Here Today, Gone Tomorrow and Other Consequences of Being Fraudulently Avoided

December 30, 2013

The Bankruptcy Code provides the debtor or trustee with a variety of tools to augment the estate through avoidance and recovery actions. This paper will address recent cases of interest involving fraudulent transfers within the 10th Circuit and in other jurisdictions. It has been stated that "[t]he purpose of fraudulent [transfer] law is to make available to creditors those assets of the debtor that are rightfully a part of the bankruptcy estate, even if they have been transferred away." If it were only that simple to determine what is rightfully part of the debtor's estate - however, it is not. With the constructive fraud provisions found in the Code and applicable state law, the transferee of the debtor's property will frequently have a different view as to its entitlement to retain the transferred property.


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