Is this a recoverable fraudulent transfer? (CH 11)
Posted: Tue Jun 27, 2017 6:46 am
A fraudulent transfer complaint has already been filed by my DIP.
In the 2 years prior to filing, Debtor made payments totaling over $45K to
a lender on a piece of equipment. Debtor had use of the equipment valued at
much less than what debtor was paying for it. Debtor is not the borrower
nor a guarantor. Principal of debtor is the borrower, but Debtor has use of
the equipment and continues to make the payments.
Under 548:
(1) Debtor was insolvent during the time he was making the payments;
(2) Debtor made payments to lender for the benefit of an insider
(principal) since principal was the only one on the loan;
(3) Debtor *may have* received less than a reasonably equivalent value in
exchange for the payments, but this is unclear. Debtor had full use of the
equipment, however, Debtor was making monthly payments of over $2k/month on
equipment now worth $7K, while the outstanding loan is still $60K.
Creditor's counsel is posturing and wants me to dismiss my complaint since
it's "not a fraudulent transfer if the Debtor had "use of the equipment";
that's equivalent value."
Is creditor's counsel correct?
Holly Roark
Certified Bankruptcy Specialist*
*and Sports Lawyer*
holly@roarklawoffices.com **primary email address**
www.roarklawoffices.com
*Central District of California & District of Idaho* - Consumer Bankruptcy
Attorney
1875 Century Park East, Suite 600 Los Angeles, CA 90067
T (310) 553-2600; F (310) 553-2601
*By State Bar of California Board of Legal Specialization
A fraudulent transfer complaint has already been filed by my DIP.In the 2 years prior to filing, Debtor made payments totaling over $45K to a lender on a piece of equipment. Debtor had use of the equipment valued at much less than what debtor was paying for it. Debtor is not the borrower nor a guarantor. Principal of debtor is the borrower, but Debtor has use of the equipment and continues to make the payments.Under 548:(1) Debtor was insolvent during the time he was making the payments;(2) Debtor made payments to lender for the benefit of an insider (principal) since principal was the only one on the loan;(3) Debtor *may have* received less than a reasonably equivalent value in exchange for the payments, but this is unclear. Debtor had full use of the equipment, however, Debtor was making monthly payments of over $2k/month on equipment now worth $7K, while the outstanding loan is still $60K.Creditor's counsel is posturing and wants me to dismiss my complaint since it's "not a fraudulent transfer if the Debtor had "use of the equipment"; that's equivalent value."Is creditor's counsel correct?Holly RoarkCertified Bankruptcy Specialist*and Sports Lawyer
holly@roarklawoffices.com**primary email address**
www.roarklawoffices.com
Central District of California & District of Idaho - Consumer Bankruptcy Attorney
1875 Century Park East, Suite 600 Los Angeles, CA 90067T (310) 553-2600; F (310) 553-2601
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