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AmeriFirst: U.S. trustee loses bid to transfer cases to Arizona court
By Sarah Lizee
Olympia, Wash., Oct. 26 – The judge overseeing AmeriFirst Financial, Inc.’s Chapter 11 bankruptcy case denied a motion filed by Regions 3 and 9 U.S. trustee Andrew R. Vara that sought to transfer the debtors’ cases to the U.S. Bankruptcy Court for the District of Arizona from the U.S. Bankruptcy Court for the District of Delaware.
Vara had said that the debtors “abused the bankruptcy system,” and that steps had been taken on the eve of bankruptcy to manufacture venue in a certain court.
“Venue in this jurisdiction is based solely on debtor Phoenix 1040 LLC’s incorporation in Delaware on June 28, 2023, 57 days before the bankruptcy filing,” the U.S. trustee said in the motion.
“Arizona debtor AmeriFirst Financial, Inc.’s stock was transferred to Phoenix hours, if not minutes, prior to the filing.
“Phoenix filed first, basing its venue choice on its state of incorporation. AFI filed next, basing its venue choice on the forum of an affiliated entity that was created to manufacture venue in Delaware.”
Judge Thomas M. Horan said the Delaware and Arizona courts are equally capable of presiding over the cases in an efficient manner.
He said there would be “some measure of increased cost” associated with transferring the case, particularly because professionals might be replaced in the new venue or would be required to associate with and integrate Arizona counsel and take the time to assist the court in getting acquainted with the cases.
AmeriFirst Financial is a mortgage lender based in Mesa, Ariz. The company filed bankruptcy on Aug. 24 under Chapter 11 case number 23-11240.
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