Brandt v. Nvida Corp (In the Matter of 3DFX Interactive, Inc.)

Summarized by David Kozlowski , Morrison Cohen LLP
11 years 3 months ago

Citation:

D.C. No. 5:08-cv-04634-RMW (9th Cir., November 6, 2014) (NOT FOR PUBLICATION)

Tag(s):

Ruling:

The Circuit AFFIRMED the district court and held that a pre-bankruptcy transfer was not a fraudulent conveyance. Certain regulations at issue regarding purchaser NVIDIA's disclosure of the value of the assets acquired required disclosure of the fair market value, or if greater, the acquisition price. Nothing disclosed by NVIDIA prevented NVIDIA from claiming the fair market value was $70 million or less. Moreover, the fact that Debtor 3dfx engineers subsequently joined NVIDIA does not overcome the ample evidence that 3dfx did not transfer its workforce or make payment contingent upon hiring engineers. The Circuit also examined alleged procedural irregularities regarding exclusion of proposed rebuttal expert witnesses, determining the bankruptcy court's decision to exclude the proposed witnesses was not an abuse of discretion and further, the Trustee was not prejudiced by the bankruptcy court's temporary closure of proceedings to the public.

Procedural context:

Appeal by the Trustee to the Circuit Court from a district court judgment affirming the bankruptcy court determination that purchaser NVIDIA did not pay less than fair market value for assets of Debtor 3dfx shortly before the Debtor filed for bankruptcy relief.

Facts:

Before filing for bankruptcy, Debtor 3dfx Interactive, Inc. transferred assets to competitor NVIDIA Corporation for $70 million. NVIDIA filed a form with the Department of Justice and the Federal Trade Commission indicating, inter alia, that the transaction was worth $108 million. NVIDIA later asserted the value of the transferred assets was less than $70 million. The Trustee sought to avoid the transfer as a fraudulent conveyance for less than reasonably equivalent value. NVIDIA asserted 3dfx's graphics business and workforce were not included in the transfer, despite the fact that many 3dfx engineers subsequently joined NVIDIA.

Judge(s):

Thomas, McKeown, and W. Fletcher, Circuit Judges.

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