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Commercial Division Grants Order for Prejudgment Attachment Where Defendants’ Post-Litigation Transfer of Assets Could Frustrate a Future Judgment

In In re Renren, Inc. Derivative Litigation, Justice Andrew Borrok of the New York County Commercial Division granted Plaintiffs’ order to show cause for prejudgment attachment against certain assets of defendants Oak Pacific Investment (“OPI”), Renren SF Holdings Inc. (“Renren SF”), and Renren Lianhe Holdings (“Renren Lianhe”) (collectively, “Defendants”).[i]  The opinion addresses whether allegations of defendants’ improper sale of assets for less than fair market value to frustrate a future judgment warrant a preliminary injunction or prejudgment attachment pursuant to CPLR § 6201.

Factual Background

Plaintiffs brought this derivative action in their capacity as Renren, Inc. (“Renren”) stockholders to remedy alleged harms that Defendants caused to Renren through a spin-off transaction (the “Transaction”) that Plaintiffs claim stripped Renren of its most valuable assets for a price well below fair market value.[ii] According to the amended complaint, Renren began as a Chinese social media platform after Facebook was blocked from operating on the Chinese internet in 2009.[iii]  In 2011, Renren went public, and its initial public offering (“IPO”) enabled it to raise over $950 million.  Following its IPO, however, Renren’s social media business floundered.[iv] 

As Renren’s social media business proved unsuccessful, Plaintiffs allege that Renren’s Chairman and CEO, Joseph Chen (“Chen”), began to use IPO proceeds to transform Renren into a venture capital fund by making several investments into companies with preexisting connections to Chen.[v]  For example, in 2012, Renren invested $240 million in a financial technology startup, Social Finance, Inc. (“SoFi”).[vi]  At that time, Chen had personally invested in SoFi and also served on SoFi’s board.[vii]

After Renren’s investment portfolio grew, Plaintiffs allege that Chen attempted to capitalize on inside information to take Renren’s valuable portfolio private through an unfair spin-off.[viii]  To execute the Transaction, Plaintiffs allege that Chen formed OPI as a holding company and wholly-owned subsidiary of Renren, and then transferred Renren’s investment portfolio to OPI.  With Renren’s investments isolated in OPI, Chen and Renren’s controlling stockholders then caused Renren to surrender its entire interest in OPI.[ix]  But rather than distribute OPI’s shares to all Renren stockholders, Renren’s controlling stockholders allegedly presented Renren’s minority stockholders with a choice between (1) accepting an inadequate cash dividend or (2) participating in a private placement of OPI shares on unfair terms to the minority stockholders.[x]

In the complaint, Plaintiffs brought claims for breach of fiduciary duty and breach of contract in connection with Defendants’ alleged self-dealing Transaction, among other claims.

Plaintiffs’ Motion for a Preliminary Injunction or Prejudgment Attachment

In April 2021, Plaintiffs moved for a preliminary injunction, or alternatively, for prejudgment attachment based on allegations that OPI transferred over 22 million shares of SoFi for a fraction of the shares’ fair market value after the commencement of this litigation.[xi]  Under CPLR § 6201(3), an order of attachment may be granted when “the defendant, with intent to defraud his creditors or frustrate the enforcement of a judgment that might be rendered in plaintiff’s favor, has assigned, disposed of, encumbered or secreted property, or removed it from the state or is about to do any of these acts.” 

According to the Court, prejudgment attachment was appropriate in this case because of the “post spin-off conduct of OPI,” including transferring major assets identified in the complaint at below market value while Defendants “slow rolled disclosure” of the amount of transferred assets in discovery.[xii]  The Court noted that the “fact that the apparent self-dealing conduct continued after this action was brought raises serious concerns relating to OPI’s ability to render itself judgment proof or to otherwise secrete assets to frustrate a future judgment.”[xiii]

Justice Borrok also reasoned that the fact “that the SoFi shares were sold so soon after the spin-off to OPI and for the defendants’ benefit” rather than for the benefit of all Renren stockholders suggested “that these assets were spun off without legitimate corporate purpose.”[xiv]

The Court did not find any of defendants’ counterarguments persuasive.  First, Justice Borrok rejected Defendants’ argument that Plaintiffs were not entitled to relief because they had not proven all of the elements of a fraudulent conveyance.  Even without proof of all of the elements of fraudulent conveyance, the Court found that OPI’s post spin-off conduct “appears to be prima facie evidence of the breach of fiduciary duty that forms the gravamen of the action.”[xv]  The Court also found it irrelevant that Defendants had proffered a valuation expert who challenged Plaintiffs’ valuation of the SoFi shares.  Since neither fact nor expert discovery were complete, Justice Borrok found that there was no way to verify the accuracy of the information provided by Defendants’ expert’s analysis.[xvi]

Accordingly, the Court granted Plaintiff’s order to show cause for a prejudgment attachment in the amount of $560 million, and denied Plaintiffs’ motion for a preliminary injunction as moot.[xvii]


The Court granted an order to show cause for prejudgment attachment where Defendants’ post-litigation transfer of assets evidenced an intent to frustrate a future adverse judgment.  The decision highlights the utility of prejudgment attachment to maintain the status quo in the event that a party appears to be disposing of assets to render itself judgment proof. 


[i] In re Renren, Inc. Derivative Litig., No. 653594/2018, 2021 BL 193420 (N.Y. Sup. Ct. May 14, 2021).

[ii] Am. Complaint, In re Renren, Inc. Derivative Litig., No. 653594/2018 (N.Y. Sup. Ct. May 14, 2021), at ¶ 1.

[iii] Id. at ¶¶ 1, 2.

[iv] Id. at ¶ 55.

[v] Id. at ¶ 3.

[vi] Id.

[vii] Id.

[viii] Id. ¶ 7.

[ix] Id. ¶ 9.

[x] Id. ¶ 10.

[xi] In re Renren, Inc. Derivative Litigation, 2021 BL 193420, at *1.

[xii] Id. at *2.

[xiii] Id.

[xiv] Id.

[xv] Id.

[xvi] Id.

[xvii] Id. at *1.