$3 Million in Claims Defeated After Seven-Day Arbitration Involving Alter Ego and Fraudulent Transfer Allegations

Novian & Novian achieved a complete defense victory in a high-stakes arbitration involving claims totaling more than $3,000,000, arising from a commercial lending dispute centered on a loan secured by a promissory note. The Novian & Novian team, led by Farhad Novian and Yasmine Novian, represented a commercial lender and its three individual members against aggressive claims brought by an unpaid unsecured creditor.

The dispute arose after the unsecured creditor sought to recover alleged losses by pursuing not only the commercial lender, but also its individual members under theories of alter ego liability, actual fraudulent transfer, and unlawful distributions. The claims, if successful, would have exposed the individual members to substantial personal liability.

Discovery and Pre-Arbitration Proceedings

From the outset, the unsecured creditor prosecuted the case aggressively. Over the course of the proceedings, the claimant propounded nearly 80 sets of discovery, noticed and conducted more than five third-party depositions, designated three expert witnesses, and filed two motions for summary adjudication seeking to establish liability prior to arbitration.

Novian & Novian responded with a disciplined and strategic defense. We carefully managed the scope of discovery, opposing dispositive motions, and developing a comprehensive factual record grounded in the financial and corporate documentation governing the loan and the lender’s operations.

Seven-Day Arbitration and Extensive Briefing

The matter proceeded to a seven-day arbitration, during which Novian & Novian presented detailed evidence and testimony addressing the structure of the transaction, the lender’s corporate formalities, and the flow of funds at issue. The firm submitted extensive pre- and post-hearing briefing, focusing on the intersection of the financial records and the legal standards governing alter ego claims, fraudulent transfer allegations, and unlawful distributions.

A central component of the defense was our ability to clearly and methodically explain complex financial documents and demonstrate how those records comported with applicable law. The team emphasized the absence of commingling, improper transfers, or conduct justifying the extraordinary remedy of alter ego liability.

Complete Defense Victory

Following the arbitration, the arbitrator issued a ruling in favor of Novian & Novian’s clients on all claims. The arbitrator found no alter ego liability, no actual fraudulent transfer, and no unlawful distributions, fully rejecting the claimant’s theories of recovery.

The decision represented a substantial victory, eliminating more than $3 million in claimed exposure and protecting both the commercial lender and its individual members from personal liability. The outcome reflected the effectiveness of Novian & Novian’s strategic arbitration advocacy, mastery of complex financial evidence, and disciplined application of the governing law.