CMS Holdings Group, LLC

CMS Holdings Group, LLC, along with its affiliate CMS Processing, LLC, filed for Chapter 11 bankruptcy protection on December 28, 2023, in the District of Maryland (Case No. 23-19382). The case was converted to Chapter 7 on January 26, 2024, with Cheryl E. Rose appointed as the trustee. The deadline for filing claims was May 9, 2024, and the case has been proceeding through the standard bankruptcy process.

Since the filing, the Trustee and her accountants have been engaged in asset recovery, claims analysis, and the examination and investigation of the many thousands of funds transfers between the Debtors and Creditors, with the ultimate goal of providing a source of recovery, or a distribution, to defrauded investors.

The amount of these distributions are dependent on the total available funds in the estate as well as the total amount of allowable claims. The timing of any such interim or final distributions will depend on the success of the Trustee’s efforts to collect funds and administer the claims.

In the case of CMS Holdings Group, LLC, the trustee is seeking to apply the “Ponzi Presumption,” which allows courts to infer a debtor's intent to defraud creditors if it's established that the debtor operated a Ponzi scheme. Applying this presumption allows the Trustee to recover assets transferred during the company's operations for the equitable benefit of all creditors. By demonstrating that CMS Holdings operated as a Ponzi scheme, the trustee aimed to simplify the process of voiding fraudulent transfers and reclaiming funds for creditors – thereby streamlining the process to recover assets by negating the need for direct evidence of fraudulent intent.

With CMS Holdings, the Trustee has been discussing the disallowance of certain interest and payments made on the claims after June 1, 2019, and believes that the Ponzi Scheme Presumption should be applied to all claims. The Trustee will be seeking Court approval of applying the Ponzi Scheme Presumption.

Claimholders are encouraged to consult the Bankruptcy Court docket for further information.

Argo Partners has been purchasing claims in the CMS Holdings case over the past few months, providing immediate liquidity to claimholders. If you would like to sell your claim or have any questions regarding the sale process, please feel free to contact us.

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