In the complex world of estate planning, irrevocable trusts offer a robust mechanism for protecting assets from various threats, including bankruptcy and divorce. This article delves into the specific protections offered by...more
One year ago, we wrote that 2022 would be remembered in the corporate bankruptcy world for the “crypto winter” that descended in November 2022 with the spectacular collapse of FTX Trading Ltd., Alameda Research, and...more
On June 21, 2022, the U.S. District Court for the Eastern District of Missouri denied a motion to dismiss a fraudulent transfer claim asserted by the borrower’s lender against the borrower’s principals’ lender. Plaintiff...more
For most non-bankruptcy attorneys, their first experience in bankruptcy court could very likely begin with a call from an agitated and bewildered client asking for help to understand why they have been sued by a trustee in a...more
Can you be held liable for a tax liability owed by another taxpayer? Yes, under certain circumstances. The IRS uses fraudulent transfer law and “transferee” liability tools to collect unpaid taxes where a taxpayer has...more
Court Reinstates Life Insurance Company's Fraud Claims Over Defunct Laboratory - A New Jersey state appeals court reinstated Aetna Life Insurance Company’s (Aetna) fraud claims against the minority owners of the now defunct...more
Texas law prohibits a debtor who is subject to a valid judgment from moving assets out of reach of creditors in order to hinder, delay, or defraud a judgment creditor. This legal restriction applies even if the transfer takes...more
Traditional avoidance actions under the Bankruptcy Code, i.e., preferences and fraudulent transfers, have laudable goals: (a) to provide equal treatment to creditors of an insolvent company and (b) to claw back otherwise...more
The ability of a bankruptcy trustee or chapter 11 debtor-in-possession ("DIP") to avoid fraudulent transfers is an important tool promoting the bankruptcy policies of equality of distribution among creditors and maximizing...more
Any creditor that has experienced more than a few customers or borrowers filing for bankruptcy is aware that there is a risk of being sued by a trustee to avoid transfers that the creditor received prior to the bankruptcy...more
As the pandemic-induced recession continues, there will be increasing opportunities for investors to acquire failing businesses at bargain prices. Companies with sound business models that were until recently profitable may...more
Burkhart v. Genworth Fin. Inc., C.A. No. 2018-0691-JRS (Del. Ch. Jan. 31, 2020). This case illustrates not only that plaintiffs who have only unmatured and contingent claims against a transferor have standing to seek...more
In UMB Bank NA v. Sun Capital Partners V, LP (In re LSC Wind Down, LLC), Adv. Proc. No 19-50272 (Bankr. D. Del. Jan. 23, 2020), the Bankruptcy Court for the District of Delaware denied a motion to dismiss a liquidating...more
Last month, New York enacted the Uniform Voidable Transactions Act (“UVTA”), which seeks to modernize the state’s fraudulent conveyance law. ...more
Answering “no” to a certified question from the Fifth Circuit, the Supreme Court of Texas held that a transferee on inquiry notice of fraud cannot shield itself from clawback without diligently investigating its initial...more
Section 548 of the Bankruptcy Code enables trustees to avoid certain pre-bankruptcy transfers of “an interest of the debtor in property,” where the transfer was intended to defraud creditors or where the transfer was made...more
We have been tracking an ongoing reinsurance matter in which Odyssey Reinsurance Co. obtained a $3.2 million default judgment against Cal-Regent Insurance Services Corp. and Pacific Brokers Insurance Services (PBIS) as a...more
The Nevada legislature has gone a long way to insulate directors of Nevada corporations from liability. Directors, however, are not entirely immune as was recently illustrated in Judge Barry Ted Moskowitz' recent ruling in...more
Creditors’ recoveries often hinge on claw-back lawsuits that trustees bring under bankruptcy law and non-bankruptcy law. Trustees can file claims based on non-bankruptcy law because Bankruptcy Code section 544(b) allows them...more
No, this wasn't a case of Cain and Abel or Romulus and Remus, but it did involve brothers and an execution of sorts. The protaganists in Chen v. Berenjian, 2019 Cal. App. LEXIS 275 were Chen and the brothers Berenjian (Shazad...more
Fraudulent transfer law allows creditors and bankruptcy trustees, under certain circumstances, to sue transferees to recover funds received where a debtor’s transfers to the transferees actually or constructively defrauded...more
The Alabama Civil Court of Appeals recently issued a decision, International Management Group, Inc. v. Bryant Bank, No. 2170744, which, among other things, limits the potential for summary judgment in fraudulent transfer...more
Bernie Madoff in New York, Tom Petters in Minneapolis, Allen Stanford in Houston, and Darren Berg in Seattle lead a rogues’ gallery of infamous Ponzi schemers. All are now serving time in prison. But the civil litigation...more
The Corporate “Shield”- Ask any shareholder of a closely held corporation whether they may be held liable for the tax obligations of the corporation, and they will likely respond “of course not, that’s why we established...more
In Crystallex International Corp. v. Petróleos de Venezuela, S.A., 879 F.3d 79 (3d Cir. 2018), a divided U.S. Court of Appeals for the Third Circuit ruled that transfers by nondebtor subsidiary corporations to their ultimate...more