Case 16-07207-JMC-7A Doc 2915 Filed 09/12/18 EOD 09/12/18 17:24:45 Pg 1 of 11 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF INDIANA INDIANAPOLIS DIVISION IN RE: ) ) ITT EDUCATIONAL SERVICES, INC., et al.1 ) Case No. 16-07207-JMC-7A ) Debtors. ) Jointly Administered __________________________________________) ) DEBORAH J. CARUSO, the chapter 7 trustee for ) the bankruptcy estates of ITT Educational Services, ) Inc., ESI Service Corp., and Daniel Webster ) College, Inc., ) ) Plaintiff, ) Adversary No. ___________ ) vs. ) ) NBCUNIVERSAL MEDIA, LLC; ) UNIVERSAL TELEVISION, LLC d/b/a ) USA NETWORK; TELEMUNDO OF ) GALVESTON-HOUSTON PARTNERS, LLC ) d/b/a KTMD HOUSTON TM; ESTRELLA ) COMMUNICATIONS, LLC d/b/a ) KVEA ESTRELLA LOS ANGELES; ) NBC SUBSIDIARY (WTVJ-TV), LLC, d/b/a ) WTVJ TV MIAMI; TELEMUNDO ) MID-ATLANTIC, LLC d/b/a WWSI ATLANTIC ) CITY; TELEMUNDO LAS VEGAS, LLC d/b/a ) KBLR LAS VEGAS TM; TELEMUNDO OF ) DENVER, LLC d/b/a KDEN DENVER TM; ) TELEMUNDO OF TEXAS, LLC d/b/a KVDA ) SAN ANTONIO TM; TELEMUNDO OF ) DALLAS, LP d/b/a KXTX DALLAS TM; ) TELEMUNDO OF CHICAGO, LLC d/b/a WSNS ) CHICAGO TM; TELEMUNDO NETWORK ) GROUP, LLC d/b/a TELEXITOS TV; ) NBC UNIVERSAL DIGITAL SOLUTIONS, LLC; ) and JOHN/JANE DOES, ) ) Defendants. ) 1 The debtors in these cases, along with the last four digits of their respective federal tax identification numbers are ITT Educational Services, Inc. [1311]; ESI Service Corp. [2117]; and Daniel Webster College, Inc. [5980]. Case 16-07207-JMC-7A Doc 2915 Filed 09/12/18 EOD 09/12/18 17:24:45 Pg 2 of 11 COMPLAINT TO AVOID AND RECOVER TRANSFERS PURSUANT TO 11 U.S.C. §§ 547, 548 AND 550, TO DISALLOW CLAIMS PURSUANT TO 11 U.S.C. § 502 AND FOR UNJUST ENRICHMENT Deborah J. Caruso, the chapter 7 trustee (the “Trustee”) in the chapter 7 bankruptcy cases of ITT Educational Services, Inc. (“ITT”), ESI Service Corp. (“ESI”), and Daniel Webster College, Inc. (“Webster College,” and together with ITT and ESI, the “Affiliated Debtors”), and as plaintiff in the above-captioned adversary proceeding, by counsel, hereby alleges for her Complaint to Avoid and Recover Transfers Pursuant to 11 U.S.C. §§ 547, 548 and 550, to Disallow Claims Pursuant to 11 U.S.C. § 502 and for Unjust Enrichment (the “Complaint”) against NBCUniversal Media, LLC (“NBCUniversal”), Universal Television, LLC d/b/a USA Network (“USA”), Telemundo of Galveston-Houston Partners, LLC d/b/a KTMD Houston TM (“KTMD”), Estrella Communications, LLC d/b/a KVEA Estrella Los Angeles (“KVEA”), NBC Subsidiary (WTVJ-TV), LLC d/b/a WTVJ Miami (“WTVJ”), Telemundo Mid-Atlantic, LLC d/b/a WWSI Atlantic City (“WWSI”), Telemundo Las Vegas, LLC d/b/a KBLR Las Vegas TM (“KBLR”); Telemundo of Denver, LLC d/b/a KDEN Denver TM (“KDEN”); Telemundo of Texas, LLC d/b/a KVDA San Antonio TM (“KVDA”), Telemundo of Dallas, LP d/b/a KXTX Dallas TM (“KXTX”), Telemundo of Chicago, LLC d/b/a WSNS Chicago TM (“WSNS”), Telemundo Network Group, LLC d/b/a TeleXitos TV (“Telemundo”), NBC Universal Digital Solutions, LLC (“NBCDigital”) and John/Jane Does (together with NBCUniversal, USA, KTMD, KVEA, WTVJ, WWSI, KBLR, KDEN, KVDA, KXTX, WSNS, Telemundo, and NBCDigital, the “Defendants”), as follows: JURISDICTION AND VENUE 1. The Court has subject matter jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 151, 157 and 1334. 2 Case 16-07207-JMC-7A Doc 2915 Filed 09/12/18 EOD 09/12/18 17:24:45 Pg 3 of 11 2. Venue is proper in this district pursuant to 28 U.S.C. § 1409. 3. This adversary proceeding is commenced pursuant to sections 502, 547, 548 and 550 of title 11 of the United States Code (the “Bankruptcy Code”) and Rules 3007 and 7001 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”). 4. Each count of this adversary proceeding is a “core” proceeding under 28 U.S.C. § 157(b)(2). 5. As required by Bankruptcy Rule 7008, the Trustee consents to entry of final orders or judgment by the Court. 6. NBCUniversal filed a proof of claim against one or more of the Affiliated Debtors on October 19, 2016 (Claim No. 413, filed in Case No. 16-07207), and thereby has submitted to the jurisdiction of the Court. THE PARTIES 7. On September 16, 2016 (the “Petition Date”), the Affiliated Debtors filed voluntary petitions for relief under chapter 7 of the Bankruptcy Code. The Trustee was appointed interim trustee under section 701 of the Bankruptcy Code in each of the Affiliated Debtors’ bankruptcy cases on the Petition Date, and in accordance with section 702(d) of the Bankruptcy Code, became the permanent case trustee on November 1, 2016 following the conclusion of the meeting of creditors held pursuant to section 341(a) of the Bankruptcy Code. 8. Upon information and belief, NBCUniversal is a limited liability company incorporated under the laws of the state of Delaware, with its principal place of business located at 30 Rockefeller Plaza – 1221 Campus, New York, NY 10112. 9. Upon information and belief, KTMD is a limited liability company incorporated under the law of the state of Delaware, with its principal place of business located at 1235 North 3 Case 16-07207-JMC-7A Doc 2915 Filed 09/12/18 EOD 09/12/18 17:24:45 Pg 4 of 11 Loop West, Suite 125, Houston, TX 77008. 10. Upon information and belief, KVEA is a limited liability company incorporated under the law of the state of Delaware, with its principal place of business located at 100 Universal City Plaza, Universal City, CA 91608. 11. Upon information and belief, USA is a limited liability company incorporated under the law of the state of New York, with its principal place of business located at 100 Universal City Plaza, Universal City, CA 91608. 12. Upon information and belief, WTVJ is a limited liability company incorporated under the law of the state of Delaware, with its principal place of business located at 15000 SW 27th Street, Miramar, FL 33027. 13. Upon information and belief, WWSI is a limited liability company incorporated under the law of the state of Delaware, with its principal place of business located at 10 Monument Road, Bala Cynwyd, PA 19004. 14. Upon information and belief, KBLR is a limited liability company incorporated under the law of the state of Delaware, with its principal place of business located at 5000 W. Oakey Blvd. Suite B2, Las Vegas, NV 89146. 15. Upon information and belief, KDEN is a limited liability company incorporated under the law of the state of Delaware, with its principal place of business located at 4100 E. Dry Creek Road, Centennial, CO 80122. 16. Upon information and belief, KVDA is a limited liability company incorporated under the law of the state of Delaware, with its principal place of business located at 6234 San Pedro Avenue, San Antonio, TX 78216. 17. Upon information and belief, KXTX is a limited partnership under the law of the 4 Case 16-07207-JMC-7A Doc 2915 Filed 09/12/18 EOD 09/12/18 17:24:45 Pg 5 of 11 state of Delaware, with its principal place of business located at 34805 Amon Carter Blvd., Fort Worth, TX 76155. 18. Upon information and belief, WSNS is a limited liability company incorporated under the law of the state of Delaware, with its principal place of business located at 454 N. Columbus Drive, Chicago, IL 60611. 19. Upon information and belief, Telemundo is a limited liability company incorporated under the law of the state of Delaware, with its principal place of business located at 2290 West 8th Avenue, Hialeah, FL 33010. 20. Upon information and belief, NBCDigital is a limited liability company incorporated under the law of the state of Delaware, with its principal place of business located at 30 Rockefeller Plaza – 1221 Campus, New York, NY 10112. 21. The defendants, John/Jane Does, include any affiliates, subsidiaries and/or any other entities related to the Defendants that are either the initial transferee of the Transfers (as defined herein) or the entity for whose benefit the Transfers were made or any immediate or mediate transferee of such initial transferee. The Trustee will seek leave of the Court to amend this complaint to reflect their true names when they have been ascertained. FACTUAL BACKGROUND 22. ITT was founded in 1946 and became a publicly traded company in 1994. Prior to filing for bankruptcy, ITT grew to be one of the largest for-profit education companies in the country, offering master, bachelor and associate degree programs at its approximately 137 campus locations and online programs to students located in all 50 states and the District of Columbia in a number of subjects, including electronics, drafting and design, criminal justice, business, information technology, health sciences and nursing. 5 Case 16-07207-JMC-7A Doc 2915 Filed 09/12/18 EOD 09/12/18 17:24:45 Pg 6 of 11 23. Prior to the Petition Date, the Affiliated Debtors maintained business relationships with various media companies, through which the Affiliated Debtors regularly purchased broadcast (e.g., television and radio) and/or online (e.g., digital) advertising for its campus locations. 24. Upon information and belief, the Affiliated Debtors purchased broadcast advertising with various television stations2 owned by one or more of the Defendants and continued to conduct business with one another during the ninety (90) days immediately preceding the Petition Date (the “Preference Period”). 25. Upon information and belief, the Affiliated Debtors also purchased online advertising3 with one or more of the Defendants and continued to conduct business with one another during the Preference Period.