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Power to Avoid a FC in a Chapter 13
Jeff:
I wouldn't expect a bk judge would allow you to pursue the FC for just your client. You would have to get the bk dismissed to take that approach. Why not move to convert and let the 7 trustee do the work?
I agree that a chapter 13 trustee won't likely pursue the transfer, more likely the trustee just objects to confo. My best advice is to move to convert.
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Dennis McGoldrick, 350 S. Crenshaw Bl., #A207B, Torrance, Ca 90503 310-328-1001-voice
> On Oct 6, 2014, at 10:28 AM, jsmith@cgsattys.com [cdcbaa] wrote:
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> My client is an unsecured creditor in a Chapter 13 that proposes to pay 10% to unsecureds. We have discovered a transfer of unencumbered, valuable real estate by the debtor to a family member that occurred more than 2 years pre-petition, less than 4 years pre-petition and the transfer deed says "bona fide gift, no-consideration, exempt inter family transfer deed". The debtor was probably not required to list the transfer in SFA 10 since the transfer was more than 2 years ago. I was not retained until after the 341(a) so I don't know if the 4 year transfer question was asked by the trustee, transcript is on the way.
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> If you assume the transfer is voidable as a FC in a Chapter 7 then the plan fails the liquidation analysis unless increased to 100%. I will object to confirmation on that basis, among others not relevant here.
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> My question is whether my client has standing to take it a step further. Sections 546 & 548 say the "trustee" has the right to pursue the FC actions under those sections. In a 13 I don't expect the trustee will, based on experience. Can a creditor bring that action in BK court? My spidey sense says no (trustee means trustee), but it also says that I can probably just do it in state court (i.e. sue the recipient of the FC directly). The problem with that is that, at least usually, the transferor and the transferee are both defendants in a state court FC action, in my experience. Putting the transferor/debtor in as a defendant would violate the stay.
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> If I cannot directly sue the transferee relative in BK court, then is the answer to get RFS to pursue the debtor to the extent necessary to make her a party to the state court FC action against relative? Sort of the same theory as RFS to pursue collateral sources?
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> Thoughts? Judge is VZ.
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> Thanks, Jeff Smith
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