UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF NEW YORK

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In the Matter of Case No. 803-82409-511

Chapter 7

STEVE TSIOLIS and PAULINE TSIOLIS,

COMPLAINT

Debtors.

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KENNETH KIRSCHENBAUM, as Chapter 7

Bankruptcy Trustee for the Estate of Steve Tsiolis

and Pauline Tsiolis, Adv. Pro. No.

Plaintiff

-against-

498 DINER ENTERPRISES CORP. d/b/a

MAJESTIC DINER, TOM TSIOLIS, CHRIS

TSIOLIS, and STELIOS TSIOLIS,

Defendants.

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Plaintiff, by his attorneys, KIRSCHENBAUM & KIRSCHENBAUM, P.C., as and for his complaint herein alleges:

THE PARTIES

1. Kenneth Kirschenbaum is the duly appointed, qualified, and acting trustee of the estate of the above-named

debtors.

2. At all times hereinafter mentioned, STEVE TSIOLIS (hereinafter the "debtor") and PAULINE TSIOLIS

(hereinafter the "debtor's spouse") were and still are the debtors in the underlying bankruptcy proceeding.

3. At all times mentioned herein, 498 DINER ENTERPRISES CORP. d/b/a MAJESTIC DINER (hereinafter the

"Corporation"), upon information and belief, was and still is a domestic corporation with a place of business in the County

of Nassau, State of New York.

4. At all times mentioned herein, upon information and belief, TOM TSIOLIS, CHRIS TSIOLIS and STELIOS

TSIOLIS (the "debtor's sons") were and still are all residents of New York and children of the debtors.

JURISDICTION AND VENUE

5. The debtors filed a voluntary petition for relief pursuant to Chapter 7 of Title 11 of the United States Code (the

"Bankruptcy Code") on April 11, 2003 under case number 803-82409-511, and this adversary proceeding arises out of and

relates to the Chapter 7 case of the debtors on the docket of this Court.

6. This adversary proceeding is commenced pursuant to 11 U.S.C. 548 and New York Debtor & Creditor Law §§

270-281 to set aside a transfer of 50% of the outstanding shares of stock of the corporation from the debtor to his three sons

as a fraudulent conveyance.

7. The Court has jurisdiction over this matter pursuant to Sections 1334 and 157 of Title 28 of the United States

Code.

8. The trustee has authority to bring this adversary proceeding in accordance with Rules 6009 and 7001 et seq. of

the Federal Rules of Bankruptcy Procedure.

9. This is a core proceeding pursuant to 28 U.S.C. Sections 157(b)(2)(A)(H) and (O).

10. Venue is proper in this Court pursuant to 28 U.S.C. Section 1409.

GENERAL ALLEGATIONS

11. Upon information and belief, less than one year prior to the filing of the underlying petition for relief, the

debtor was the owner of 50% of the outstanding shares of stock in the corporation.

12. During the 2002 calendar year, the debtor had a gross annual income of $79,500.00.

13. During the 2002 calendar year, the debtor's spouse had a gross annual income of $14,440.00.

14. Upon information and belief, at all times hereinafter mentioned the debtors held joint title to two separate

properties, located at 181 Brompton Road South, Garden City, New York, and 2 Jester Court, Dix Hills, New York.

15. Upon information and belief, on or about October 24, 2002, the debtor executed a loan agreement with

Progressive Credit Union ("Progressive") pursuant to which Progressive agreed to lend the debtor the sum of

$2,075,000.00.

16. In accordance with the terms of the loan agreement, the debtor executed and delivered a promissory note to

Progressive evidencing an indebtedness and a promise to pay Progressive the sum of $2,075,000.00 over a period of 12

years.

17. On or about October 24, 2002, the debtors executed and delivered a subordinate real property mortgage on the

Garden City property to secure the guaranty of the payment on the note to Progressive.

18. The maximum principal amount of the mortgage debt to be secured by the subordinate real property mortgage

on the Garden City property was $300,000.00.

19. Upon information and belief, the total loan proceeds were used for the benefit of the corporation, to wit:

refinancing of existing corporate debt, renovations to the business premises, working capital and closing costs.

20. Upon information and belief, no portion of the loan proceeds were used by the debtors personally.

21. By Agreement dated October 25, 2002, the debtor agreed to sell to his sons Tom, Chris and Stelios 50% of the

outstanding shares of stock in the defendant corporation which he owned.

22. According to the terms of the sale agreement the purchase price of the selling shares which the debtor agreed to

sell to his sons was $30,000.00, subject to all liabilities and obligations of the defendant corporation.

23. Upon information and belief, on or about December 17, 2002, the debtor conveyed his interest in his shares for

the sum of $30,000.00 subject to all liabilities and obligations of the defendant corporation.

24. Upon information and belief, at the time of the sale, the debtor was employed as the manager of the

corporation.

25. Upon information and belief, at the time of the sale, the debtor's spouse was engaged as a salesperson at the

Disney Store.

26. Upon information and belief, from the date of the conveyance up to and including the date of the filing of the

petition, the debtors were engaged in no other form of employment.

27. Upon information and belief, upon the conveyance of his shares, the debtor did not have sufficient income and

assets to tender the monthly payments to Progressive as required under the terms of the promissory note, and his liabilities

exceeded his assets.

AS AND FOR A FIRST CAUSE OF ACTION PURSUANT TO 11 U.S.C. §§548 and 544

& NEW YORK DEBTOR CREDITOR LAW §§ 270-281 TO

SET ASIDE A FRAUDULENT CONVEYANCE

28 The conveyance of the debtor's interest in the corporate shares of stock was made within one year of the date of

the filing of the debtors' petition.

29. Upon information and belief, the debtor received less than a reasonably equivalent value in exchange for the

conveyance of his interest in the corporate stock.

30. Upon information and belief, the debtor was insolvent on the date of the transfer of his interest in the corporate

stock or became insolvent as a result of the transfer.

31. By reason of the foregoing, the transfer of the debtor's interest in the shares of corporate stock constitutes a

Fraudulent Conveyance as defined by 11 U.S.C. §548 and New York Debtor and Creditor Law §§ 270-281.

32. By virtue of the foregoing, the conveyance should be set aside pursuant to 11 U.S.C. 544 (b).

AS AND FOR A SECOND CAUSE OF ACTION PURSUANT TO 11 U.S.C. §§548 and 544 & NEW YORK DEBTOR

CREDITOR LAW §§ 270-281 TO

SET ASIDE A FRAUDULENT CONVEYANCE

33. The debtor transferred his interest in the shares of stock in the corporation to his sons with actual intent to

hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made,

indebted.

34. By virtue of the foregoing, the conveyance should be set aside pursuant to 11 U.S.C. Section 544(b).

AS AND FOR A THIRD AND DISTINCT CAUSE OF ACTION

PURSUANT TO NEW YORK DEBTOR & CREDITOR LAW §276-a

35. By virtue of the foregoing, plaintiff has been required to retain the services of

an attorney to enforce his rights in and to the shares of corporate stock which were conveyed from the debtor to the

defendant sons.

36. Pursuant to New York Debtor and Creditor Law §276-a, plaintiff is entitled to

reasonable attorney's fees in an amount as may be fixed by the Court.

WHEREFORE, plaintiff demands judgment against defendants setting aside the conveyance from the debtor to the

debtor's sons of the shares of stock in the corporate defendant, awarding the plaintiff reasonable attorneys fees in an

amount to be fixed by the Court, and granting such other and further relief as this Court deems just and proper, including

costs and disbursements.

Dated: Garden City, New York

September 15, 2003

KIRSCHENBAUM & KIRSCHENBAUM, P.C.

Attorneys for Plaintiff

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By: Steven B. Sheinwald, Esq. (SS-6336)

200 Garden City Plaza

Garden City, New York 11530

(516) 747-6700

I:\Bankruptcy\DEBTOR\Tsiolis\complaint.wpd

UNITED STATES BANKRUPTCY COURT CASE NO. 803-82409-511

EASTERN DISTRICT OF NEW YORK

In the Matter of

STEVE TSIOLIS and PAULINE TSIOLIS,

Debtors.

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KENNETH KIRSCHENBAUM, as Chapter 7

Bankruptcy Trustee for the Estate of Steve Tsiolis

and Pauline Tsiolis, Adv. Pro. No.

Plaintiff

-against-

498 DINER ENTERPRISES CORP. d/b/a MAJESTIC

DINER, TOM TSIOLIS, CHRIS TSIOLIS and STELIOS

TSIOLIS,

Defendants.

COMPLAINT

KIRSCHENBAUM & KIRSCHENBAUM, P.C.

Attorneys for the Trustee/Plaintiff

200 Garden City Plaza

Garden City, New York 11530

(516) 747-6700