2/24/2024 0 Comments 11 usc fraudulent conveyanceUnder Bankruptcy Code section 548(a)(1)(B), a transfer may be deemed constructively fraudulent where the debtor received less than reasonably equivalent value in exchange for such transfer or obligation, and (a) the debtor was insolvent or became insolvent as a result of the transfer or obligation (b) the debtor was engaged in business for which any remaining property was unreasonably small capital, or (c) the debtor intended to incur debts that would be beyond the debtor’s ability to pay as they mature. Direct proof is not required, because fraud is usually proved by circumstantial evidence, customarily referred to as “badges of fraud.” These include: (i) retention of control of the property by the debtor following transfer (ii) whether the transferee was a relative (iii) whether the transfer was for fair consideration (iv) whether the transfer was concealed, and (v) whether the debtor was insolvent or rendered insolvent by the transfer. Under Bankruptcy Code section 548(a)(1)(A), the bankruptcy trustee may avoid any made or obligation incurred with actual intent to hinder, delay, or defraud creditors. Lines ( In re TransLines West, Inc.) (Bankr. Whether a “transfer” of a debtor’s property interest has occurred is construed broadly. However, what dispositions of a particular property interest in property constitute a transfer is a matter of federal law. “Property” is not defined in the Bankruptcy Code, and the courts look to state law. California adopted the UFTA in 1986.Ī transfer of an interest of the debtor in property within two years before the filing of the petition, or an obligation incurred by the debtor within two years before the filing of the petition, may be avoided as a fraudulent transfer if one of several tests is met. A majority of states have adopted the Uniform Fraudulent Transfer Act (the “UFTA”), which defines the criteria for establishing fraudulent transfers. § 544) allows a trustee or a creditor to use state law to pursue fraudulent transfers. Section 544 of the Bankruptcy Code (11 U.S.C. § 548) codifies fraudulent transfer law for bankruptcy cases. Section 548 of the Bankruptcy Code (11 U.S.C. Bankruptcy trial attorneys at Mark Anchor Albert and Associates are well-versed in prosecuting and defending against fraudulent conveyance actions in bankruptcy court, federal district court, and state court.
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