Cleveland-Cliffs Burns Harbor LLC v. Boomerang Tube, LLC

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE CLEVELAND-CLIFFS BURNS ) HARBOR LLC, a Delaware limited ) liability company, and ) CLEVELAND-CLIFFS STEEL LLC, ) a Delaware limited liability company, ) ) Plaintiffs, ) ) v. ) C.A. No. 2022-0378-LWW ) BOOMERANG TUBE, LLC, a ) Delaware limited liability company, ) BLACK DIAMOND CAPITAL ) MANAGEMENT, L.L.C., a Delaware ) limited liability company, and ) PTC LIBERTY TUBULARS, LLC, a ) Delaware limited liability company, ) ) Defendants. ) MEMORANDUM OPINION Date Submitted: June 2, 2026 Date Decided: September 28, 2026 Kevin M. Capuzzi, Andrew D. Kinsey & Kate Harmon, BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP, Wilmington, Delaware; Nathan Boninger, James R. Bedell & Alexandra Goss, BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP, Cleveland, Ohio; Counsel for Plaintiffs Cleveland- Cliffs Burns Harbor LLC and Cleveland-Cliffs Steel LLC Joseph B. Cicero, Kelly E. Rowe, Paul D. Brown & Mariska Suparman, CHIPMAN BROWN CICERO & COLE, LLP, Wilmington, Delaware; Jeffrey H. Zaiger, Judd Linden & Bernie Toledano, ZAIGER LINDEN ROBERTI & PEPE LLC, Stamford, Connecticut; Counsel for Defendant PTC Liberty Tubulars, LLC WILL, Vice Chancellor  The plaintiffs sold steel products to Boomerang Tube, LLC—a now-defunct producer of specialized steel goods for the oil and gas industry—and were left with an unsecured claim when Boomerang failed to pay for them. They now seek to recover from PTC Liberty Tubulars, LLC, the purchaser of certain Boomerang assets in an Article 9 sale. The plaintiffs’ theories—styled as claims for successor liability and fraudulent transfer—are legally meritless. At bottom, they are an appeal to equity by a disgruntled creditor. There are admittedly some strange facts here, like a Christmas Day sale notice and a bidding deadline just after the winter holidays. But no equities call for bending the law to pay an unsecured creditor. The plaintiffs failed to prove the fundamental elements of their claims. Judgment is for the defendant. I. BACKGROUND Unless otherwise noted, the following facts were stipulated to by the parties or proven by a preponderance of the evidence at trial.1 1 See Joint Pre-trial Stipulation (Dkt. 208) (“PTO”). Trial occurred over three days, during which three fact witnesses and four expert witnesses testified live. See Trial Trs. Vols. I- III (Dkts. 226-28). Trial testimony is cited as “[Name] Tr. __.” The trial record contains 397 joint exhibits and 17 deposition transcripts. Exhibits are cited by the numbers provided on the parties’ joint exhibit list as “JX __,” unless otherwise defined. See Third Am. Joint Ex. List (Dkt. 219). Deposition transcripts are cited as “[Name] Dep. __.” 1  A. Boomerang and Black Diamond Boomerang Tube, LLC is a Delaware entity that produced specialized tubing for oil and natural gas customers.2 It operated manufacturing facilities in Liberty, Texas (the “Liberty Facility”) and Houston, Texas (the “Houston Facility”).3 In June 2015, Boomerang filed for bankruptcy and emerged in February 2016 under a confirmed Chapter 11 plan.4 Under that plan, Boomerang became a portfolio company of two funds managed by asset-management firm Black Diamond Capital Management, L.L.C. (“Black Diamond”): BDCM Opportunity Fund III, L.P. (“Fund III”) and BDCM Opportunity Fund IV, L.P. (“Fund IV”).5 Fund III and Fund IV acquired 44.54% and 25.76% of the equity, respectively, in Boomerang’s parent company—Boomerang Tube Holdings, Inc.—giving Black Diamond a combined 70.30% controlling majority stake alongside 21 unaffiliated minority investors (29.70%).6 2 PTO ¶ 30; see Tregenza Dep. 25-26; Deckoff Tr. 77-78; Hrosik Tr. 11-12. 3 PTO ¶¶ 31-32. 4 Id. ¶ 21. When Boomerang emerged from bankruptcy, its valuation was $335 million. JX 244 at 9195. 5 PTO ¶¶ 23-26. Black Diamond is a registered investment advisor that provides advice to its affiliated advisor and general partner entities. Id. ¶¶ 53-54. On the private equity side of its business, Black Diamond purchases controlling interests in companies and works with those businesses to maximize value. Deckoff Tr. 72-73; Fontana Dep. 26-30. 6 PTO ¶¶ 23-26. 2  Black Diamond also secured the right to appoint a majority of Boomerang’s six-person Board of Directors (the “Board”).7 Until December 2020, the Boomerang Board consisted of the following individuals: Stephen Deckoff, Black Diamond’s founder and managing principal; John Fontana, the managing director of Black Diamond; Cary Hart, the CEO of a Black Diamond portfolio company; Jesse Austin III, a minority appointee; Mark Steele, an outside steel expert; and Jim Tregenza, Boomerang’s CEO.8 Through Funds III and IV, Black Diamond also became Boomerang’s largest senior secured lender pursuant to a Second Amended and Restated Term Credit Agreement (the “Credit Agreement”).9 The Credit Agreement gave Funds III and IV extensive rights, including to replace the loans’ administrative and collateral agent, to direct the agent to accelerate loans in the event of default, and to direct the agent to sell Boomerang’s assets.10 The loans were secured by all of Boomerang’s assets, comprising its personal property as well as the Liberty and Houston Facilities.11 7 JX 6 § 4.7(a)-(b); Fontana Tr. 397-98. 8 PTO ¶¶ 29, 50(d), 55; Deckoff Tr. 87-99. 9 Deckoff Tr. 103-04; JX 54 at 6385; PTO ¶ 69. 10 JX 54 §§ 9.2, 10.6(b), 10.8(a). 11 PTO ¶ 71. 3  B. Boomerang’s Financial Struggles After emerging from bankruptcy, Boomerang adopted a “run it till it dies” mentality.12 Its employees were expected to “just keep getting tonnage out” without regard to safety or quality.13 Boomerang’s equipment deteriorated,14 along with its financial and operational health post-bankruptcy. Between 2017 and 2019, Boomerang suffered cumulative financial losses of nearly $139 million.15 By 2020, Boomerang was “in severe crisis.”16 Demand for its products fell considerably in early 2020 amid the onset of the COVID-19 pandemic and an increase in crude oil production in Russia and Saudi Arabia.17 These developments precipitated a sharp decline in oil prices, with U.S. crude oil prices turning negative.18 12 Johnson Dep. 147-52. 13 Id. at 152. 14 Hart Tr. 605-06 (testifying that key equipment “was completely rotted” or “destroyed” or “not operable”). 15 Id. at 585-86. 16 Deckoff Tr. 88; JX 95 at 938 (reflecting liabilities totaling $165 million, including $26.6 million in accounts payable). 17 Fontana Tr. 424; Deckoff Tr. 95-97; JX 244. 18 Deckoff Tr. 95-96. 4  Boomerang attempted to improve its financial position. It hired a new CEO and CFO to solidify its executive leadership team.19 It also obtained a $15 million “rescue loan” from Fund IV.20 These efforts proved futile. New orders stopped coming in and preexisting orders were canceled. Boomerang became so “desperate to sell” products that it “beg[ged]” clients “to take” them.21 By the close of 2020, Boomerang had run out of cash and was losing approximately $3 million per month.22 It also had an asset- backed line of credit that was “tapped out[,]” and default grew imminent.23 C. The ArcelorMittal Purchases Boomerang continued to operate during its financial struggles. To produce tubing, it needed rolled steel products. From June to November 2020, Boomerang purchased hot-rolled steel products from ArcelorMittal Burns Harbor LLC and ArcelorMittal USA LLC (together, “ArcelorMittal”).24 The purchases were governed by ArcelorMittal 19 JX 47; Edgeller Dep. 15-19. 20 Deckoff Tr. 99-100 (testifying that “[n]one of the other shareholders were willing to participate” in the rescue loan, so “we provided it by ourselves”). 21 Tregenza Dep. 54-55. 22 Deckoff Tr. 103; Hart Tr. 591. 23 Hart Tr. 591; JX 95; JX 96. 24 PTO ¶¶ 61-62; Hrosik Tr. 14-15, 27-28, 35-38; Deckoff Tr. 104. 5 USA’s Terms & Conditions of Sale.25 Under those terms, if Boomerang failed to timely pay ArcelorMittal for the products, ArcelorMittal was entitled to reimbursement of its collection costs, including attorneys’ fees and interest.26 In total, Boomerang purchased approximately $7.35 million of products.27 ArcelorMittal transmitted invoices to Boomerang for each shipment (the “Invoices”), reflecting the sums owed.28 Boomerang defaulted on each of the Invoices.29 In December 2020, Cleveland-Cliffs Inc. acquired ArcelorMittal under a Transaction Agreement.30 It assumed ArcelorMittal’s rights under the Invoices.31 D. The Article 9 Sale With Boomerang’s insolvency imminent, Black Diamond’s lending arm began evaluating its options.32 Black Diamond identified a Chapter 7 bankruptcy or 25 JX 42; PTO ¶ 62. 26 JX 42 ¶ 15. 27 See Hrosik Tr. 29-30, 60. 28 JX 55; JX 56; JXs 62-63; JXs 68-72; Hrosik Tr. 30, 35. 29 Hrosik Tr. 30, 52. 30 PTO ¶¶ 63-64; JX 58; JX 59. 31 JX 58. 32 Deckoff Tr. 109-10 (explaining that Boomerang “wasn’t a viable company” because it “was losing $3 million EBITDA per month, and the management team didn’t have any plan to correct that”). 6 an Article 9 sale as the principal options to recover on its secured debt.33 The Boomerang Board did not file for bankruptcy.34 Thus, Black Diamond pursued an Article 9 sale.35 On December 18, 2020, Black Diamond Commercial Finance (“BDCF”)— Black Diamond’s administrative and collateral agent—sent Boomerang a notice of default and reservation of rights.36 That notice explained that an event of default had occurred due to Boomerang’s failure to satisfy Section 8.11 of the Credit Agreement, which set a minimum EBITDA requirement.37 Two days later, on December 20, Deckoff resigned from Boomerang’s Board and was replaced by Kevin Castellanos—a Black Diamond employee.38 An “information barrier” was erected between Black Diamond professionals on the lending side, who sought to maximize Funds III and IV’s recovery, and the investment side, who supported Boomerang and its Board.39 33 Id. 34 Id.; Tanna Tr. 488-89; see JX 95. 35 Deckoff Tr. 108-09. 36 PTO ¶¶ 74-75; JX 109. 37 PTO ¶ 75; JX 54. 38 JX 113; Fontana Dep. 225-26. 39 Deckoff Tr. 107-08; Tanna Tr. 498, 538. 7  BDCF retained Candlewood Partners, LLC as its financial advisor and Winston & Strawn LLP as its legal advisor to facilitate the Article 9 sale.40 Winston & Strawn circulated a notice of public sale of collateral under the New York Uniform Commercial Code (the “Notice of Sale”) on December 24.41 The Notice of Sale explained that Boomerang’s personal property would be sold at a virtual public auction on January 4, 2021.42 The assets to be auctioned were “all [of Boomerang’s and its subsidiaries’] accounts, chattel paper, equipment, fixtures, general intangibles, inventory and other personal property, wheresoever located, together with the proceeds thereof.”43 On December 25, 2020—Christmas Day—Candlewood sent the Notice of Sale to approximately 300 potential bidders by email.44 BDCF also advertised the auction in three Houston publications.45 Candlewood sent additional information about Boomerang’s inventory and accounts receivable to 18 potential bidders.46 It 40 PTO ¶ 78; Tanna Tr. 493-97. 41 JX 132; PTO ¶ 76. 42 JX 134; PTO ¶ 77. 43 PTO ¶ 77 (citing JX 22 § 3.1). 44 PTO ¶ 79; JX 150; JX 201 (native) (listing 309 recipients). Candlewood curated the list of recipients, selecting companies operating in the oil and gas space, private equity firms, and auctioneers. Tanna Tr. 500. 45 See JX 178 (Houston Chronicle); JX 185 (Liberty Vindicator); JX 172 (American Metal Market); Tanna Tr. 506-07. 46 JX 201; Pollack Dep. 63. 8 shared a “key equipment list” with ten prospective bidders who signed nondisclosure agreements.47 The Notice of Sale set a bidding deadline of January 3, 2021, and required a 10% cash deposit.48 The Article 9 sale went forward on January 4.49 Two bidders were present: Centric Pipe, LLC and 2021 Bidco I, LLC.50 2021 Bidco I, LLC has since been renamed PTC Liberty Tubulars, LLC (“PTC Liberty”).51 Centric Pipe made several bids on Boomerang inventory, including an $8 million bid for inventory plus an upsetting line.52 PTC Liberty submitted a $16.5 million bid for all of Boomerang’s personal property.53 BDCF accepted PTC Liberty’s bid.54 BDCF and PTC Liberty executed an Asset Purchase Agreement to memorialize the sale.55 47 JX 201; Pollack Dep. 57-58. 48 JX 132 at 7027. 49 PTO ¶¶ 80-81; JX 130 at 1-2 (describing the list of assets at auction). 50 PTO ¶ 82. The other attendees were Black Diamond affiliates. JX 199 at 3, 20. 51 PTO ¶¶ 33-35. 52 JX 192; JX 199 (auction transcript) 6 (explaining that Centric Pipe was “only bidding on the inventory”); PTO ¶ 83. 53 JX 193; PTO ¶ 84. 54 JX 199 at 21-25. 55 PTO ¶ 86; JX 195. 9  At the time of the Article 9 sale, Boomerang’s assets were encumbered by two perfected liens totaling approximately $126.4 million.56 The first-priority lien of $16.1 million was held by Fifth Third Bank under a senior ABL facility.57 The second-priority lien of $110.3 million was held mainly by Black Diamond Funds III and IV under a term credit facility ($87.5 million), with the remainder ($22.8 million) held by unaffiliated minority lenders.58 Fifth Third Bank was the most senior secured lender.59 After the Article 9 sale, proceeds were used to pay $16.1 million to Fifth Third Bank, satisfying the ABL debt and extinguishing its senior lien.60 Over $109 million of the term loan debt remained outstanding. E. The Real Estate Foreclosures Boomerang’s real estate, which was excluded from the Article 9 sale, served as collateral for its outstanding debt under the Credit Agreement.61 Three days after 56 Edgeller Dep. 86-87; JX 24. 57 Edgeller Dep. 87-89 (concluding that Boomerang’s outstanding debt to Fifth Third Bank, under a revolving loan facility, totaled approximately $16.1 million at the time of the Article 9 sale); PTO ¶ 73. 58 Fontana Dep. 101-02; Edgeller Dep. 313-15 (testifying that approximately $110.3 million remained outstanding under the term loan, at the time of the Article 9 sale). The term loan is governed by the Credit Agreement. JX 54. 59 PTO ¶ 72. 60 Id. ¶ 87. 61 JX 213. 10 the Article 9 sale, PTC Liberty and Boomerang entered into a lease agreement under which PTC Liberty leased the Liberty Facility for $39,677 per month.62 Meanwhile, BDCF began foreclosure proceedings on Boomerang’s real property. Two days after the Article 9 sale, BDCF sent Boomerang a notice of intent to accelerate the maturity of the loans secured by Boomerang’s Houston and Liberty Facilities.63 BDCF also sent notices that the Facilities would be foreclosed upon and sold at a public auction.64 On February 2, 2021, PTC Liberty purchased the Liberty Facility for $1 million at a public auction.65 Black Diamond then formed another portfolio company—Boomerang Houston RE LLC—to acquire the Houston Facility.66 On June 1, 2021, Boomerang Houston RE purchased the Houston Facility for $25.1 million at a public auction.67 F. PTC Liberty Develops Its Operations While the real estate foreclosures were proceeding, PTC Liberty began developing its operations using the personal property acquired at the Article 9 sale. 62 PTO ¶ 88; JX 288. 63 JX 213; PTO ¶ 95. 64 PTO ¶ 96; JX 220. 65 PTO ¶ 97; JX 270. 66 PTO ¶ 59; JX 298 § 6.1. Boomerang Houston RE was also owned by Funds III and IV. PTO ¶¶ 53, 60. 67 PTO ¶ 103; JX 304. 11 PTC Liberty, like Boomerang, entered the business of producing steel pipes used in the natural gas and crude oil drilling markets.68 PTC Liberty immediately focused on operational readiness and customer outreach. It invested over $43 million to repair and upgrade equipment, revamped its manufacturing processes, switched suppliers and vendors, and changed staffing at the facility.69 It adopted new public-facing branding and licensing, and used a new thread protector color—a branding signal in the tubular goods industry.70 PTC Liberty worked to foster a culture of safety and quality.71 It did not automatically inherit Boomerang’s customers and undertook efforts to build its own customer base.72 PTC Liberty also established a new management structure. At PTC Liberty’s inception, Deckoff served as sole member of its Board of Managers and as its Managing Principal.73 PTC Liberty also engaged PTC Alliance LLC—another 68 PTO ¶ 42. 69 Hart Tr. 599-608; Johnson Tr. 475. 70 Deckoff Tr. 121-22. The color of the thread protector—a visible plastic covering on the ends of pipes—reflects which company produced the pipes. Boomerang was red and blue; PTC Liberty was orange. Id. The decision to change the color signaled to the market that PTC Liberty was different from Boomerang. Id. 71 Hart Tr. 599-608; Johnson Tr. 473-75. 72 Hart Tr. 600-01. 73 PTO ¶ 39. 12 Black Diamond portfolio company—to provide management services.74 PTC Alliance began providing those services shortly after the Article 9 sale under an oral arrangement, which the companies later memorialized in a written Management Services Agreement.75 The Management Services Agreement covered “financial, managerial and operational services in connection with [PTC Liberty’s] day-to-day operations.”76 Through PTC Alliance, Cary Hart served as PTC Liberty’s CEO, Steve Bogle as its CFO, and Vince Fera as its General Counsel.77 None of those executives had been employed by Boomerang.78 In exchange for PTC Alliance’s services, PTC Liberty paid a fee based on the tonnage of products shipped.79 G. This Litigation In April 2022, plaintiffs Cleveland-Cliffs Burns Harbor LLC and Cleveland- Cliffs Steel LLC (together, “Cleveland-Cliffs”) filed this action against Black 74 Tanna Tr. 509-11; PTO ¶ 90. 75 Hart Tr. 596-98; PTO ¶¶ 89-90. 76 JX 309. PTC Alliance would provide services including accounting and finance, legal work, and human resources. Hart Tr. 597-98. 77 JX 309; Hart Tr. 597-98; Deckoff Tr. 120-21. Todd Dorsey later replaced Steve Bogle as the CFO of PTC Alliance, and he assumed that role for PTC Liberty as well. Hart Tr. 577-78, 598. 78 Deckoff Tr. 120-21; Johnson Tr. 473. PTC Liberty never hired any members of Boomerang’s executive leadership. Tregenza Tr. 823. At most, Jim Tregenza and Tom Edgeller provided transition services after the Article 9 sale. Hart Tr. 609-14. 79 JX 309. 13 Diamond, PTC Liberty, and Boomerang.80 Cleveland-Cliffs brought claims for successor liability, fraudulent transfer, breach of contract, unjust enrichment, and declaratory judgments.81 As relief, it seeks payment for Boomerang’s outstanding Invoices. Black Diamond and PTC Liberty each moved to dismiss the suit under Court of Chancery Rule 12(b)(6).82 In a September 5, 2023 memorandum opinion, I granted Black Diamond’s motion to dismiss in full.83 As to PTC Liberty, I held that Cleveland-Cliffs advanced reasonably conceivable claims for fraudulent transfer and successor liability.84 Boomerang never appeared, and I eventually entered a default judgment against it in February 2024.85 80 Dkt. 1. 81 Verified Amended Compl. (Dkt. 18) ¶¶ 89-132. 82 Dkts. 23, 24. 83 See Cleveland-Cliffs Burns Harbor LLC v. Boomerang Tube, LLC, 2023 WL 5688392, at *4-19 (Del. Ch. Sept. 5, 2023). 84 Id. 85 Dkts. 65, 68. 14  A three-day trial began on January 14, 2026.86 Post-trial briefing was complete as of April 15.87 Post-trial argument was held on June 2, after which the matter was submitted for decision.88 II. ANALYSIS Two claims proceeded to trial: whether Boomerang’s transfer of assets constitutes a fraudulent transfer under the Delaware Uniform Fraudulent Transfer Act (DUFTA), and whether PTC Liberty is liable for Boomerang’s debts under a successor liability theory.89 Cleveland-Cliffs bears the burden of proving these claims by a preponderance of the evidence.90 It has not done so. A. Fraudulent Transfer Cleveland-Cliffs claims that the Article 9 sale was a “fraudulent transfer,” as defined in DUFTA.91 It seeks to hold Boomerang (the transferor) and PTC Liberty 86 See Trial Trs., Vols. I-III (Dkts. 226-28). 87 Pls.’ Post-trial Opening Br. (Dkt. 231); PTC Liberty Tubulars LLC’s Post-trial Br. (Dkt. 234) (“Def.’s Post-trial Br.”); Pls.’ Post-trial Reply Br. (Dkt. 239). 88 Dkt. 244. 89 PTO ¶¶ 109-10. 90 Revolution Retail Sys., LLC v. Sentinel Techs., Inc., 2015 WL 6611601, at *9 (Del. Ch. Oct. 30, 2015) (“Proof by a preponderance of the evidence means proof that something is more likely than not.”); In re Coverdale, 1987 WL 758002, at *3 (Del. Ch. Aug. 3, 1987) (explaining that the “burden of proof in civil cases in Delaware is typically one of preponderance of the evidence” (citation omitted)). 91 6 Del. C. § 1304(a). Under DUFTA, such transfers may be actual or constructive in form. 6 Del. C. § 1304(a)(1) (providing a cause of action for actual fraudulent transfers); 6 Del. C. §§ 1304(a)(2), 1305(a) (same but for constructive fraudulent transfers); see also 15 (the transferee) liable under this theory. Before reaching whether the Article 9 sale was fraudulent, I must first determine whether the disposition of Boomerang’s personal property constituted a “transfer” of an “asset” within the meaning of DUFTA. DUFTA defines a “transfer” as “every mode . . . of disposing of or parting with an asset or an interest in an asset.”92 An “asset” is the “property of a debtor,” but excludes “[p]roperty to the extent it is encumbered by a valid lien.”93 A “valid lien,” in turn, is a “lien that is effective against the holder of a judicial lien subsequently obtained by legal or equitable process or proceedings.”94 “Thus, for a transaction to qualify as a ‘transfer’ of ‘assets’ under DUFTA, the value of the transferred property must exceed the value of any valid liens.”95 Great W. Ins. Co. v. Graham, 2026 WL 34966, at *10 (S.D.N.Y. Jan. 6, 2026) (summarizing the two). 92 6 Del. C. § 1301(12). 93 Id. § 1301(2). 94 Id. § 1301(13). 95 Cleveland-Cliffs, 2023 WL 5688392, at *8; Rsrvs. Mgmt. Corp. v. 30 Lots, LLC, 2009 WL 4652991, at *5 (Del. Super. Nov. 30, 2009) (holding that because the “mortgage lien . . . exceeded the value of the property, the lots [we]re not an ‘asset’” and, as a result, the “mortgage foreclosure sale was not . . . a ‘transfer’ by the debtor” within the meaning of DUFTA). Because DUFTA “is modeled on the UFTA[,] . . . decisions of other jurisdictions interpreting the same (or substantially similar) model statutes [provide] guidance.” Burkhart v. Genworth Fin., Inc., 275 A.3d 1259, 1270 (Del. Ch. 2022). Other jurisdictions confirm this approach. See In re Valente, 360 F.3d 256, 260 (1st Cir. 2004) (finding that because a property “was only worth $150,000 but was encumbered by a $168,000 first mortgage, as well as a number of state and federal tax liens, it did not qualify as an ‘asset’ under the UFTA at the time of the transfer”); Epperson v. Ent. Express, Inc., 16  My analysis of whether the transferred property qualifies as an “asset” proceeds in two parts. I first determine the amount of the liens encumbering the property and then assess the property’s value. Because the liens exceed the value of the property, the property is not an “asset” under 6 Del. C. § 1301(2)(a). Cleveland- Cliffs’ DUFTA claim therefore fails as a matter of law. 1. The Value of the Liens PTC Liberty identifies approximately $126.4 million in liens encumbering Boomerang’s assets at the time of the Article 9 sale.96 Two liens comprise that total: the $110.3 million lien under the Credit Agreement with Black Diamond, and the $16.1 million lien that was later repaid to Fifth Third Bank.97 Cleveland-Cliffs asks that I “disregard[]” the $87.5 million liens held by Funds III and IV due to Black Diamond’s “inequitable conduct.”98 Cleveland-Cliffs asserts that doing so would 338 F. Supp. 2d 328, 342 (D. Conn. 2004) (explaining that because various “security interests [were] ‘valid liens’ that exceeded the value of the collateral,” the property at issue was “preclud[ed] . . . from meeting UFTA’s definition of ‘asset’”), aff’d, 159 F. App’x 249 (2d Cir. 2005). 96 Def.’s Post-trial Br. 42-43 & n.201; Edgeller Dep. 85-89, 313-15; JX 24. 97 Edgeller Dep. 87-89, 313-15; JX 24. 98 Pls.’ Post-trial Opening Br. 53-54 (asking this court to do so based on Black Diamond’s “inequitable conduct”). The $87.5 million figure reflects the portion of Boomerang’s debt held by Black Diamond-managed funds. See Fontana Tr. 421-22; supra note 58 and accompanying text. 17 amount to an “equitable subordination” of those liens.99 Its reliance on that doctrine is misplaced. “Equitable subordination is a doctrine that, based on a creditor’s inequitable conduct and its effect on other creditors, allows that creditor’s debt to be subordinated to other claims in bankruptcy or allows the creditor’s liens to be transferred to the bankruptcy estate.”100 Its practical effect is to permit bankruptcy courts to re-rank liens as higher or lower in priority “where justice so requires.”101 The doctrine does not extinguish liens—or ignore them for purposes of a fraudulent transfer analysis—as Cleveland-Cliffs suggests. It merely alters their relative priority.102 Even if equitable subordination applied, the value of the outstanding liens would remain the same.103 99 Pls.’ Post-trial Opening Br. 53-54. 100 Nelson v. Emerson, 2008 WL 1961150, at *4 n.13 (Del. Ch. May 6, 2008); see generally 11 U.S.C. § 510(c)(1). 101 In re John Varvatos Ents. Inc., 2022 WL 2256017, at *2 (3d Cir. June 23, 2022) (explaining that the “doctrine lets the court subordinate distribution of all or part of a higher priority claim in favor of a lower priority claim”). 102 See In re SubMicron Sys. Corp., 432 F.3d 448, 462 (3d Cir. 2006) (articulating three prerequisites that must be met before equitable subordination can occur). 103 Cleveland-Cliffs insists that the Court of Chancery has applied “equitable subordination” in other circumstances. Pls.’ Post-trial Opening Br. 53 (citing In re Dura Medic Hldgs. Inc. Consol. Litig., 331 A.3d 796, 830 (Del. Ch. 2025)). But in the case it relies on, the court applied the doctrine by making a financing scheme “junior to other [c]ompany creditors but senior to the holders of common equity.” Dura Medic, 331 A.3d at 830. The court did not ignore the financing scheme, as Cleveland-Cliffs would have me do to the liens here. 18  Second, Cleveland-Cliffs points out that the liens were secured not only by Boomerang’s personal property, but also by its real property.104 It argues that DUFTA’s definition of “asset” as “property of a debtor” does not expressly “indicate[] courts must view the property transferred in isolation to determine ‘the extent [to which] it is encumbered.’”105 In support, Cleveland-Cliffs cites Siematic Mobelwerke GmbH & Co. KG v. Siematic Corp.—a Pennsylvania federal court decision—which states that when “an obligation is secured by a lien on several items of property and only one such item is disposed of, it may be appropriate to allocate the obligation among the items of property subject to the lien for the purpose of determining the ‘extent’ to which the item disposed of is encumbered.”106 Cleveland-Cliffs’ reliance on Siematic is misplaced. The quoted language comes from commentary specific to the Pennsylvania Uniform Fraudulent Transfer Act.107 The Siematic court itself did not analyze or apply that commentary in resolving the summary judgment motion.108 More importantly, DUFTA contains no 104 Pls.’ Post-trial Opening Br. 47-48 (arguing that the Fifth Third Bank loan was secured by “substantially all of Boomerang’s assets[,]” and that the Credit Agreement “encumbered the entirety of Boomerang’s property, including its real property” (emphasis omitted)). 105 Pls.’ Post-trial Reply Br. 19 (quoting 6 Del. C. § 1301(2)). 106 643 F. Supp. 2d 675, 691 (E.D. Pa. 2009). 107 Id. 108 Cleveland-Cliffs cites no other cases interpreting this provision of the Pennsylvania statute, and I have found none. 19 comparable commentary. Although Delaware courts may look to other jurisdictions when interpreting uniform acts, that principle does not supply a basis to import commentary accompanying another state’s statute where Delaware’s own statutory text contains no such allocation rule.109 Thus, Cleveland-Cliffs offers no persuasive basis to allocate or reduce the value of the liens encumbering Boomerang’s personal property. 2. The Value of the Transferred Property Next, I must determine the value of the transferred property for purposes of DUFTA. Cleveland-Cliffs advances two arguments concerning the value of the transferred property. First, it invokes the “collapsing sales doctrine” to treat the Article 9 sale and the later real-estate foreclosures as a single transaction. Second, if the Article 9 sale is considered on its own, Cleveland-Cliffs contends that the transferred personal property was worth $104.7 million. I reject Cleveland-Cliffs’ collapsing theory and conclude that, even accepting its own valuation evidence, the value of the transferred property did not exceed the approximately $126.4 million in asserted liens. 109 Cf. Burkhart, 275 A.3d at 1270 n.68 (explaining that Delaware courts “may look to other states when interpreting uniform acts”). 20  a. The Collapsing Sales Doctrine To begin, Cleveland-Cliffs asserts that the value of the “transferred property” should include all Boomerang property—the personal property transferred at the Article 9 sale as well as the real property transferred in the later foreclosures.110 In other words, Cleveland-Cliffs asks me to treat the three transactions as a single transfer for purposes of DUFTA. It posits that the three sales were part of a prearranged, fraudulent scheme by Black Diamond to strip Boomerang of its assets while shedding its debts.111 To support this theory, Cleveland-Cliffs borrows the “collapsing sales doctrine” from bankruptcy law.112 Under that doctrine, “multiple transactions may be ‘collapsed’ and treated as ‘steps in a single transaction for analysis under the [bankruptcy code’s] fraudulent conveyance laws.’”113 Bankruptcy “courts focus their analysis not on the structure” 110 Pls.’ Post-trial Opening Br. 4, 46-50. “The total value of Boomerang’s assets [transferred] was $137.2 million—$97 million in machinery, equipment, and inventory, $32.5 million in real property, and $7.7 million in [accounts receivable], cash, and cash equivalents.” Id. (emphasis added); see also Kinahan Tr. 226. 111 Pls.’ Post-trial Opening Br. 50. This argument is based on two core theories. The first is that substance should not give way to form: viewing the sales in isolation might immunize the debtor’s fraud by breaking large transfers into smaller chunks that, in isolation, would not exceed the value of the outstanding liens. The second is that it implicates the idea of operational necessity: the machines were useless without the real estate, rendering the transactions functionally inseparable. These arguments are not founded in the record. See infra notes 118-125 and accompanying text. 112 Pls.’ Post-trial Opening Br. 51-52. 113 In re Maxus Energy Corp., 641 B.R. 467, 532 (Bankr. D. Del. 2022) (citation omitted). The bankruptcy code addresses fraudulent transfers, allowing a debtor to void certain 21 of the transactions “but the knowledge and intent of the parties involved.”114 They may consider “whether all parties involved in the individual transactions had knowledge of the other transactions; whether each transaction sought to be collapsed would have occurred on its own; and whether each transaction was dependent or conditioned on the other transactions.”115 This argument is unavailing for several reasons. The collapsing sales doctrine has been deployed as an equitable mechanism to “analyze the motivations for a transfer as opposed to whether . . . a transfer of debtor property occurred in the first place.”116 It cannot be used to rewrite the statutory definition of a qualifying “asset” under DUFTA.117 Even if the doctrine were available, Cleveland-Cliffs has not shown that the transactions should be collapsed. The Article 9 sale and the later foreclosures of the Liberty and Houston Facilities were separate transactions over several months. The Article 9 sale took place in January 2021, the Liberty Facility foreclosure in transfers made pre-bankruptcy where actual or constructive fraud exists. See 11 U.S.C. §§ 548, 550. 114 In re Maxus Energy Corp., 641 B.R. at 532 (citation omitted). 115 In re Jevic Holding Corp., 2011 WL 4345204, at *5 (Bankr. D. Del. Sept. 15, 2011). 116 Crystallex Int’l Corp. v. Petroleos de Venezuela, S.A., 213 F. Supp. 3d 683, 692-93 (D. Del. 2016), rev’d and remanded on other grounds, 879 F.3d 79 (3d Cir. 2018). 117 Id. (explaining that the court “ha[d] not encountered any case applying the collapsing doctrine” to effectively rewrite the statutory language). 22 February, and the Houston Facility foreclosure in June.118 The transactions also involved different categories of property. Through the Article 9 sale, Boomerang parted with its personal assets.119 The foreclosures, by contrast, involved two parcels of real property located in different areas.120 None of the sales was contingent upon or contractually linked to the others.121 All could have, and did, “occur[] on [their] own.”122 The transactions also took place under different legal regimes.123 Article 9 of the New York Uniform Commercial Code governed the sale of Boomerang’s personal assets; Texas law governed the foreclosures of the Liberty and Houston Facilities.124 That distinction reflects the different legal treatment of the assets—not a strategic effort to divide a single transaction, as Cleveland-Cliffs suggests. 118 PTO ¶¶ 80, 97, 100-03. 119 JX 130 (list of items auctioned off at the Article 9 sale); PTO ¶¶ 80, 97, 102. 120 PTO ¶¶ 97, 102. Candlewood told potential bidders that Boomerang’s real property was not for sale at the Article 9 auction. JX 168 (email from Grant Pollack stating, “I just made it very clear that [purchase of the real estate] is not an option”). 121 See Jevic, 2011 WL 4345204, at *5 (explaining that courts considering whether to collapse transactions examine, among other factors, whether the transaction “would have occurred on its own,” and whether each was “dependent or conditioned on the other transactions”). 122 Id. 123 Id. 124 Compare JX 199 at 4 (making plain that the Article 9 sale was governed by “Section 9- 610 [of the] New York Uniform Commercial Code”), with JX 270 (bill of sale for the Liberty Facility), and JX 304 (bill of sale for the Houston Facility). 23  Because the transactions are separate and cannot be collapsed, the value of the personal property alone is considered for purposes of DUFTA.125 b. The Value of the Personal Property Having concluded that the Article 9 sale must be considered separately from the later foreclosures of the Houston and Liberty Facilities, I next consider the value of the personal property transferred in the sale. Cleveland-Cliffs asserts that Boomerang’s property falls into three categories: (1) machinery, equipment, and inventory; (2) real property; and (3) accounts receivable, cash, and cash equivalents.126 Cleveland-Cliffs proffered expert testimony that, at the time of the Article 9 sale, the machinery, equipment, and inventory were worth $97 million, and the accounts receivable, cash, and cash equivalents were worth $7.7 million.127 Thus, according to Cleveland-Cliffs, Boomerang’s personal property was worth $104.7 million. PTC Liberty disputes this number, presenting competing expert testimony that the total value of 125 Prior cases applying the DUFTA confirm this result. See 30 Lots, 2009 WL 4652991, at *5 (assessing whether the transferred property constituted an “asset” under DUFTA based on the liens encumbering that property, without regard to other collateral securing the same debt). 126 Kinahan Tr. 226-27; Saba Tr. 308-09. 127 Kinahan Tr. 226-27; Saba Tr. 308-09; JX 354; JX 355. Mr. Wood valued Boomerang’s real property at $32.5 million. JX 353 at 54. As explained above, that figure does not factor into the assessment. 24 Boomerang’s personal property was approximately $69.56 million at the time of the Article 9 sale.128 I need not determine which value is correct. Even accepting Cleveland-Cliffs’ figure, the value of the transferred personal property does not exceed the value of the liens encumbering it. A personal property value of $104.7 million is plainly less than the approximately $126.4 million in asserted liens. * * * The value of the liens ($126.4 million) exceeds the value of the transferred personal property (even using Cleveland-Cliffs’ higher valuation of $104.7 million). Given the lack of a qualifying asset, I do not reach whether the Article 9 sale was commercially reasonable under 6 Del. C. § 1308(e)(2).129