Garcia v. Garcia (In re Garcia), 494 B.R. 799 (Bankr. E.D. N.Y. 2013) –
Prior to bankruptcy, a chapter 11 debtor who had been a member of two limited liability companies was expelled by the other members on the basis that he took excess distributions from the LLCs. After filing bankruptcy, the debtor attacked his expulsions on the basis that they constituted a preference or a fraudulent transfer. Continue reading
The 5th Circuit upheld the district court decision with the result that notwithstanding the debtor’s attempt to discharge a mortgage through a plan of reorganization, a mortgagee was able to retain its lien by remaining silent until after confirmation. Continue reading
This opinion opens with a riddle: “When is a financing statement that is no longer effective, still effective?” Answer: “When it lapses, of course!” In this case, a secured creditor failed to file a continuation statement and its UCC financing statement lapsed during the bankruptcy. Continue reading
A chapter 11 liquidating trustee sought to recover a prepetition payment made by the debtor to a subcontractor on the basis that it was a preference. The case turned on whether the funds used for payment constituted property of the debtor. Continue reading
A chapter 11 liquidating trustee brought several proceedings to recover fraudulent transfers under both the Bankruptcy Code and a state version of the Uniform Fraudulent Transfer Act. The question for the court was whether the debtor’s estimated liability for withdrawal from a multiemployer benefit plan should be included in determining the debtor’s insolvency to support a constructive fraudulent transfer claim. Continue reading
White Family Cos., Inc. v. Slone (In re Dayton Title Agency, Inc.), 724 F.3d 675 (6th Cir. 2013) –
The debtor, a title agency, facilitated a series of loans by having both the loans and the loan repayments pass through its trust account. Unfortunately, checks deposited to repay loans totaling $4.8 million bounced, and the $4.885 million check that replaced them was a forgery drawn on a non-existing account. The bank teller did not place a hold on the second check, and before the check cleared, the title company issued checks totaling $4.885 million to the lenders in repayment of the loans. The question for the 6th Circuit was whether the payment to the lenders was an asset of the title company for purposes of making a fraudulent transfer claim against the lenders. Continue reading
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