor for profit and not for profit corporations which were related to
the Debtor under Adversary Proceeding No. 04-2820 ("the CEO Clubs Adversary
Proceeding"). A copy of the Complaint is on file with the Court's
Electronic Case Filing System under Adv. Proc. No. 04-2820.
9. In the CEO Clubs Adversary Proceeding, the Trustee alleged that the assets
of the Debtor, including the customer lists, name, web page, goodwill and
other assets of the Debtor, were transferred by Mr. Mancuso and others,
including Simon Guo and J.P. Li, to CEO defendants.
10. Defaults on liability were taken against most of the defendants in
connection with the CEO Clubs Adversary Proceeding.
THE PARTIES
11. The Plaintiff is the Chapter 7 Trustee in the within bankruptcy case.
12. Upon information and belief, CEO Clubs China Limited is a Hong Kong
corporation (hereinafter "Defendant CEO" or "CEO Clubs China").
13. Upon information and belief, China Word Trade Corporation ("Defendant CWTP"
or "CWTP") is a Nevada corporation. The agent designated with the Nevada
Secretary of State to accept service of process is Gateway Enterprises,
Inc., 3230 E. Flamingo Road, Suite 156, Las Vegas, NV 89121.
14. Upon information and belief, SIMON GUO, is an individual who is a Director
of Defendant CEO Clubs China and maintains an address at 295 Greenwich
Street, Suite 514, New York, New York 10007.
15. Upon information and belief, J.P. LI, is an individual who is a Director of
Defendant CEO Clubs China and maintains an address at 295 Greenwich Street,
Suite 514, New York, New York 10007.
JURISDICTIONAL PREDICATE
16. This Court has jurisdiction over this adversary proceeding pursuant to 28
U.S.C. 157 (b)(1) and (2)(A)(E) and (O).
17. This adversary proceeding relates to the above captioned bankruptcy
proceeding pending in the Bankruptcy Court for the Southern District of New
York and is a "core proceeding" as that term is defined in 28 U.S.C. 157
(a), (b)(1), (B)(2)(A, E & O) and 11 U.S.C. 549, 550 and 105 and 28 U.S.C.
959 and Bankruptcy Rules 7001 et. seq.
18. In the event that this Court determines that this cause of action, as
alleged herein, is not a core proceeding, the Plaintiff consents to the
entry of final orders and judgment by this Court determining such causes of
action.
STATEMENT OF FACTS
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19. Upon information and belief, the assets of the instant Chapter 7 estate
were transferred to Defendant CEO Clubs China.
20. Upon information and belief, Defendant CEO Clubs China subsequently
transferred the assets of the within Chapter 7 estate to Defendants CWTC
for a stock swap and deferred compensation as well as an obligation to
infuse $120,000.00 into the business. A copy of the press release
announcing the aforementioned transaction is annexed hereto as Exhibit "A"
and made a part hereof. A copy of CWTC's Form 10-QSB filing with the United
States Securities Exchange Commission for the period ending June 30, 2004
is annexed hereto as Exhibit "B" and made a part hereof.
21. The total consideration for the sale of the assets of the within Chapter 7
estate is an amount not less than $480,000.00.
22. The assets of the instant Chapter 7 estate were transferred to Defendant
CEO Clubs China and then subsequently transferred to Defendant CWTC without
the knowledge or consent of the Trustee.
23. The assets of the within Chapter 7 estate, which were formerly assets of a
not-for- profit organization, were transferred without the knowledge or
consent of the New York State Attorney General.
24. Upon information and belief, prior to the sale of the assets of this estate
and subsequent thereto, J.P. Li was and is a director of the Defendant CEO
Clubs China.
25. Upon information and belief, J.P. Li had knowledge of the instant
bankruptcy filing by the Debtor.
26. Upon information and belief, prior to the sale of the assets of this estate
and subsequent thereto, Simon Guo was and is a director of the Defendant
CEO Clubs China.
27. Upon information and belief, Simon Guo had knowledge of the instant
bankruptcy filing by the Debtor.
28. Upon information and belief, CEO Clubs China had knowledge of the Debtor's
bankruptcy filing prior to and subsequent to the transfer of the assets of
the within bankruptcy estate.
AS AND FOR A FIRST CAUSE OF ACTION
29. Plaintiff repeats and realleges each and every allegation contained in
paragraphs "1" through "28" as though it was fully set forth herein.
30. Pursuant to Section 549(a) of the Bankruptcy Code, "the trustee may avoid a
transfer of property o the estate- (1) that occurs after the commencement
of the case;" and "(2)(B) that is not authorized under this title or by the
court".
31. Upon the conversion of the instant bankruptcy case to one under Chapter 7,
the assets of the Debtor, including the customer lists, name, web page,
goodwill and other assets of the Debtor, became property of the instant
Chapter 7 estate pursuant to Section 541 of the Bankruptcy Code.
32. The transfer of the assets of the Chapter 7 estate to Defendant CEO Clubs
China was without the consent and/or knowledge of the Trustee and was not
in accordance with an Order of the Bankruptcy Court.
33. In view of the foregoing, it is respectfully requested that this Court
enter a judgment determining that the transfer of the assets of this estate
to CEO Clubs China was an unauthorized post-petition transfer in violation
of Section 549 of the Bankruptcy Code and is therefore avoided.
AS AND FOR A SECOND CAUSE OF ACTION
34. Plaintiff repeats and realleges each and every allegation set forth in
paragraphs "1" through "33" as though it is fully set forth herein.
35. Pursuant to Section 550(a)(1) and (2) of the Bankruptcy Code, "to the
extent that a transfer is avoided under section 549, the trustee may
recover, for the benefit of the estate, the property transferred, or, if
the court so orders, the value of such property, from (1) the initial
transferee of such transfer or the entity for whose benefit such transfer
was made: or (2) any immediate or mediate transferee of such initial
transferee".
36. Pursuant to Section 550(b) of the Bankruptcy Code, the "trustee may not
recover under subsection (a)(2) of this section from (1) a transferee that
takes for value, including satisfaction or securing of a present or
antecedent debt, in good faith, and without knowledge of the voidability of
the transfer avoided or (2) any immediate or mediate good faith transferee
of such transferee."
37. Defendant CEO Clubs China is a related entity of the Debtor, knew of the
Debtor's bankruptcy filing and of the avoidability of transaction with
Defendant CWTC.
38. Accordingly, Defendant CEO is not a good faith purchaser without knowledge
of the voidability of the transaction with Defendant CWTC.
39. By virtue of the foregoing, Plaintiff demands judgment against Defendant
CEO Clubs China pursuant to Section 550(b)(1) of the Bankruptcy Code in the
amount equal to the value of the assets of the estate that were transferred
not less than $480,000.00.
AS AND FOR A THIRD CAUSE OF ACTION
40. Plaintiff repeats and realleges each and every allegation contained in
paragraphs "1" through "39" as though it was fully set forth herein.
41. CEO Clubs China transferred the assets of this Chapter 7 estate to
Defendant CWTC without the knowledge of the Trustee or the consent of the
Trustee and not in accordance with an Order from the Bankruptcy Court.
42. In view of the foregoing, Plaintiff demands a judgment against Defendant
CWTC determining that the transfer of the assets of this estate from
Defendant CEO Clubs China to Defendant CWTC was an unauthorized
post-petition transfer in violation of Section 549 of the Bankruptcy Code
and is therefore avoided.
AS AND FOR A FOURTH CAUSE OF ACTION
43. Plaintiff repeats and realleges each and every allegation set forth in
paragraphs "1" through "42" as though it is fully set forth herein.
44. Defendant CWTC hired former employees and/or directors of the Debtor and/or
any of the Debtor's related entities as its own directors.
45. Defendant CWTC had knowledge of the Debtor's bankruptcy filing at the time
of the transaction with Defendant CEO Clubs China.
46. Defendant CWTC had knowledge of CEO Clubs status as a not-for profit
corporation as it is listed on its website.
47. Defendant CWTC is not a good faith purchaser without knowledge of the
voidability of the transaction with Defendant CEO Clubs China.
48. In view of the foregoing, Plaintiff demands judgment against CWTC pursuant
to Section 550(a) of the Bankruptcy Code in an amount equal to the value of
the assets of the Chapter 7 estate that were transferred to it from
Defendant CEO Clubs China not less than $480,000.00.
AS AND FOR A FIFTH CAUSE OF ACTION
49. Plaintiff repeats and realleges each and every allegation in paragraphs "1"
through "48" as though it is fully set forth herein.
50. Pursuant to New York's Not-for-Profit law section 1002(a), the board of a
not- for- profit corporation shall adopt a plan for dissolution of the
corporation and the distribution of its assets.
51. Pursuant to New York's Not- for- Profit law section 1002(b), a copy of a
plan of dissolution and distribution of the assets of a not-for-profit
corporation is to be filed with the Office of the Attorney General within
ten days of its adoption with the board.
52. A plan of dissolution and distribution of assets of the Debtor was not
filed with the Office of the Attorney General by the Debtor, any of the
Debtor's related entities, Defendant CEO Clubs China or Defendant CWTC.
53. The Office of the Attorney General was not advised of the transfer of the
assets of the Debtor.
54. Accordingly, the transfer of the asset of this estate violates New York
State Not -For-Profit law Sections 1002 (a) and (b).
55. In view of the foregoing, it is respectfully requested that this Court
enter a judgment pursuant to Section 105 of the Bankruptcy Code determining
that the sale of the assets of the estate to Defendant CEO Clubs China and
Defendant CWTC is void as it violates New York State Law and granting
Plaintiff damages in an amount equal to the value of the assets transferred
not less than $480,000.00.
AS AND FOR A SIXTH CAUSE OF ACTION
56. Plaintiff repeats and realleges each and every allegation set forth in
paragraphs "1" through "55" as though it is fully set forth herein.
57. Defendant Simon Guo was and is a Director of CEO Clubs of China, a related
entity of the Debtor which transferred its assets to CEO Clubs China,
Limited, also a related entity of the Debtor wherein Simon Guo was and is a
Director.
58. Defendant Simon Guo is a named defendant in an adversary proceeding also
pending before this Court and has appeared in that action.
59. Defendant CEO Clubs of China is a named defendant in an adversary
proceeding also pending before this Court and has appeared in that action.
60. Defendant Simon Guo knew of the Debtor's bankruptcy filing and of the
avoidability of transaction with Defendants CEO Clubs China and CWTC.
61. Defendant Simon Guo received two interest-free advances from Defendant CWTC
each in the amount of $28,942.00 for a total advance of $57,884.00.
62. Accordingly, Defendant Simon Guo did not obtain funds without knowledge of
the voidability of the transaction with Defendant CWTC.
63. Defendant Simon Guo, as a director of CEO Clubs China had full knowledge of
the transfer of assets of this Chapter 7 estate to Defendant CWTC which was
without the knowledge of the Trustee or the consent of the Trustee and not
in accordance with an Order from the Bankruptcy Court.
64. In view of the foregoing, Plaintiff demands a judgment against Defendant
Simon Guo determining that the transfer of the assets of this estate to
Simon Guo as advances were unauthorized post-petition transfers in
violation of Section 549 of the Bankruptcy Code and are therefore avoided.
65. By virtue of the foregoing, Plaintiff demands judgment against Defendant
Simon Guo pursuant to Section 550(b)(1) of the Bankruptcy Code in the sum
of $57,884.00.
AS AND FOR A SEVENTH CAUSE OF ACTION
66. Plaintiff repeats and realleges each and every allegation set forth in
paragraphs "1" through "65" as though it is fully set forth herein.
67. Defendant Li Jingping (J.P. Li) was and is a Director of CEO Clubs of
China, a related entity of the Debtor, which transferred its assets to CEO
Clubs China, Limited, also a related entity of the Debtor wherein J.P. Li
was and is a Director
68. Defendant J.P. Li is a named defendant in an adversary proceeding also
pending before this Court and has defaulted in that action. A Clerk's Entry
of Default was entered against J.P. Li.
69. Defendant J.P. Li knew of the Debtor's bankruptcy filing and of the
avoidability of transaction with Defendant CWTC.
70. Defendant J.P. Li received an interest-free advance from Defendant CWTC in
the amount of $62,594.00 and in the sum of $65,771.00 for a total advance
of $128,365.00.
71. Accordingly, Defendant J.P. Li did not obtain funds without knowledge of
the voidability of the transaction with Defendant CWTC.
72. Defendant J.P. Li, as a director of CEO Clubs China had full knowledge of
the transfer of assets of this Chapter 7 estate to Defendant CWTC which was
without the knowledge of the Trustee or the consent of the Trustee and not
in accordance with an Order from the Bankruptcy Court.
73. In view of the foregoing, Plaintiff demands a judgment against Defendant
J.P. Li determining that the transfer of the assets of this estate to J.P.
Li as advances were unauthorized post-petition transfers in violation of
Section 549 of the Bankruptcy Code and are therefore avoided.
74. By virtue of the foregoing, Plaintiff demands judgment against Defendant
J.P. Li pursuant to Section 550(b)(1) of the Bankruptcy Code in the sum of
$128,365.00.
WHEREFORE, in view of the foregoing, Plaintiff respectfully requests the
following relief:
(1) On the First Cause of Action, judgment determining that the transfer of the
assets of this estate to CEO Clubs China was an unauthorized post-petition
transfer in violation of Section 549 of the Bankruptcy Code and is
therefore avoided;
(2) On the Second Cause of Action, judgment against Defendant CEO Clubs China
in the amount of the value of the assets of the estate that were
transferred in an amount not less than $480,000.00 pursuant to Section
550(b)(1) of the Bankruptcy Code;
(3) On the Third Cause of Action, judgment against Defendant CWTC determining
that the transfer of the assets of this estate from Defendant CEO Clubs
China to Defendant CWTC was an unauthorized post-petition transfer in
violation of Section 549 of the Bankruptcy Code and is therefore avoided;
(4) On the Fourth Cause of Action, judgment against CWTC pursuant to Section
550(a) of the Bankruptcy Code in an amount equal to the value of the assets
of the Chapter 7 estate that were transferred to it from Defendant CEO
Clubs China which is not less than $480,000.00;
(5) On the Fifth Cause of Action, judgment pursuant to Section 105 of the
Bankruptcy Code determining that the sale of the assets of the estate to
Defendant CEO Clubs China and Defendant CWTC is void as it violates New
York State Law and granting Plaintiff damages in an amount equal to the
value of the assets not less than $480,000.00; and
(6) On the Sixth Cause of Action, judgment against Defendant Simon Guo in the
sum of $57,884.00; and
(7) On the Seventh Cause of Action, judgment against Defendant J.P. Li in the
sum of $128.365.00.
(8) such other further and different relief as this Court deems just proper and
equitable.
Dated: Huntington, New York
December 10, 2004
THE LAW OFFICES OF AVRUM J. ROSEN
Attorneys for the Plaintiff-Debtor
By /s/ AVRUM J. ROSEN
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AVRUM J. ROSEN
(a member of the firm)(AJR-4016)
38 New Street
Huntington, New York 11743
(631) 423-8527