All posts tagged Fraudulent Transfer

Disclaimer of Inheritance: Not a Fraudulent Transfer Under Section 548, but….

Imagine 5 months before debtor files bankruptcy, she was notified that her late grandmother left her a mansion in Beverly Hills and $50,000 in life insurance proceeds.  Debtor, who was concerned that her creditors would snatch up the assets, instead decided to disclaim her interest in this inheritance — meaning she waived her right to receive the inheritance.  It is common sense that nobody can be forced to accept something if they do not choose to and the transfer of title to the property does not vest in the person until the recipient accepts it.

Under California’s Probate Code, a beneficiary to an inheritance may disclaim any property interest as long as they file the disclaimer in accordance with the Probate statute (i.e. sign it, identify who is seeking to transfer you the asset (grandma) and voluntarily disclaim the asset).  Debtor has now “transferred” her right to inheritance to another person before filing bankruptcy.   Is this a prepetition fraudulent transfer that is voidable by the trustee under Uniform Voidable Transaction Act?

No, it’s not.

Read more…

Nice Definition of “Clear Error” from the BAP

Sitting here on Saturday morning reading unpublished BAP decisions.  Great quote on what does clear error mean.

“To be clearly erroneous, a decision must strike us as more than just maybe or probably wrong; it must . . . strike us as wrong with the force of a five-week-old, unrefrigerated dead fish.” Papio Keno Club, Inc. v. City of Papillion (In re Papio Keno Club, Inc.), 262 F.3d 725, 729 (8th Cir. 2001) (quoting Parts & Elec. Motors, Inc. v. Sterling Elec., Inc., 866 F.2d 228, 233 (7th Cir. 1988)); see Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985) (A factual finding is clearly erroneous if, after examining the evidence, the reviewing court “is left with the definite and firm conviction that a mistake has been committed.”).  The bankruptcy court’s choice among multiple plausible views of the evidence cannot be clear error. United States v. Elliott, 322 F.3d 710, 714 (9th Cir. 2003).  (my emphasis added)

Diamond v. Mesisca Riley & Kretenberg, LLP (In re Castle Trading, Inc.)(unpublished) CC-16-1322-FTaKu, 2:13-bk-15021-BB (BAP May 31, 2017)

Trustee Allowed to Reach Back 10 Years to Avoid a Fraudulent Transfer

Mr. Faucher’s post below re: 10 year clock on IRS debt reminded me of a case wherein a trustee was allowed to reach back 10 years (yes, 10!) to avoid a fraudulent transfer.  How far back is 10 years?  Obama was a junior senator.   A link to my original article published in the Law Journal Newsletter can be found by clicking here. Enjoy!