Avoiding Debt Obligations As Fraudulent Transfers? (Kartzman v. Latoc)

Avoiding obligations? (photo by Marilyn Swanson) By: Donald L Swanson “The trustee may avoid . . . any obligation . . . incurred by the debtor, that was made or incurred“ with actual fraudulent intent or as constructive fraud. --From § 548 of Bankruptcy Code (emphasis added). Similar language is contained in the Uniform Voidable Transactions... Continue Reading →

State Laws For Avoiding Insider Preferences (UVTA, UFTA & In re Lamie)

Little-known and rarely-used? (Photo by Marilyn Swanson) By: Donald L Swanson Preference avoidance provisions are a crucial part of the Bankruptcy Code—contained, primarily, in § 547 & § 550. States also have a preference avoidance statute—for insiders.  It’s in the Uniform Voidable Transactions Act (“UVTA)” or in its predecessor, the Uniform Fraudulent Transfer Act (“UFTA)). The... Continue Reading →

Can A Property Tax Foreclosure Sale Be Avoided As A Fraudulent Transfer? (Duval v. County of Ontario)

What’s the reasonably equivalent value? (Photo by Marilyn Swanson) By: Donald L Swanson Can the foreclosure of a property tax lien on real estate be avoided as a fraudulent transfer under § 584 of the Bankruptcy Code? That’s the issue before the District Court, on a bankruptcy appeal, in Duvall v. County of Ontario, New York,... Continue Reading →

Transfers With Intent To Hinder, Delay Or Defraud: History Of The Badges Of Fraud

Hindering and delaying the flow of water (photo by Marilyn Swanson) By: Donald L Swanson Fraudulent conveyance law, with its “badges of fraud” approach, has been around for a very long time.  We now have a new and fascinating article, by Prof. Emily Kadens, that provides new information and insights on this history. [Fn. 1] One... Continue Reading →

“Safe Harbor”: Merit Management’s Footnote 2 Is Back! (Deutsche v. McCormick)

Safe harbor (photo by Marilyn Swanson) By: Donald L Swanson In its unanimous Merit Management Group, LP v.FTI Consuting, Inc., opinion of February 27, 2018, the U.S. Supreme Court held (in the second-to-last sentence of the opinion): “Because the parties do not contend that either Valley View or Merit is a ‘financial institution’ or other covered... Continue Reading →

Fraudulent Transfer–Distinguishing Between A “Recipient” And A “Transferee” (Jalbert v. Gryaznova)

A conduit (photo by Marilyn Swanson) By Donald L. Swanson Under the Bankruptcy Code, an “initial transferee” is strictly liable for a fraudulent transfer—there is no good faith, subsequent advance, or similar defense. Fortunately for some fraudulent transfer defendants, it’s possible to be the “recipient” of a transfer as a mere conduit, without becoming a “transferee”... Continue Reading →

Fraudulent Transfer Claims in Bankruptcy After Statute of Limitations Expires (In re Tribune)

A closed door By: Donald L Swanson “We need not resolve” Appellants’ arguments, but we find such arguments to be fraught with “lack of statutory support, ambiguities, anomalies” and to conflict with “purposes of the Code.” --Second Circuit Court of Appeals, from December 19, 2019, opinion in In re Tribune Company Fraudulent Conveyance Litigation. As a... Continue Reading →

Fraudulent Transfer’s Good Faith Defense: A Futility Exception to Investigation?

By: Donald L Swanson Court Ruling:  A transferee on inquiry notice of fraud must diligently investigate its suspicions, before a good faith defense is available, even if an investigation would have revealed nothing. This ruling is from Janey, Receiver v. Magness, Case No. 19-0452 in the Texas Supreme Court (decided December 20, 2019), which Court is... Continue Reading →

Fraudulent Transfer Claims — In Constitutional Limbo

By: Donald L. Swanson “we assume without deciding, that the fraudulent conveyance claims in this case are Stern claims.” [Fn. 1] From unanimous U.S. Supreme Court decision in Executive Benefits Insurance Agency v Arkison (Decided June 6, 2014). [Fn. 2] It’s a curious thing, this failure-to-decide the constitutional status of fraudulent transfer claims in bankruptcy. Here’s... Continue Reading →

A State-Sanctioned Fraudulent Transfer?

By: Donald L Swanson The majority’s opinion “permits Vandelay to reap a windfall that borders on the obscene.” Hon. William B. Cassel, Nebraska Supreme Court Justice, Dissenting in Wisner v. Vandelay Investments, L.L.C. (Decided 8/24/2018). You’re not going to believe this . . . seriously. Facts of the Case In 2014, Vandelay Investments acquired 650 acres... Continue Reading →

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