I will be making a video summary of the TEDDY thesis from my perspective that will be published in the coming days. For now, I prepared some tit-jacking DD for all of you to enjoy in the meantime. 🧵👇🏽 1/
Checking the "Claims" section of the Kroll site for Bed Bath & Beyond Inc. leads you to identify two abnormally large claims submitted by Brandon Adam Meadows, the first on 07/14/2023 for just over $1 billion dollars and another for $10.85 billion filed 10/26/2023: 
While both these claims emerged after the “General Claims Bar Date” of July 7th, 2023 the deadline set by the court in Doc 584, we have to accept the fact that it exists and remind ourselves that committing a false claim violation is a felony. This means we need to take them seriously. From the DOJ site:
One interesting detail is that the July claim was submitted against Bed Bath & Beyond Inc. while the much larger sum filed in October stated Alamo Bed Bath & Beyond Inc as the debtor. I can’t help but remember that one out of ten NFTs in GMERICA V2 Collection features The Alamo, but I digress:
My guess is that the discrepancy has something to do with the fact that the company is no longer Bed Bath & Beyond after September 21st, especially not after the effective date, September 29th. Let’s look into the specifics for more information:
When analyzing the Claim Nature for differences, one thing you’ll notice is that each claim is segmented by type: General Unsecured, Priority, Secured, 503(b)(9) Admin Priority and Admin Priority.
The majority of July's claim falls under the category of general unsecured, indicating debts without pledged collateral. In the event of default, general unsecured creditors, representing trade debt, unsecured loans, and bondholders, lack specific assets to claim or sell. The remaining portion is distributed in descending order, with Admin Priority labeled as 'unliquidated.' (described below).
Interestingly, of the $10.85 billion submitted for the October claim, we see none of it was General Unsecured. And in ascending order, the inverse of the previous claim, we have all other categories report some value with the $10bn as an Admin Priority.
Definitions:
Priority claims in bankruptcy, outlined in Section 507 of the Bankruptcy Code, take precedence over other unsecured claims. These include certain unpaid wages, contributions to employee benefit plans, and specific taxes.
Secured claims are supported by collateral, granting the creditor the right to seize it in case of default. Examples include mortgages (with the house as collateral) and car loans (with the car as collateral).
503(b)(9) administrative priority claims are unique, prioritizing vendors who supplied goods within 20 days before bankruptcy filing. These vendors can claim the goods' value as a 503(b)(9) priority, ensuring early payment.
Administrative priority claims cover expenses incurred by the bankruptcy estate post-filing. They are paid first from available funds and include professional fees, costs to preserve the estate, and valid business operation expenses during bankruptcy.
But we also have the U indicator, which stands for Unliquidated, which I looked up on Kroll and discovered it is used for claims that involve debts that are hard to quantify. It likely signifies that the numbers entered are approximate values and subject to change. The C stands for contingent which means the payout that is dependent on the realization of some uncertain future event. Interesting.
The majority of July's claim falls under the category of general unsecured, indicating debts without pledged collateral. In the event of default, general unsecured creditors, representing trade debt, unsecured loans, and bondholders, lack specific assets to claim or sell. The remaining portion is distributed in descending order, with Admin Priority labeled as 'unliquidated.' (described below).
Interestingly, of the $10.85 billion submitted for the October claim, we see none of it was General Unsecured. And in ascending order, the inverse of the previous claim, we have all other categories report some value with the $10bn as an Admin Priority.
Definitions:
Priority claims in bankruptcy, outlined in Section 507 of the Bankruptcy Code, take precedence over other unsecured claims. These include certain unpaid wages, contributions to employee benefit plans, and specific taxes.
Secured claims are supported by collateral, granting the creditor the right to seize it in case of default. Examples include mortgages (with the house as collateral) and car loans (with the car as collateral).
503(b)(9) administrative priority claims are unique, prioritizing vendors who supplied goods within 20 days before bankruptcy filing. These vendors can claim the goods' value as a 503(b)(9) priority, ensuring early payment.
Administrative priority claims cover expenses incurred by the bankruptcy estate post-filing. They are paid first from available funds and include professional fees, costs to preserve the estate, and valid business operation expenses during bankruptcy.
But we also have the U indicator, which stands for Unliquidated, which I looked up on Kroll and discovered it is used for claims that involve debts that are hard to quantify. It likely signifies that the numbers entered are approximate values and subject to change. The C stands for contingent which means the payout that is dependent on the realization of some uncertain future event. Interesting.
So who is Brandon Adam Meadows?
AFAIK people have guessed the Brandon Meadows mentioned as the creditor is Brandon Meadows who works for Addison Holdings because he's an attorney working in finance. But this couldn’t be the case because looking him up on Alabama’s State Bar website and matching his education with his LinkedIn profile tells us that this guy is actually Michael Brandon Meadows who works on energy and construction matters.
AFAIK people have guessed the Brandon Meadows mentioned as the creditor is Brandon Meadows who works for Addison Holdings because he's an attorney working in finance. But this couldn’t be the case because looking him up on Alabama’s State Bar website and matching his education with his LinkedIn profile tells us that this guy is actually Michael Brandon Meadows who works on energy and construction matters.
A comprehensive search for a “Brandon Adam Meadows” yielded nothing. That's weird. How can someone qualified enough to handle a $10+ not have a LinkedIn profile or any mention whatsoever in any law firms directory? The single instance I could find of anyone having that name is this newspaper clipping from Ashvellive North Carolina-based local paper the Ashville Citizen Times printed in 1993, they were honoured a “terrific kid” at Weaverville Elementary school:
Given the nature of the inverted ascending/descending value entries for the July and October claims (not claiming there's negligence), the fact that they are "unliquidated" and have been input as approximate placeholders, and more importantly that the claims were made beyond the deadline, it’s not difficult to imagine that filings were prepared hastily, and while rushing, and perhaps a clerical error was made for Brandon’s middle name. This is the only leap of faith I ask you to make, although even if you choose not to, it does not nullify the implications of my conclusions.
I believe our creditor is Brandon C. Meadows, a partner at Jimerson and Birr. His LinkedIn states that he concentrates his practice in the areas of commercial litigation, financial services litigation, creditors’ rights.
Here is a segment of his bio from his firm’s website which I urge you all to read:
I believe our creditor is Brandon C. Meadows, a partner at Jimerson and Birr. His LinkedIn states that he concentrates his practice in the areas of commercial litigation, financial services litigation, creditors’ rights.
Here is a segment of his bio from his firm’s website which I urge you all to read:
Before I receive any backlash regarding the fact that he’s a Florida-based attorney, since he is merely submitting a claim as a creditor in the bankruptcy case and not representing the company in court, I confirmed he doesn’t need to file a motion with U.S. District Court for the District of New Jersey or seek admission pro hac vice.
What’s interesting about our friend Meadows is that he's been recognized as a “rising star” in his field and you wouldn’t guess what happens to be his specialty: Fraudulent Conveyances or Fraudulent Transfers. In fact, I learned all about these concepts from Brandon himself via a one-hour lecture posted on YouTube:
What did Brandon teach me?
The debt collection process hinges on a creditor's right to repayment through the liquidation of a debtor's assets. Various judicial procedures enable creditors to identify, seize, lien, levy, and force the sale of a debtor's assets to settle the owed debt. However, some creditors face the challenge of dealing with insolvent debtors who lack assets, rendering the debt practically uncollectible.
In certain cases, the debtor may have engaged in transferring assets that consequently delayed or hindered collection efforts by creditors. Under such circumstances, creditors possess potent remedies under the Uniform Fraudulent Transfer Act (UFTA) against the debtor and subsequent transferees. It is a means of achieving debt satisfaction through judicial processes or by negotiating a settlement with the debtor.
The debt collection process hinges on a creditor's right to repayment through the liquidation of a debtor's assets. Various judicial procedures enable creditors to identify, seize, lien, levy, and force the sale of a debtor's assets to settle the owed debt. However, some creditors face the challenge of dealing with insolvent debtors who lack assets, rendering the debt practically uncollectible.
In certain cases, the debtor may have engaged in transferring assets that consequently delayed or hindered collection efforts by creditors. Under such circumstances, creditors possess potent remedies under the Uniform Fraudulent Transfer Act (UFTA) against the debtor and subsequent transferees. It is a means of achieving debt satisfaction through judicial processes or by negotiating a settlement with the debtor.
What are Fraudulent Transfers?
A fraudulent transfer is generally defined as “a transfer made or obligation incurred by a debtor if made with actual intent to hinder, delay or defraud any creditor of the debtor” or a transfer made “without receiving a reasonably equivalent value in exchange for the transfer or obligation.”
It’s also important to distinguish between fraudulent transfers and common law fraud. Common law fraud involves intentional deception through false statements or hiding important facts to harm someone. It's a civil wrong, known as a tort, and can lead to damages for the harmed party. Fraudulent transfers, on the other hand, aren't always about false statements.
A fraudulent transfer is generally defined as “a transfer made or obligation incurred by a debtor if made with actual intent to hinder, delay or defraud any creditor of the debtor” or a transfer made “without receiving a reasonably equivalent value in exchange for the transfer or obligation.”
It’s also important to distinguish between fraudulent transfers and common law fraud. Common law fraud involves intentional deception through false statements or hiding important facts to harm someone. It's a civil wrong, known as a tort, and can lead to damages for the harmed party. Fraudulent transfers, on the other hand, aren't always about false statements.
Actual vs. Constructive Fraud
The Uniform Fraudulent Transfer Act addresses two distinct categories of fraudulent transfers. The first type is an "actual" fraudulent transfer, which centers on deliberate intent to delay, defraud, or hinder creditors. In contrast, the second type is a "constructive" fraudulent transfer, focusing not on the intent but rather on the economic effects of the transaction.
Proving the actual intent of a debtor can be challenging, list of factors, known as "badges of fraud," from which a court may infer the debtor's intent. On the other hand, establishing a constructive fraudulent transfer requires proof that the debtor did not receive reasonably equivalent value for the asset and that the transfer rendered the debtor insolvent.
UFTA does not define ‘reasonably equivalent value.’ Accordingly, whether value is reasonably equivalent must be determined on a case-by case basis. ‘Value’ has been interpreted fairly broadly, and has been defined as a comparison between ‘what went out’ with ‘what was received.’ Therefore, the focus is on the ‘economic reality’ of the situation. Also, under UFTA, a debtor is considered ‘insolvent’ when the ‘sum of the debtor’s debts is greater than all of the debtor’s assets at fair valuation.’ This definition is known as the ‘balance sheet test.’
So in summary, when it comes to "constructively fraudulent transfers," there's no need to demonstrate intent. Unlike common law fraud, there's no requirement for heightened pleading standards. The focus is more on the numbers – the economics of the transaction and circumstantial evidence play a crucial role.
The Uniform Fraudulent Transfer Act addresses two distinct categories of fraudulent transfers. The first type is an "actual" fraudulent transfer, which centers on deliberate intent to delay, defraud, or hinder creditors. In contrast, the second type is a "constructive" fraudulent transfer, focusing not on the intent but rather on the economic effects of the transaction.
Proving the actual intent of a debtor can be challenging, list of factors, known as "badges of fraud," from which a court may infer the debtor's intent. On the other hand, establishing a constructive fraudulent transfer requires proof that the debtor did not receive reasonably equivalent value for the asset and that the transfer rendered the debtor insolvent.
UFTA does not define ‘reasonably equivalent value.’ Accordingly, whether value is reasonably equivalent must be determined on a case-by case basis. ‘Value’ has been interpreted fairly broadly, and has been defined as a comparison between ‘what went out’ with ‘what was received.’ Therefore, the focus is on the ‘economic reality’ of the situation. Also, under UFTA, a debtor is considered ‘insolvent’ when the ‘sum of the debtor’s debts is greater than all of the debtor’s assets at fair valuation.’ This definition is known as the ‘balance sheet test.’
So in summary, when it comes to "constructively fraudulent transfers," there's no need to demonstrate intent. Unlike common law fraud, there's no requirement for heightened pleading standards. The focus is more on the numbers – the economics of the transaction and circumstantial evidence play a crucial role.
In a hypothetical scenario, if a company had $1.2 billion in debt and $1.5 billion in cash *cough* BBBY *cough*, and then proceeded to spend that cash almost entirely on share buybacks, it could potentially leave the company in a precarious financial position, as we learned to be the case. If the company subsequently files for bankruptcy, the creditors will indeed have grounds to make a claim against the company under UFTA.
In fact, take the sum of both claims submitted by Brandon Meadows and you get a value around 11.8 billion dollars. What do we find when we search on google the terms “Bed Bath & Beyond 11.8 billion”?
Several media outlets which were published shortly after BBBY filed for Chapter 11 lambasting the share repurchase programs as the driver behind Bed Bath’s eventual bankruptcy. I decided to double check the numbers so I subscribed to a data service which provided me with every buyback the company made throughout its history. Adding up the purchases indeed resulted in $11.803 billion.
I believe the claims that were submitted by Brandon Meadows represent the sum of the share buybacks committed by the company. I believe the $1 billion claim submitted on July 14th corresponds to the $1 billion share repurchase program announced by Mark Tritton, the former CEO, on November 01st 2021. Due to the fact that UFTA is governed by several statutes of limitations and the fact that this program transpired within the past 4 years, the amount that is owed is undisputed and hence the lack of a “U” indicated along with the claim. The $10.8 billion claim filed separately on October 28th I believe refers to the buybacks that took place between 2004-2019 by Steven Temares, the predecessor CEO. This are more difficult to value due to several factors including an inflated dollar value, hence the “U”.
But AJ you fucking moron cash is not considered to be an asset so how could these transactions qualify as fraudulent transfers?! … Actually, cash is considered an asset and we have precedent of UFTA cited in cases concerning share buybacks.
In 2016, the US Court of Appeals for the Second Circuit (which includes New York) held in a case involving the Chapter 11 reorganization of Adelphia Communications Corp., formerly one of the largest cable companies in the United States, that while the fraudulent transfer analysis is factually dependent on each case, as a matter of law, transfers of cash for stock buybacks may be clawed back as fraudulent transfers by the bankruptcy trustee.
Here are some interesting excerpts from that case:
Here are some interesting excerpts from that case:
While the case against Adelphia was ultimately dismissed, it wasn’t because the judge did not think there argument that the share buybacks doomed the company, but because Adelphia had assets they could have solved to avoid bankruptcy. Supposedly, you could argue that BBBY was able to sell BuyBuyBABY much earlier and settle their debts thus any UFTA case would be similarly dismissed, but that’s not necessarily true. Not only because BBBY’s situation was unique in itself, but because BABY was tied up as collateral for the ABL facility administered by JP Morgan. The same JPM that was the party exclusively selling the shares back to the company. Hmmm.
In a stock buyback, a company spends its money to buy its own stock from a public market holder. The key factor is whether the value exchanged was fair.
In a stock buyback, a company spends its money to buy its own stock from a public market holder. The key factor is whether the value exchanged was fair.
So let’s say in this case it’s pretty easy to demonstrate the buybacks put BBBY at an unfair advantage and was the key factor behind its performance decline and in turn bankruptcy. What are the creditor’s remedies?
UFTA sets forth six primary remedies available to creditors: (1) avoidance of the transfer; (2) attachment of the asset; (3) injunctive relief to prohibit further transfers; (4) appointment of a receiver; (5) levy and execution; and (6) “any other relief the circumstances require”—also known as the “catch-all provision.”
UFTA sets forth six primary remedies available to creditors: (1) avoidance of the transfer; (2) attachment of the asset; (3) injunctive relief to prohibit further transfers; (4) appointment of a receiver; (5) levy and execution; and (6) “any other relief the circumstances require”—also known as the “catch-all provision.”
Creditors typically seek the remedy of “avoidance of the transfer” or a money judgment against the transferee of the asset. Here is the definition of avoidance: “ is either an action by a creditor against a transfer directed against a particular transaction, which, if declared fraudulent, is set aside thus leaving the creditor free to pursue the asset, or it is an action against a transferee (JPM🤡) who has received an asset by means of a fraudulent conveyance and should be required to either return the asset or pay for the asset”
That’s right. You read it correctly. Reversal of the transfer.
That’s right. You read it correctly. Reversal of the transfer.
If the claim is deemed valid by the judge, the remaining $10.9 billion (11.8 billion - 900 million debt) could potentially be distributed among the shareholders who have had their equity extinguished following the bankruptcy. This is known as a "clawback" or "recoupment,”.
While I was doing my research, I found a SeekingAlpha article that coincidentally touched on many of the concepts I mentioned earlier and paints a wholistic picture regarding the prevalence of fraud in our markets, foreshadowing a looming financial disaster as a consequence. With that said, the article here assumes shareholders will be hurting as a result of the clawback, but in our case the amount claimed far exceeds the company’s remaining debt. Which means we’ll likely be beneficiaries of the distribution of remaining funds.
Source: seekingalpha.com/article/434561…
While I was doing my research, I found a SeekingAlpha article that coincidentally touched on many of the concepts I mentioned earlier and paints a wholistic picture regarding the prevalence of fraud in our markets, foreshadowing a looming financial disaster as a consequence. With that said, the article here assumes shareholders will be hurting as a result of the clawback, but in our case the amount claimed far exceeds the company’s remaining debt. Which means we’ll likely be beneficiaries of the distribution of remaining funds.
Source: seekingalpha.com/article/434561…
Is everyone ready for the Reverse UNO? Did someone say 1-2-Switch?
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