Fraudulent or Preferential Transfers - Revision history

Alanfields: /* Attack on Prior Sale for Ad Valorem Taxes */

2022-10-12T15:12:21Z

‎Attack on Prior Sale for Ad Valorem Taxes

Alanfields: /* §544(b) -- State Law Challenges */

2022-01-17T16:06:02Z

‎§544(b) -- State Law Challenges

Alanfields at 16:58, 21 March 2019

2019-03-21T16:58:35Z

Alanfields at 16:58, 21 March 2019

2019-03-21T16:58:18Z

Alanfields: /* §547 -- Preferential Transfers */

2018-09-23T23:02:43Z

‎§547 -- Preferential Transfers

Alanfields at 23:01, 23 September 2018

2018-09-23T23:01:53Z

Alanfields at 17:49, 20 September 2018

2018-09-20T17:49:57Z

Alanfields at 01:12, 24 February 2018

2018-02-24T01:12:02Z

Alanfields: Created page with "A transfer of the debtor’s property to another party in order to deter, hinder or defraud a creditor, or to unfairly place such property out of the reach of a creditor is a..."

2018-02-24T01:00:20Z

Created page with "A transfer of the debtor’s property to another party in order to deter, hinder or defraud a creditor, or to unfairly place such property out of the reach of a creditor is a..."

New page

A transfer of the debtor’s property to another party in order to deter, hinder or defraud a creditor, or to unfairly place such property out of the reach of a creditor is a fraudulent transfer under [https://www.law.cornell.edu/uscode/text/11/548 § 548] of the Bankruptcy Code. In bankruptcy cases, a trustee is given the power to set aside or avoid these transfers under either federal law or state law.

This is limited to transfers during the 2 year period prior to filing the petition.

Aside from §548, there is a wholly separate line of attack for the trustee trying to avoid a fraudulent transfer. This is [https://www.law.cornell.edu/uscode/text/11/544 §544(b)] of the Bankruptcy Code, which provides that the trustee may avoid a transfer “that is voidable under applicable law by a creditor holding an unsecured claim.” This means that the trustee may look to non-bankruptcy law (usually “state” law) and deploy any avoiding power that he finds there. The most common use of §544(b) is to give the trustee a right of action under state fraudulent transfer law, the UFTA or UFCA.

State law claims may allow the trustee (or DIP) a longer reach-back period based on the state Statute of limitations.

← Older revision		Revision as of 15:12, 12 October 2022
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	In 1997 the U.S. Supreme Court decided ''BFP v. Resolution Trust Corp.'', [https://supreme.justia.com/cases/federal/us/511/531/ 511 U.S. 531]. It held that a regularly-conducted mortgage foreclosure sale could not be considered a fraudulent transfer under Bankruptcy Code Sec. 548, even if the sale brought much less than market value. However, the opinion expressly did not apply to tax foreclosure sales.		In 1997 the U.S. Supreme Court decided ''BFP v. Resolution Trust Corp.'', [https://supreme.justia.com/cases/federal/us/511/531/ 511 U.S. 531]. It held that a regularly-conducted mortgage foreclosure sale could not be considered a fraudulent transfer under Bankruptcy Code Sec. 548, even if the sale brought much less than market value. However, the opinion expressly did not apply to tax foreclosure sales.

−	Most recently, the Sixth Circuit has found that fraudulent transfer reasoning can apply to tax sales; see ''In re Lowry'', 2021 WL 6112972 (6th Cir. Dec. 27, 2021). There is now reportedly ~~an even~~ split in the circuits, with the Third, Sixth and Seventh holding that a tax sale can be set aside as a fraudulent transfer, and the Fifth, Ninth and Tenth holding that it cannot. Dirt Blog 1/14/21	+	Most recently, the Sixth Circuit has found that fraudulent transfer reasoning can apply to tax sales; see ''In re Lowry'', 2021 WL 6112972 (6th Cir. Dec. 27, 2021). There is now reportedly a split in the circuits, with the Second, Third, Sixth and Seventh holding that a tax sale can be set aside as a fraudulent transfer, and the Fifth, Ninth and Tenth holding that it cannot. Dirt Blog 1/14/21, updated to reflect Gunsalus.
		+
		+	Gunsalus v. County of Ontario, 37 F.4th 859 (2d Cir. 2022) held that in a "strict foreclosure" of delinquent property taxes, where title transferred to the County if not paid by a date certain, there is no presumption that the foreclosure proceeding provided for "reasonably equivalent value" unlike the public auction foreclosure in BFP v. Resolution Trust Corp. In a post-foreclosure Bankruptcy, the sale could be set aside as a fraudulent conveyance.

← Older revision		Revision as of 16:06, 17 January 2022
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	Most importantly, structuring this as a state law claim often allow the trustee (or DIP) a longer reach-back period based on the state Statute of limitations.		Most importantly, structuring this as a state law claim often allow the trustee (or DIP) a longer reach-back period based on the state Statute of limitations.
		+
		+	==Attack on Prior Sale for Ad Valorem Taxes==
		+
		+	In 1997 the U.S. Supreme Court decided ''BFP v. Resolution Trust Corp.'', [https://supreme.justia.com/cases/federal/us/511/531/ 511 U.S. 531]. It held that a regularly-conducted mortgage foreclosure sale could not be considered a fraudulent transfer under Bankruptcy Code Sec. 548, even if the sale brought much less than market value. However, the opinion expressly did not apply to tax foreclosure sales.
		+
		+	Most recently, the Sixth Circuit has found that fraudulent transfer reasoning can apply to tax sales; see ''In re Lowry'', 2021 WL 6112972 (6th Cir. Dec. 27, 2021). There is now reportedly an even split in the circuits, with the Third, Sixth and Seventh holding that a tax sale can be set aside as a fraudulent transfer, and the Fifth, Ninth and Tenth holding that it cannot. Dirt Blog 1/14/21

@@ Line 3: / Line 3: @@
 *In 2011, [https://uww.wfgnationaltitle.com/images/5/5d/Texas_SB_735.docx Texas law] was changed to prohibit any Texas licensed title insurer from issuing creditor's rights coverage anywhere in the United States.
 *California followed suit, obtaining express [https://uww.wfgnationaltitle.com/images/e/eb/Creditor_rights_agreement_with_Ca_DOI.pdf agreements] from title insurers not licensed in Texas -- including one of WFG's predecessor companies (later merged into WFG) -- committing to not issuing creditor rights coverage
 Three separate Bankruptcy law provisions and legal standards apply to when a trustee (or DIP) may avoid a transaction.

← Older revision		Revision as of 16:58, 21 March 2019
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		+	WFG will no longer issue an ALTA 21 or other Creditor's Rights Coverage (except as set forth in the standard ALTA policies)
		+
		+	*In 2011, [https://uww.wfgnationaltitle.com/images/5/5d/Texas_SB_735.docx Texas law] was changed to prohibit any Texas licensed title insurer from issuing creditor's rights coverage anywhere in the United States.
		+	*California followed suit, obtaining express [https://uww.wfgnationaltitle.com/images/e/eb/Creditor_rights_agreement_with_Ca_DOI.pdf agreements] from title insurers not licensed in Texas -- including one of WFG's predecessor companies (later merged into WFG) -- committing to not issuing creditor rights coverage
		+
	Three separate Bankruptcy law provisions and legal standards apply to when a trustee (or DIP) may avoid a transaction.		Three separate Bankruptcy law provisions and legal standards apply to when a trustee (or DIP) may avoid a transaction.
	* §547 -- Preferential Transfers		* §547 -- Preferential Transfers

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 ==§547 -- Preferential Transfers==
-A Trustee may avoid “preferential transfer” to or for benefit of a creditor for an antecedent debt, made while insolvent within 90 days prior to filing (1 year if an insider).   11 USC 547.
+A Trustee may avoid “preferential transfer” to or for benefit of a creditor for an antecedent debt, made while insolvent within 90 days prior to filing (1 year if an insider).   [https://www.law.cornell.edu/uscode/text/11/547 11 USC 547].
 Exceptions for:

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 A transfer of the debtor’s property to another party in order to deter, hinder or defraud a creditor, or to unfairly place such property out of the reach of a creditor is a fraudulent transfer under [https://www.law.cornell.edu/uscode/text/11/548 § 548] of the Bankruptcy Code.  In bankruptcy cases, a trustee  (or DIP) is given the power to set aside or avoid these transfers under either federal law or state law.
@@ Line 8: / Line 22: @@
 This is limited to transfers during the 2 year period prior to filing the petition.  § 548(a)(1).   As long as the transfer occurred within one year of the bankruptcy filing, the complaint can be filed anywhere within two (2), and perhaps as long as three (3), years after the bankruptcy is filed. This additional period to initiate the action under the Bankruptcy Code arises out of the language of [https://www.law.cornell.edu/uscode/text/11/546 11 U.S.C. §546].
 Under [https://www.law.cornell.edu/uscode/text/11/544 §544(b)] of the Bankruptcy Code, the trustee (or DIP) may also avoid a transfer “that is voidable under applicable law by a creditor holding an unsecured claim.” This means that the trustee may look to non-bankruptcy law (usually “state” law) and deploy any avoiding power that he finds there. The most common use of §544(b) is to give the trustee a right of action under state fraudulent transfer law, the UFTA or UFCA.
 Most importantly, structuring this as a state law claim often allow the trustee (or DIP) a longer reach-back period based on the state Statute of limitations.

@@ Line 1: / Line 1: @@
-A transfer of the debtor’s property to another party in order to deter, hinder or defraud a creditor, or to unfairly place such property out of the reach of a creditor is a fraudulent transfer under [https://www.law.cornell.edu/uscode/text/11/548 § 548] of the Bankruptcy Code.  In bankruptcy cases, a trustee is given the power to set aside or avoid these transfers under either federal law or state law.
+A transfer of the debtor’s property to another party in order to deter, hinder or defraud a creditor, or to unfairly place such property out of the reach of a creditor is a fraudulent transfer under [https://www.law.cornell.edu/uscode/text/11/548 § 548] of the Bankruptcy Code.  In bankruptcy cases, a trustee  (or DIP) is given the power to set aside or avoid these transfers under either federal law or state law.
-This is limited to transfers during the 2 year period prior to filing the petition.
+Under §548, the test is whether:
-Aside from §548, there is a wholly separate line of attack for the trustee trying to avoid a fraudulent transfer. This is [https://www.law.cornell.edu/uscode/text/11/544 §544(b)] of the Bankruptcy Code, which provides that the trustee may avoid a transfer “that is voidable under applicable law by a creditor holding an unsecured claim.” This means that the trustee may look to non-bankruptcy law (usually “state” law) and deploy any avoiding power that he finds there. The most common use of §544(b) is to give the trustee a right of action under state fraudulent transfer law, the UFTA or UFCA.
+(A) the transfer was made "with actual intent to hinder, delay, or defraud"; or
-State law claims may allow the trustee (or DIP) a longer reach-back period based on the state Statute of limitations.
+This is limited to transfers during the 2 year period prior to filing the petition.  § 548(a)(1).   As long as the transfer occurred within one year of the bankruptcy filing, the complaint can be filed anywhere within two (2), and perhaps as long as three (3), years after the bankruptcy is filed. This additional period to initiate the action under the Bankruptcy Code arises out of the language of 11 U.S.C. §546.