The opinion of the court was delivered by: Glasser, United States Senior District Judge
Nearly twenty years ago, Plaintiffs Gasser Chair Company, Inc. and George Gasser (collectively, "Gasser" or "Plaintiffs") commenced an action against Infanti Chair Manufacturing Corporation ("Infanti Chair") and Vittorio Infanti ("Infanti") individually for the infringement of one of Gasser's patents. On August 9, 1996, Plaintiffs obtained a judgment in excess of $15 million (the "Judgment") against Infanti and Infanti Chair. The current action, brought by Gasser against now defunct Infanti International, Inc. ("Infanti International"), seeks, inter alia, to set aside a series of fraudulent conveyances and impose liability for the Judgment, which remains unpaid, on Infanti International as successor in interest to Infanti Chair. The Amended Complaint also asserts that Gasser has a first priority lien on the property of Infanti International superior to liens held by defendants Amboy National Bank ("Amboy" or "the Bank") and George Scharpf ("Scharpf"). Both Amboy and Scharpf filed cross-claims against Infanti International to recover monies they advanced to it, and counterclaimed against Gasser to assert that, based on the collateral conveyed to secure these loans, they hold superior rights to the property of Infanti International.
A. Plaintiffs' Motion for Default Judgment
On March 30, 2005, Infanti International's counsel, Katten, Muchin, Zavis & Rosenman, requested permission to withdraw because Infanti International had not paid its legal bills. On April 5, 2005, the Court granted that motion and warned Infanti International that because "a corporation cannot appear pro se," counsel must appear on behalf of the company within twenty days of the Order or "judgment(s) which may be obtained in any subsequent proceedings may be entered against it by default." No subsequent appearance on behalf of Infanti International has ever been made in this action. On May 19, 2005, Plaintiffs moved this Court to enter default judgment on the first through seventh causes of action in their Amended Complaint, including a declaration that Infanti International is a successor in interest to Infanti Chair, and therefore liable for Gasser's Judgment.*fn1
B. Amboy's Motions for Partial Summary Judgment and Default Judgment
Amboy, a creditor of Infanti International, has two motions pending before the Court: (1) a motion for partial summary judgment; and (2) a motion for default judgment against Infanti International.
Amboy's motion for partial summary judgment seeks a declaration from the Court that (1) Infanti International is indebted to it for the amount of several loans it made to the company, and (2) Amboy holds a first priority perfected lien on the collateral of Infanti International that is superior to Plaintiffs' Judgment, and as a result, it is entitled to the proceeds of a sale of the assets of Infanti International that was held on April 12, 2005. However, Amboy also filed a motion, ostensibly pursuant to Federal Rule of Civil Procedure 41, seeking an order of this Court that would dismiss all of Gasser's claims against it. In its submission in support of its motion, Amboy acknowledges that Gasser's interest in the proceeds of the auction is superior to its own. That acknowledgment makes moot Amboy's motion for partial summary judgment as to its claim of priority over the proceeds of the auction, thus the motion as to (2) above is hereby denied.*fn2 Accordingly, the Court sua sponte grants summary judgment in favor of Plaintiffs on their claim that they have priority over Amboy to the proceeds of the sale held on April 12, 2005.
Amboy's motion for default judgment against Infanti International, based on Infanti International's failure to appoint replacement counsel, seeks judgment on its cross-claim against Infanti International -- that it is indebted to Amboy for the amount of the loans plus interest, the same relief sought in (1) above for partial summary judgment.
C. Scharpf's Motions for Partial Summary Judgment and Default Judgment
Scharpf, President of Amboy, and a creditor of Infanti International, acting in his individual capacity, also filed a motion for partial summary judgment seeking essentially the same relief as Amboy -- that he is entitled to declarations that Infanti International is indebted to him for several loans he personally made to the company and that his lien on the collateral of Infanti International is superior to all creditors, except Amboy. Scharpf also moved for default judgment against Infanti International on his cross-claim that it is indebted to him for the amount of the loans he personally made to it.
In response, Plaintiffs argue that Scharpf was not a lender, but rather an investor in the company, and that his claims should therefore be equitably subordinated to Plaintiffs' claims. In the alternative, they contend that even if Scharpf was a lender, that the loans were nonetheless invalid because the security interests in support of those loans were conveyed with an intent to hinder, delay, or defraud Infanti International's creditors and were therefore fraudulent conveyances pursuant to New York Debtor & Creditor Law ("DCL") § 276, and even if there was no requisite intent, the conveyances were constructively fraudulent pursuant to DCL §§ 272-75.*fn3
A. Bankruptcy of Infanti Chair and Infanti
Within a month of this Court's August 9, 1996 Judgment, Infanti Chair filed for bankruptcy pursuant to Chapter 11 in the United States Bankruptcy Court for the Eastern District of New York. Am. Compl. ¶ 26. Infanti, in his individual capacity, also filed for bankruptcy pursuant to Chapter 11 in the United States Bankruptcy Court for the District of New Jersey. Id. ¶ 23. Both courts found the Judgment to be non-dischargeable. Id. ¶¶ 25, 33.
Two years later, the Bankruptcy Court for the Eastern District of New York issued an order authorizing the sale of Infanti Chair's assets. By August 1998, the Trustee appointed by the Bankruptcy Court had shut down Infanti Chair's operations and sold all its assets. Id. ¶ 30.
B. Amboy, Scharpf, and the Creation of Infanti International
Amboy is a federally chartered commercial bank with locations throughout New Jersey. See Affidavit of Alex Spizz ("Spizz Aff."), dated November 23, 2005, Ex. 1 at 8:7-11. It is privately owned by approximately seventy shareholders. Id. at 8:23-9:4. Scharpf is the President of Amboy, Chairman of its Board ...