Court Holds Proven Fraudulent Conveyance Does Not Support Damages Duplicating Contract Recovery

Posted: October 19, 2026 / Written by: Thomas A. Kissane / Categories Contracts, Corporate Transactions, Damages, Fraudulent Conveyance

Court Holds Proven Fraudulent Conveyance Does Not Support Damages Duplicating Contract Recovery

On September 29, 2026, Justice Robert R. Reed of the New York County Commercial Division held that proof of a fraudulent conveyance does not support a separate damages recovery where the creditor’s loss is already addressed by its breach-of-contract claim. The case is Borden LP v. Sixth St. Partners, LLC, Index No. 657398/2017.

The dispute arose from a loan secured by membership units in non-party Switch, Ltd. The lenders were entitled to a share of the units’ appreciation and, if the borrower elected to sell, an opportunity to purchase the units. Plaintiff Borden LP transferred the units to an affiliated entity in exchange for a ten-year promissory note, then contended that no appreciation payment was due because it had received no cash proceeds.

Following a nonjury trial, the Court found clear and convincing evidence that the transfer was intended to hinder and delay payment. Nevertheless, the lenders could not obtain additional damages for fraudulent conveyance measured by the same unpaid appreciation share recoverable under the contract. The Court explained:

Duplicate damages are not permitted for the same financial harm. If multiple grounds exist for separate and distinct losses, a party is permitted to recover for the individual harms. Here, the harm — fraudulent conveyance — resulted in PBB not being paid the Switch Sharing Percentage it was owed under a fair market sale of the Switch Units. The same conduct resulted in the same harm from Borden’s breach of the credit agreement by failing to pay the Switch Sharing Percentage as he was contractually required.

. . . Here, PBB has not identified any monetary loss specifically related to the fraudulent transfer that is not already redressed and recoverable under its breach of contract claim.

Slip op., p. 15.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning fraudulent conveyances or remedies for breach of contract.