Paloian v. LaSalle Bank

To secure a $25 million line of credit for cash-strapped Doctors Hospital, its owner Desnick and lender Daiwa structured MMA as a bankruptcy-remote vehicle to hold the hospital's accounts receivable, but MMA in practice functioned merely as a department of the hospital: it kept no office, prepared no financial statements or tax returns, never actually purchased the receivables, and the hospital continued carrying those assets on its own books. After the hospital entered bankruptcy, the trustee sought to recover money that flowed through MMA, and the parties disputed whether MMA's bankruptcy-remote structure protected those funds.