Burtch

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

In re: ) Ch. 7

)

BW Industries, Inc., et al., )

) Case No. 23-10844 (MFW)

Debtors. )

) (Jointly Administered)

)

)

Jeoffrey L. Burtch, in his ) Adv. No. 25-51045 (MFW)

capacity as Chapter 7 Trustee )

for the bankruptcy estates of )

BW Industries, Inc., et al., )

)

Plaintiff, )

)

v. )

)

Voyager Pacific Opportunity )

Fund II, LLC, )

)

Defendants. ) Rel. Docs. 1, 5, 6, 7, 8

MEMORANDUM OPINION1

Before the Court is Voyager’s Motion to Dismiss. For the

reasons stated below, the Court will grant the motion in part and

deny the motion in part.

I. BACKGROUND

Bitwise and its affiliates (the “Debtors”) had revenues of

less than $5 million per year but were allegedly spending more

than $50 million per year,2 leading to, inter alia, cash flow

1 This Opinion constitutes the findings of fact and

conclusions of law of the Court pursuant to Rule 7052 of the

Federal Rules of Bankruptcy Procedure.

2 Adv. D.I. 1 ¶ 19.

issues.3 To help resolve the problem, the Debtors obtained a

loan of $750,000 from Voyager Pacific Opportunity Fund II, LLC

(“Voyager”) on December 12, 2022.4 The loan was represented by a

note (the “Voyager Note”) whose terms required the Debtors to

repay the loan plus a “Fixed Loan Fee” of $25,000 four days later

(by December 16, 2022).5 The Debtors repaid Voyager $779,917.81

on December 23, 2022.6

The Debtors’ financial situation did not improve and on June

28, 2023, the Debtors filed a chapter 7 petition. Jeoffrey

Burtch was appointed as the chapter 7 trustee (“Trustee”).7 On

June 27, 2025, the Trustee sued Voyager to avoid the Voyager Note

transaction and the Debtors’ December 23, 2022, payment as

fraudulent transfers.8

In Counts 1 and 2, the Trustee seeks to avoid the

“Obligations” defined by the Trustee as the “contractual terms

requiring payment of interest at a rate of 304% per annum” as a

fraudulent transfer under sections 544(b) and 548 of the

Bankruptcy Code and sections 3439.04 and 3439.05 of the

3 Id. ¶ 27.

4 Id. ¶ 43.

5 Id. ¶ 44.

6 Id. ¶ 49.

7 Id. ¶¶ 8-9.

8 Id. ¶ 10.

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California Civil Code.9 In Counts 3 and 4, the Trustee seeks to

avoid the “Transfer,” defined by the Trustee as the entire

$779,917.81 that the Debtors wired to Voyager to satisfy the

Voyager Note and its related fees, as a fraudulent transfer under

sections 544(b) and 548 of the Bankruptcy Code and sections

3439.04 and 3439.05 of the California Civil Code.10 In Count 5

the Trustee seeks to recover the Transfer and in Count 6 the

Trustee seeks to disallow Voyager’s claims.11

Voyager filed a motion to dismiss Counts 3, 4, and 6.12 The

parties have fully briefed the motion,13 and the matter is ripe

for decision.

II. JURISDICTION

The Court has subject matter jurisdiction over this

adversary proceeding.14 The Trustee consented to entry of a

final order or judgment by this Court.15 Voyager did not state

9 Id. ¶ 54-55. The Complaint is silent about the Voyager

Note’s governing law, but both parties cite California law as the

applicable state law under section 544.

10 Id. ¶ 47.

11 Id. ¶¶ 82-83, 85-87.

12 Adv. D.I. 6 at 5.

13 Adv. D.I. 7 & 8.

14 28 U.S.C. §§ 1334(b) & 157(a).

15 Adv. D.I. 1 ¶ 7; Adv. D.I. 18 ¶ 7.

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whether it consented to the entry of a final order or judgment by

this Court, which according to the local rules constitutes

consent.16

III. STANDARD OF REVIEW

Rule 12(b)(6) provides for dismissal for “failure to state a

claim upon which relief can be granted.”17 Under Rule 12(b)(6),

a complaint “does not need detailed factual allegations, [but] a

plaintiff’s obligation to provide the ‘grounds’ of his

‘entitle[ment] to relief’ requires more than labels and

conclusions, and a formulaic recitation of the elements of a

cause of action will not do.”18 The plaintiff must state enough

facts for the Court to determine that “a claim for relief is

plausible on its face.”19 A claim is plausible when the court

can “draw a reasonable inference that the defendant is liable for

the misconduct alleged.”20 The moving party has the burden of

16 Del. Bankr. L.R. 7012-1.

17 Fed. R. Civ. P. 12(b)(6). The applicable Federal Rules of

Civil Procedure are incorporated into the Federal Rules of

Bankruptcy Procedure. See Fed. R. Bankr. P. 7012.

18 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

19 Id. at 570.

20 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (describing

applicable pleading standards).

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demonstrating that dismissal is appropriate.21

IV. DISCUSSION

A. Constructive Fraud

The Trustee may avoid a transfer of the Debtors’ interest in

property or an obligation that was made or incurred within two

years before the Debtors filed the bankruptcy petition if the

Debtors, inter alia, “received less than a reasonably equivalent

value in exchange for such transfer or obligation.”22

Voyager acknowledges that normally constructive fraudulent

transfer cases require discovery on the issue of what value was

given,23 but it argues that this case does not because the

Trustee has pled facts which defeat his own cause of action: The

Complaint alleges that the Debtors received a loan for $750,000

and subsequently wired $750,000 (in addition to the fees charged

for that loan) to Voyager in satisfaction of that loan.24

Voyager therefore argues that the Complaint is missing an

21 In re Intel Corp. Microprocessor Antitrust Litig., 496 F.

Supp. 2d 404, 408 (D. Del. 2007).

22 11 U.S.C. § 548(a)(1)(B). See also Cal. Civ. Code §§

3439.04(a)(2), 3439.05.

23 See Beskrone v. OpenGate Cap. Group, LLC (In re PennySaver

USA Publishing, LLC), 602 B. R. 256, 267 (Bankr. D. Del. 2019)

(observing that reasonably equivalent value is usually a factual

issue best left for decision after discovery is concluded).

24 D.I. 1 ¶¶ 43-47.

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essential element or is subject to an absolute defense which is

apparent from the face of the Complaint as to the repayment of

the $750,000 loan.25

Voyager contends that the Trustee has not alleged that the

loan itself was fraudulent. Instead, Voyager contends that the

Complaint’s only allegations of fraudulently incurred obligations

are the allegations that the obligation to pay the Fixed Loan Fee

was a fraudulent transfer.26

Even if the Complaint did allege that the $750,000 portion

of the repayment was avoidable, Voyager argues that the Complaint

does not state a claim for relief under the Bankruptcy Code or

California law because the $750,000 loan constitutes reasonably

equivalent value for its repayment. It asserts that the statutes

and case law clearly provide that a payment in satisfaction of a

debt is a transfer for value under applicable law.27

25 VFB LLC v. Campbell Soup Co., 482 F.3d 624, 631 (3d Cir.

2007) (stating that a party receives reasonably equivalent value

when it gets approximately the same value that it gave). See

also Kendall v. Lancaster Exploration & Dev. Co., LLC, 323 F.

Supp. 3d 664, 676 n. 67 (M.D. Pa. 2018) (“In the Third Circuit,

affirmative defenses may be raised at the motion to dismiss stage

if the defenses are ‘apparent on the face of the complaint.’”)

(citation omitted).

26 Adv. D.I. ¶¶ 54-55.

27 11 U.S.C. § 548(d)(2)(A) (defining “value” in the context of

fraudulent transfers to include “satisfaction [of an] antecedent

debt of the debtor.”); Cal. Civ. Code § 3439.03 (same). See

also, Burkart v. Bisessar (In re Singh), No. 12-2312D, 2015 WL

1887939, at *16 (Bankr. E.D. Cal. Apr. 22, 2015) (holding that

repayments that did not make Ponzi scheme victims “net winners”

6

The Trustee does not dispute that the payment of an

enforceable debt is a transfer for reasonably equivalent value.

However, he argues that if the loan itself is avoided as

unreasonable, then the transfer satisfying that debt was not for

reasonably equivalent value.28 The Trustee contends that

Voyager’s reading of the Complaint is too narrow. The Trustee

asserts that the Complaint states, in its entirety, that he is

trying to avoid all of the obligations the Debtors incurred in

connection with the Voyager Note. The Trustee claims that the

Debtors only had one obligation under the Voyager Note, which

included both the principal and the Fixed Loan Fee. The Trustee

argues that the right to receive $750,000 is not reasonably

equivalent to an obligation to pay $775,000 four days later. As

a result, the Trustee asserts that the entire loan obligation

should be avoided.

were payments for value and could not be avoided by the trustee

as constructively fraudulent); Annod Corp. v. Hamilton & Samuels,

100 Cal. App. 4th 1286, 1294-95 (2002) (affirming decision that

payments to law firm partners were reasonably equivalent value

for the services they performed for the firm).

28 TSIC v. Thalheimer (In re TSIC, Inc.), 428 B.R. 103, 115

(Bankr. D. Del. 2010) (holding that the transfer at issue was

constructively fraudulent and could be avoided because the

underlying debt obligation was avoided); Ogle v. JT Miller, Inc.

(In re HDD Rotary Sales, LLC), 512 B.R. 877, 885 (Bankr. S.D.

Tex. 2014) (stating the general rule that if an obligation is

avoided, the transfers made on account of that obligation are not

necessarily for reasonably equivalent value but finding in that

case that they were for value and not constructively fraudulent

transfers).

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Voyager disputes the Trustee’s contention that the Complaint

seeks to avoid the $750,000 loan. Voyager points out that the

Complaint defines “Obligations” as “contractual terms requiring

the payment of interest at a rate of 304% per annum.”29

Therefore, it does not seek to avoid the loan itself or even the

repayment of the principal.

The Court finds it unnecessary to decide whether the

Complaint seeks to avoid the loan transaction itself as a

constructively fraudulent transfer, because even if it does, the

Court concludes that it fails to state a plausible claim for the

avoidance of the repayment of the principal amount of the loan,

which is the only part of the Complaint Voyager is seeking to

dismiss by its motion.30

The Complaint acknowledges that Voyager gave the Debtors

$750,000 in cash.31 The repayment of that exact amount is

29 Adv. D.I. 1 ¶ 55.

30 Adv. D.I. 8 at 5 (“the Motion to Dismiss does not seek

dismissal of the Trustee’s Complaint with respect to the

approximate $30,000 in fees and interest paid by [the Debtors] in

addition to the repayment of the $750,000 principal amount of the

loan. Voyager certainly does not concede that such obligations or

the payment of such obligations are avoidable, only that the

determination of such is not appropriate at the motion to dismiss

stage of this proceeding.”).

31 Adv. D.I. 1 ¶ 46 (“On December 12, 2022, Defendant wired the

sum of $750,000 to [the Debtors].”).

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equivalent value.32 Therefore, the Trustee cannot state a claim

for avoidance of the portion of the Transfer that repaid the loan

principal of $750,000 as a constructively fraudulent transfer.

The TSIC case cited by the Trustee is inapposite as it did

not involve the repayment of an antecedent debt.33 The HDD

Rotary case cited by the Trustee supports the Court’s conclusion

that the repayment of the amount that Voyager gave to the Debtors

is not avoidable.34

B. Actual Fraud

The Trustee may avoid a transfer of the Debtors’ interest in

property or an obligation as an actual fraudulent transfer that

was made or incurred within two years before the Debtors filed

the bankruptcy petition if the Debtors, inter alia, “made such

transfer or incurred such obligation with actual intent to

hinder, delay, or defraud any entity to which the debtor was or

became, on or after the date that such transfer was made or such

32 11 U.S.C. § 548(d)(2)(A) (defining “value” in the context of

fraudulent transfers to include “satisfaction [of an] antecedent

debt of the debtor.”).

33 TSIC, 428 B.R. at 114-15 (holding that severance payment

made in exchange for promise not to sue – not for repayment of an

antecedent debt - was for less than reasonably equivalent value).

34 See HDD Rotary Sales, 512 B.R. at 886 (holding that payment

of bonus promised to salesman to induce him to join the debtor’s

sale force was in satisfaction of a legal obligation of the

debtor and the debtor had received reasonably equivalent value in

the form of the salesman’s services).

9

obligation was incurred, indebted.”35 The California statute

enumerates several “badges of fraud” which the court may consider

to determine whether a transfer was made with fraudulent

intent.36

Voyager argues that Count 4, the actual fraudulent transfer

claim, must be dismissed. Voyager asserts that although the

statutes and courts consider many “badges of fraud” to ascertain

whether a transfer is actually fraudulent, the most relevant

badge of fraud in the present case is “[w]hether the value of the

consideration received by the debtor was reasonably equivalent to

the value of the asset transferred or the amount of the

obligation incurred.”37 Voyager notes that the Complaint alleges

that the Debtors received $750,000 and repaid that same amount.38

According to Voyager, its loan to the Debtors created a debt and

that, if a transfer is made to satisfy a debt, the other badges

35 11 U.S.C. § 548(a)(1)(A). See also Cal. Civ. Code §

3439.04(a)(1).

36 See Cal. Civ. Code § 3439.04(b). See also Universal Home

Improvement v. Robertson, 51 Cal. App. 5th 116, 127 (2020).

37 Cal. Civ. Code § 3439.04(b)(8). See also Official Comm. of

Unsecured Creditors of Fedders N. Am., Inc. v. Goldman Sachs

Credit Partners L.P. (In re Fedders N. Am., Inc.), 405 B.R. 527,

545 (Bankr. D. Del. 2009) (stating that the “badges of fraud”

include, but are not limited to: “. . . consideration for the

conveyance”).

38 Adv. D.I. 1 ¶¶ 46-47.

10

of fraud are irrelevant.39 Voyager asserts that these facts are

sufficiently straightforward that the Court need not analyze the

other badges of fraud.

Voyager also argues that reasonably equivalent value is the

most important factor for public policy reasons. Voyager claims

that fraudulent transfer laws exist to prevent estate assets from

disappearing without consideration.40 Here, Voyager asserts that

the Debtors’ transfer of $750,000 did not decrease the Debtors’

bankruptcy estate because it was in satisfaction of a debt owed

by the Debtors.

The Trustee argues that the loan transaction itself is

avoidable as an actual fraudulent transfer because the Debtors’

former CEOs committed fraudulent acts, causing enormous losses

39 Universal Home Improvement, 51 Cal. App. 5th at 127 (2020)

(affirming holding that defendant’s transfer of a partnership

interest to her sister after a judgment was entered was for

reasonably equivalent value because it satisfied a valid,

antecedent debt and therefore was not an actual fraudulent

transfer under California law even though some badges of fraud

were present); Wyzard v. Goller, 23 Cal. App. 4th 1183, 1188

(1994) (affirming holding that the defendant had not received an

actual fraudulent transfer because he had given equivalent value

even though some badges of fraud were present); Annod 100 Cal.

App. 4th at 1299 (2002) (affirming decision that payments to law

firm partners were not fraudulent transfers because they were for

reasonably equivalent value and some of the badges of fraud were

not present). But see Kasolas v. Nicholson (In re Fox Ortega

Enters., Inc.), 631 B.R. 425, 465, 468 (Bankr. N.D. Cal. 2021)

(declining to follow the general rule that a transfer for value

inherently defeats an actual fraudulent transfer claim).

40 Rebein v. Cornerstone Creek Partners, LLC (In re Export S.

Tulsa, LLC), 842 F.3d 1293, 1297 (10th Cir. 2016) (explaining the

rationale of fraudulent transfer law).

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which led to the Debtors agreeing to Voyager’s predatory loans.

After the loan is avoided, the Trustee asserts that the Transfer

must be avoided because there would be no antecedent debt and the

Transfer would not have been for value.

The Trustee contends that Voyager will have the chance at

trial to show that it is a good faith transferee under section

548(c) entitled to retain any value it provided to the Debtors.41

The Trustee argues that it is incumbent upon the Defendant to

prove its good faith because of the onerous terms of the loan and

the former CEOs’ fraudulent acts.

Voyager responds that the Complaint does not support the

Trustee’s predatory lending arguments because it does not allege

that the loan was usurious or that Voyager was involved with any

of the CEOs’ allegedly fraudulent acts. Voyager asserts that the

market for short-term loans to distressed entities dictates the

fees and interest attached to those loans and argues that

avoiding the Transfer would chill the short-term lending market

for other distressed companies.

Voyager also argues that even if the obligation to repay

$750,000 was avoidable, Voyager would still have a right to

41 See 11 U.S.C. § 548(c) (providing that “a transferee or

obligee of such a transfer or obligation that takes for value and

in good faith has a lien on or may retain any interest

transferred or may enforce any obligation incurred, as the case

may be, to the extent that such transferee or obligee gave value

to the debtor in exchange for such transfer or obligation.”).

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retain the Transfer in that amount under section 548(c) and under

theories of “money lent,”** unjust enrichment,**? and implied

contract.** Voyager argues that avoiding the Transfer would give

the Debtors an inappropriate windfall. Voyager asserts that

fraudulent transfer law has a remedial purpose,*? and serves to

protect the transferor’s creditors and restore the parties to

their prior positions.*® Voyager asserts that avoiding the loan

See, e.g., Farmers Ins. Exch. v. Zerin, 53 Cal. App. 4th

445, 460 (1997) (describing claim for “money had and received” as

indebtedness for consideration that has not been repaid).

as Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 762 (9th

Cir. 2015) (stating that California law allows plaintiffs to

recover benefits that the defendant unjustly retained); Ghirardo

v. Antonioli, 14 Cal. 4th 39, 51 (1996) (holding that the

defendant had been unjustly enriched when he failed to pay

remainder of mortgage due to mathematical error in a payoff

demand).

a4 Retired Emps. Ass’n of Orange Cty., Inc. v. County of

Orange, 52 Cal. 4th 1171, 1178 (2011) (describing implied

contract as an agreement that is not expressed in words but has

the same legal effect as a written contract).

as See e.g., Butler v. Anderson (In re C.R. Stone Concrete

Contractors, Inc.), 462 B.R. 6, 27 (Bankr. D. Mass. 2011)

(finding that § 548 was remedial for purposes of determining

whether the action survived the plaintiff’s death); Butler v.

Anderson (In re Best Products Co., Inc.), 168 B.R. 35, 57 (Bankr.

S.D.N.Y. 1994) (stating the general principle that fraudulent

transfer law is meant to be remedial and not punitive).

ae Frontier Bank v. Brown (In re N. Merchandise, Inc.), 371

F.3d 1056, 1059 (Sth Cir. 2004) (stating that the fraudulent

transfer analysis focuses on the amount of funds available to

unsecured creditors); Harman v. First Am. Bank of Md. (In re

Jeffrey Bigelow Design Grp., Inc.), 956 F.2d 479, 485 (4th Cir.

1992) (stating that fraudulent transfer law seeks to determine

whether the transfer depleted the bankruptcy estate); Rubin v.

Mfrs. Hanover Tr. Co., 661 F.2d 979, 991-92 (2d Cir. 1981)

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would just restore the parties to the positions they occupied

before they signed the Voyager Note and would not allow the

Trustee to keep the $750,000 that Voyager lent it but would

obligate it to return the loan to Voyager. Therefore, Voyager

argues that the Transfer of the $750,000 from the Debtors to

Voyager had no impact on the Debtors’ net estate and should not

be avoided.

The Court concludes that the Trustee has stated a plausible

claim for avoidance of the principal amount of the loan as an

actual fraudulent transfer. Providing value is not an absolute

bar to an actual fraudulent transfer claim under section

548(a)(1)(A). Although there is disagreement on this point, the

Court agrees with the analysis of the Kasolas Court which held

that a claim could be stated if there was evidence of fraud on

the part of the defendant.47 In that case, there was evidence

that the debtor was running a Ponzi scheme and the defendant knew

of it (having threatened to reveal the scheme to the authorities

(describing how creditors have not suffered if the debtor

received a benefit equivalent to the value it transferred); Best

Products, 168 B.R. at 57 (stating that an avoided transfer places

parties in their prior positions).

47 See Kasolas v. Nicholson (In re Fox Ortega Enters., Inc.),

631 B.R. 425, 467-68 (Bankr. N.D. Cal. 2021. But see Universal

Home Improvement, 51 Cal. App. 5th at 127 (holding that the

defendant had not made an actual fraudulent transfer despite the

presence of badges of fraud because the transfer was for

reasonably equivalent value and made to satisfy a valid,

antecedent debt).

14

unless he received the product he had paid for).48 After he was

sued for a fraudulent transfer, the defendant presented the same

argument as Voyager here, asserting that badges of fraud were not

relevant because his payment for the product was value.49 The

Kasolas Court disagreed, holding that the satisfaction of an

antecedent debt did not preclude the Court from avoiding the

transfer if it found the defendant had committed an actual

fraud.50

Like the Kasolas case, the payment of value does not

automatically insulate Voyager from liability if the Court

concludes that the Transfer was an actual fraudulent transfer.

The Court finds that there is sufficient factual content in the

Complaint to state such a claim here. The Trustee alleges that

the principal of Voyager, David Hardcastle, was an advisory board

member of the Debtors who knew about the Debtors’ financial

difficulties and the Debtors’ executives’ allegedly fraudulent

efforts to conceal those difficulties.51 The Trustee further

alleges that the Debtors obtained the loan from Voyager to hide

48 Id. at 446.

49 Id. at 465. See also Universal Home, 51 Cal. App. 5th at

127 (2020) (quoting and affirming the trial court’s application

of the principle that “[t]he ‘badges of fraud’ do not matter when

value is given, such as satisfaction of antecedent debt.”).

50 Kasolas, 631 B.R. at 468.

51 Adv. D.I. 1 ¶ 39-40.

15

the Debtors’ cash shortfalls as part of the CEOs fraudulent

scheme.52 Although claims for fraud require particularity,53 the

Court finds that the Trustee has plead sufficient facts to nudge

it into the realm of plausibility and survive a motion to

dismiss.54

The Court finds that for purposes of this motion to dismiss

the facts in the case relied upon by Voyager, Universal Home, are

distinguishable. In Universal Home, the defendant transferred a

partnership interest to her sister, to whom she owed a valid,

preexisting debt, after a judgment was entered against her in an

unrelated matter.55 The judgment creditor sued the defendant for

actual and constructive fraudulent transfers under California

law.56 Despite the existence of several badges of fraud, the

trial court found the defendant’s payment to be a good faith

payment to her sister.57 The Court has made no such findings of

good faith at this stage, but the Court finds that the Trustee

52 Id. ¶ 22.

53 See Fed. R. Civ. P. 9(b); Fed. R. Bankr. P. 7009.

54 Miller v. Greenwich Cap. Fin. Prods. Inc., (In re Am. Bus.

Fin. Servs., Inc.), 361 B.R. 747, 759 (Bankr. D. Del. 2007)

(stating that chapter 7 trustees are afforded more latitude in

pleading fraud but holding that the trustee had not stated an

actual fraudulent transfer claim with sufficient particularity).

55 Universal Home, 51 Cal. App. 5th at 119-20 (2020).

56 Id. at 120.

57 Id. at 127.

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has sufficiently alleged that the Transfer was not made in good

faith.

C. Disallowance of Claim

Count 6 of the Complaint asks the Court to disallow any

claim of Voyager pursuant to section 502(d) until and unless

Voyager returns any transfer that is avoided.

Voyager asks the Court to dismiss Count 6 because Voyager

has not filed any claim in the Debtors’ cases. The Trustee does

not object to the dismissal.

The Court will therefore grant Voyager’s motion to dismiss

Count 6 of the Complaint.

V. CONCLUSION

For the foregoing reasons, the Court will grant the motion

to dismiss Counts 3 and 6 and deny the motion as to Count 4.

An appropriate Order is attached.

Dated: January 22, 2026 BY THE COURT:

Mary F. Walrath

United States Bankruptcy Judge

17