TiZA bankruptcy trustee opposes paying landlord, in part, "on the basis that they were fraudulent transfers"

Categories: Education

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TiZA's bankruptcy case rages on
Tarek ibn Ziyad Academy is closed but its bankruptcy case continues in federal court, and the bankruptcy trustee assigned to the case is considering filing a claim against the school's former landlords.

"I am probably going to commence such a proceeding," John Hedback, the bankruptcy trustee, tells City Pages. "I just want to make sure all my ducks are in a line."

On December 1, the Minnesota Education Trust (MET) -- TiZA's former landlord -- filed a request with the bankruptcy court for $171,237.64 in "administrative expenses" related to unpaid rent and utilities owed to it by TiZA.

Yesterday, Hedback filed a response opposing payment to MET for numerous reasons, including the fact that he "intends to commence an adversary proceeding seeking to avoid substantial payments of funds to MET and related entities on the basis that they were fraudulent transfers."

Hedback believes TiZA might have "significant claims against MET and its affiliates" and has requested at least 60 days to "conduct discovery with respect to MET's claims, the relationship between MET and its affiliates with insiders of the debtor," among other concerns.

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John Hedback, bankruptcy trustee, might sue TiZA's landlord
Hedback lays out the issues he plans to investigate during discovery in the filing.

Hedback is investigating whether TiZA "raised and spent substantial sums of money remodeling the Inver Grove Heights property for the benefit of MET without receiving adequate consideration in return."

He is investigating whether MET charged higher rent than the "general market rate."

Hedback also wrote that MET "appears to be an insider or related entity as those terms are defined under Bankruptcy Code," and is investigating charges that the "officers and directors of the Debtor [TiZA] and MET overlap."

Last October, the ACLU released hundreds of records related to the case along with a press release alleging "TiZA and its religious landlords are effectively controlled by the same small group of people" and that TiZA "used taxpayer funds in excess of a million dollars to renovate buildings to the benefit of their religious landlords."

The ACLU's lead attorney considers the bankruptcy trustee's interest in these issues vindication of the ACLU's stance against TiZA.

"Every time TiZA has been the recipient of charges by the ACLU, by Islamic Relief, by the State, they always say there's some bias involved," said Peter Lancaster. "So here's yet another objective third party who is making the same assertions. We'll see if TiZA says the same thing about the trustee."

Calls to TiZA attorney Mark Azman and MET attorney Ferdinand Peters were not immediately returned.

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