Continental Casualty Company v. Symons, et al.
7th Circuit Court of Appeals Citation: 14-2665, 14-2671 & 15-106
Decided: March 22, 2016
This fraudulent transfer case pits 2 insurance company’s – as well as the controlling family of the seller and their related businesses – against one another. despite some fancy footwork on the part of the sellers, the Court saw through the ruse to the heart of the deceit. The upshot: if it quacks like a duck then it probably is. To nobody’s surprise, fraudulent transfers were found and liability followed close behind.
IGF Insurance Company owed Continental Casualty Company more than $25 million for a crop-insurance business it bought in 1998. In 2002 IGF resold the business to Acceptance Insurance Company for approximately $40 million. Continental alleged in the District Court that IGF’s controlling family — Gordon, Alan, and Doug Symons — structured the sale so that most of the purchase price was siphoned into the coffers of other Symons-controlled companies rendering IGF insolvent. Specifically, Continental claimed that $24 million of the $40 million purchase price went to 3 Symons-controlled companies—Goran Capital, Inc.; Symons International Group, Inc.; and Granite Reinsurance Co.—for sham noncompetition agreements and a superfluous and over-priced reinsurance treaty. Continental, still unpaid, sued for breach of contract and fraudulent transfer.
In 1998 IGF bought Continental’s crop-insurance business at a price to be determined at either side’s option by the exercise of a put or call option. In 2001 Continental exercised its put option; under the contractual formula, IGF owed Continental $25.4 million. At that same time, IGF sold its business to Acceptance for $40 million. The Symons, who controlled IGF, structured the purchase price: $16.5 million to IGF; $9 million to IGF’s parent companies Symons International and Goran in exchange for noncompetition agreements; and $15 million to Granite, an affiliated Symons-controlled company, for a reinsurance treaty. Continental, still unpaid, sued for breach of contract and fraudulent transfer.