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A Transfer Made In Connection With A Securities Contract May Not Be Avoided Under Section 546(E) Of The Bankruptcy Code, Dennis Mossberg

Bankruptcy Research Library

(Excerpt)

Under title 11 of the United States Code (the “Bankruptcy Code”), a bankruptcy trustee has the power to avoid, or claw back, certain transfers of property made before a bankruptcy filing. A trustee may avoid transfers such as those that are preferential under section 547 and fraudulent transfers under section 548. Section 546(e) of the Bankruptcy Code generally provides that a transfer made by, to, or for the benefit of a commodity broker, stockbroker, financial institution, or securities clearing agency in connection with a securities contract cannot be avoided. In 2018, the Supreme Court clarified the scope of the …

Transfer Of Real Estate Title May Be Avoided As A Preference In Certain Jurisdictions, Aleksandra Adamska

Bankruptcy Research Library

(Exceprt)

This article addresses whether a transfer of real estate title may be avoided as a preference under section 547(b) of title 11 of the United States Code (the “Bankruptcy Code”). Section 547 permits avoidance of preferential transfers. “A preference is a ‘transfer that enables a creditor to receive payment of a greater percentage of his claim against the debtor than he would have received if the transfer had not been made and he had participated in the distribution of assets of the bankrupt estate.’” Essentially, a preference allows one creditor to receive more value than other creditors. Preferential transfers …

Distribution Of Property Overseen By Family Courts Will Not Bar Constructive Fraudulent Transfer Claims, Allyson Rivard

Bankruptcy Research Library

(Excerpt)

In general, a transfer made by a debtor may be avoided under title 11 of the United States Code (the “Bankruptcy Code”) or applicable state law, if the transfer was actually or constructively fraudulent. Actual fraudulent transfer claims require a showing of actual intent to hinder, delay, or defraud creditors. Constructive fraudulent transfer claims do not require proof of actual intent. Instead, a transfer will generally be constructively fraudulent if it is shown that (1) the debtor was insolvent at the time of, or rendered insolvent by, the transfer and (2) so long as the debtor received “less than …

A Trustee Generally May Not Recover An Actual Fraudulent Transfer If The Funds Have Been Reimbursed To The Debtor Pre-Petition, Carina Zupa

Bankruptcy Research Library

(Excerpt)

Section 544 of title 11 of the United States Code (the “Bankruptcy Code”) grants a trustee the power to “avoid any transfer of property of the debtor or any obligation incurred by the debtor that is voidable by” certain classes of secured creditors, unsecured creditors, and bona fide purchasers. When seeking to avoid a transfer a trustee can look to various other provisions of the Bankruptcy Code, including: 11 U.S.C. § 545 (statutory liens), 11 U.S.C. § 547 (preferences), 11 U.S.C. § 548 (fraudulent transfers), 11 U.S.C. § 549 (post-petition transactions), 11 U.S.C. § 553(b) (impermissible setoffs), and 11 …

Can A Bankruptcy Trustee Recover Assets Transferred To A Self-Settled Trust?, Christian Corkery

Bankruptcy Research Library

(Excerpt)

A “spendthrift trust” provides a fund for the benefit of another, secures it against the beneficiary’s improvidence, and places it beyond the reach of the beneficiary’s creditors. A spendthrift trust has long been recognized as a useful vehicle for providing the beneficiary with the benefits of the trust while simultaneously preventing the beneficiary from voluntarily transferring his interest in the trust. This is particularly useful where the settlor wants to protect the transfer of wealth to a beneficiary. For instance, if a parent makes a large gift to an irresponsible child, the child will likely squander the gift …

An Exercise In Economics: Determining “Value” Under § 548 Of The Bankruptcy Code, Gregory R. Bruno

Bankruptcy Research Library

(Excerpt)

Determining whether a debtor receives value for a constructively fraudulent prepetition transfer under section 548 of the Bankruptcy Code can prove troublesome when a debtor receives only an indirect, intangible benefit. Section 548 allows a bankruptcy trustee to avoid and recover a debtor’s prepetition transfers for which the debtor did not receive “reasonably equivalent value.” However, judicial interpretation of the term “value” has greatly limited the kinds of benefits to the debtor that might qualify.

Gold v. Marquette (In re Leonard) both illustrates the limitations that courts have placed on the term “value” for purposes of section …

The Ponzi Scheme Presumption And Fraudulent Conveyances In The 21st Century: It’S Not Just Black And White, Gabriella B. Zahn

Bankruptcy Research Library

(Excerpt)

Section 548(a)(1)(A) of the Bankruptcy Code (the “Code”) allows the trustee of a bankruptcy estate to avoid a transfer made by the debtor “with actual intent to hinder, delay, or defraud” an entity to which the debtor was or became indebted, as long as the transfer was made within two years of filing. Because it is difficult to prove that a transfer was made with such actual intent, courts have applied the so-called “Ponzi scheme presumption.” In cases involving conveyances in Ponzi schemes, the “Ponzi scheme presumption” allows the court to assume that a transfer was made with the …