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Showing posts in Fraudulent Transfers

Third Circuit Rules That Transfers By Non-Debtors Are Immune From Avoidance As Fraudulent Transfers

Crystallex Int’l Corp. v. Petroleos de Venezuela, S.A., 879 F.3d 79 (3d Cir. 2018)

In an Opinion that may also have repercussions in bankruptcy law, the Third Circuit Court of Appeals recently held in Crystallex Int’l Corp. v. Petroleos de Venezuela, S.A. that transfers by a non-debtor cannot be fraudulent under title 6, section 1304 of the Delaware Code (the “Delaware Uniform Fraudulent Transfer Act” or “DUFTA”).  Notwithstanding that the transfers at issue were allegedly orchestrated by a debtor with the express purpose of defrauding a creditor and notwithstanding the transferor’s intentional and knowing participation in the alleged… Read More

Two Clear-Cut Decisions of the Supreme Court – Narrowing Both Section 546(e)’s Securities Safe Harbor in Merit and the Standard of Review for Non-Statutory Insider Determinations in U.S. Bank

Merit Mgmt. Group, LP v. FTI Consulting, Inc., 583 U.S. __ (2018)

U.S. Bank Nat’l Ass’n v. Vill. at Lakeridge, LLC, 583 U.S. __ (2018)

On February 27, 2018, the United States Supreme Court issued its unanimous holding in Merit Management Group, LP v. FTI Consulting, Inc.  The Opinion, delivered by Justice Sotomayor, addressed a Congressional limitation placed on a trustee’s power to avoid certain transfers, such as preferential transfers under 11 U.S.C. § 547 or constructively fraudulent transfers under 11 U.S.C. § 548(a)(1)(B).  More specifically, section 546(e) of the… Read More

Delaware Bankruptcy Court Holds Section 546(e) Safe Harbor Does Not Bar a Litigation Trust, as a Creditor-Assignee, From Asserting State Law Constructive Fraudulent Transfer Claims

PAH Litig. Trust v. Water Street Healthcare Partners, L.P. (In re Physiotherapy Holdings, Inc.), No. 15-51238 (KG), 2016 WL 3611831 (Bankr. D. Del. June 20, 2016)

In rendering this Opinion and permitting a post-confirmation trust to pursue state law constructive fraudulent transfer claims against two former shareholders of debtor Physiotherapy Holdings, Inc. (“Physiotherapy”), the Honorable Kevin Gross of the Delaware Bankruptcy Court eschewed the recent holding of the Court of Appeals for the Second Circuit that section 546(e) of the Bankruptcy Code preempts not only state law fraudulent transfer claims brought by trustees in bankruptcy, but also those brought… Read More

Court Addresses Standards for Insolvency, Piercing the Corporate Veil Under Delaware Law, Avoiding Alleged Fraudulent Transfers, and More

Burtch v. Opus, LLC (In re Opus East, LLC), Adv. Proc. No. 11-52423 (MFW), 2015 WL 1404959 (Bankr. D. Del. March 23, 2015)

In this Opinion, Judge Mary F. Walrath addressed 67 counts brought by a chapter 7 trustee (the “Trustee”) against former fiduciaries of the debtor and related business entities.  The Trustee alleged theories of piercing the corporate veil, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, successor liability, avoidance of fraudulent and preferential transfers, unjust enrichment, disallowance and equitable subordination of claims, revocation of certificate of dissolution, imposition of constructive trust, tortious interference… Read More

Transferee’s Knowledge of Debtor’s Intent Not Relevant For Fraudulent Transfer Claim For Actual Intent To Defraud

SB Liquidation Trust v. Preferred Bank (In re Syntax-Brillian Corp.), Nos. 13-1373, 13-1959, 2014 WL 3893292 (3d Cir. Aug. 11, 2014)

In these consolidated appeals stemming from a 2011 Bankruptcy Court decision, the Third Circuit vacated the Bankruptcy Court’s dismissal of certain fraudulent transfer claims against appellee Preferred Bank because the debtor’s intent determines whether a fraudulent transfer claim may be maintained, not the transferee-defendant’s knowledge of the debtor’s intent.  However, the Court affirmed the Bankruptcy Court’s dismissal of all other claims.

The Third Circuit and Bankruptcy Court Opinions detail an alleged fraudulent scheme by certain… Read More

Unconscionability Claim Dismissed; Fraudulent Transfer Claim Survives

Ritz Camera & Image, L.L.C. v. Canon U.S.A., Inc. (In re Ritz Camera & Image, L.L.C.), Adv. No. 12-50986 (KG) (Bankr. D. Del. Feb. 4, 2014)

This Memorandum Opinion opines on a routine motion to dismiss federal bankruptcy and state law claims asserted by a chapter 7 trustee against defendant Canon U.S.A., Inc. (“Canon“).  The adversary proceeding was commenced by the trustee following the 2012 filing and conversion of the chapter 11 proceedings commenced by electronics and camera merchandisers, Ritz Camera Centers and its affiliated debtors.  In connection with the debtors’ first… Read More