Tag Archives: Property of the estate

Aiding and Abetting Fraudulent Transfers

Aiding and Abetting Fraudulent TransfersAiding and abetting fraudulent transfers. Can a Trustee maintain an action against parties who were directly involved in the implementation of a fraudulent transfer, but were not the recipient of any of the fraudulently transferred property? Would it matter if the involved party were an attorney? It depends on where you are.

Two bankruptcy courts have addressed this issue and made contrary holdings, based on differing state law. In the case of In re Parker, 2009 WL205011 (Bkrtcy. E.D. N.Y.), Judge Eisenberg held that applicable New York law “does not recognize a cause of action against parties for aiding and abetting a fraudulent conveyance because …the parties were neither transferees of the assets nor beneficiaries of the conveyance.” Further, the status of one party as an attorney did not change this finding. The Trustee’s only remedy was avoidance of the transfer and recovery of the transferred property for the bankruptcy estate.

In the case of In re Restaurant Development Group, Inc. 397 B.R. 891 (Bkrtcy.N.D. Ill. 2008), Judge Schmitterer noted that Illinois courts recognize claims for conspiracy against attorneys where there is evidence of participation in a plan with their clients to commit fraud. Though acknowledging that other states, under their version of the Uniform Fraudulent Transfers Act, have not found and do not recognize aiding and abetting claims against non-recipients of fraudulent transfers: The Court found such liability under Illinois law. If you have a question about the liability of aiding and abetting fraudulent transfers you should seek the advice of an experience bankruptcy attorney.

For more information about Bankruptcy and aiding and abetting a fraudulent transfers  – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

Are Pre-petition checks delivered post-petition avoidable?

Are Pre-petition checks delivered post-petition avoidable?Are pre-petition checks delivered post-petition avoidable?   Here’s the story:  One day before filing for bankruptcy, a Debtor obtained a cashier’s check payable to his former personal injury attorney.  The check was sent express mail to the law firm’s post office box. The Trustee learned of the transaction, and established that the cashier’s check was not negotiated until five days after the debtor’s petition was filed. When the Trustee sought to avoid the payment under § 549,
the defendant (the personal injury attorney) argued that delivery of the check was before the petition was filed.  In re Scheu, 356 B.R. 751 (Bkrtcy. D. Idaho 2006 ).

Judge Pappas cited In re Mora, 199 F.3d i024 (9th Cir. 1999). which held that “the transfer of a cashier’s check for purposes of § 547(b) occurred at the time it was delivered rather than honored.” Applying Mora to § 549, the issue to be determined in this case was whether the transferee received the cashier’s check before the petition was filed. Based on the Trustee’s showing that the check was negotiated post-petition, the Court found the burden was on the transferee to prove it was delivered pre-petition. Refusing to take judicial notice that “express mail” is delivered on the day following mailing; the Court held for the Trustee, due to the defendant’s inability to prove when the check was actually received. Therefore, the check mailed before the debtor’s petition was presumed to be delivered post-petition and was avoidable under § 549.

Are Pre-petition checks delivered post-petition avoidable? For more information about Bankruptcy and the questions – are pre-petition checks delivered post petition avoidable – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

Defective Attestation in security deeds fatal under Georgia law

Defective Attestation in security deeds fatal under Georgia lawDefective Attestation in security deeds fatal under Georgia law – Is a defective attestation in security deeds fatal under Georgia Law. The answer is likely. Here’s a story about one case and how the Judge Massey looked at the problem.

A Debtor owned a home subject to a security deed that was completely unattested. In the companion case, there was an official witness but no unofficial witness to the security deed on the home, one of each is required under Georgia law.

The Trustee successfully avoided each mortgage in his capacity as a bona fide purchaser of real property. In re Hagler, 429 B.R. 42 (Ban kr. N.D. Ga., December 10. 2009), and In re Codrington, 2009 WL 649 7837 (Bankr. N.D. Ga.. December 10, 2009). In both cases, the subject security deeds had been admitted to record. The trustee however challenged them on the basis that they could not be “duly filed, recorded, and indexed on the appropriate county land records in order to provide constructive notice to subsequent bona fide purchaser unless they were properly attested,

The trustee argued that the word “duly” was synonymous with being in pro per form. Judge Massey held that these security deeds were patently defective as distinguished from being latently defective. Security deeds containing latent defects in attestation would nevertheless provide constructive notice to a bona fide purchaser if admitted to record. The lenders argued that the law required constructive notice regardless of whether a defect was latent or patent so long as it was accepted for recording by the clerk of the court. Judge Massey disagreed and granted summary judgment to the Trustee in each case. The court gives the following detailed analysis of the rationale behind the attestation requirements:

“The court cannot agree that the Legislature meant to protect lenders (and in reality negligent lawyers and title insurers who rely on them) at the expense of a system of recordation designed to inspire confidence in the real estate market. Attestation serves to enhance the reliability of a deed to increase the odds that the grantor in fact executed the deed. It creates a presumption of genuineness (cite omitted) for the purpose of inducing the public to act on that presumption …. constructive notice is another way of saying that duly filed, recorded, and indexed deeds and mortgages are worthy of a presumption of genuineness which enhances predictability and thereby encourages commerce in real property,

An unattested deed cannot be presumed genuine merely because the clerk erred by recording it. Moreover, the lenders’ arguments would provide no penalty on anyone for presenting or accepting defective deeds and would reward the negligence of lenders and their agents in those few instances in which a county clerk’s employee carelessly accepts a defective deed. It would hobble, with a single sentence (In a section that begins by commanding clerks not to accept unattested deeds) , a time- tested system of recording real estate transactions at the core of which is a general and well grounded suspicion of unattested deeds , . . [and] tend to lead to an increase in the presentation of fraudulent deeds .”

If you have a questions about whether a defective attestation in security deeds is fatal under Georgia Law – you should seek an experience bankruptcy lawyer.

Defective Attestation in security deeds fatal under Georgia law – for more information about Bankruptcy and security deeds – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.

Bankruptcy and Tax Refunds

Bankruptcy and Tax RefundsBankruptcy and Tax Refunds. After a bankruptcy, can I keep tax refunds or can I use my tax refunds to pay my bankruptcy attorney? If you have this question you should seek advice from a Bankruptcy Attorney. Here’s what happened in In re Bailey, 380 B.R. 486 (6th Cir. BAP 2008).

After filing their case, the Debtors received tax refunds derived from pre-petition earnings. On advice of counsel that the funds were exempt, they used part of this money to pay their counsel’s attorney fee. The Trustee subsequently filed a turnover motion under section 542(a), and the Bankruptcy Court ruled for the Trustee, finding the funds were not exempt and ordering the Debtors to pay the entire amount, including what they had paid their attorney. Appeal was taken to the BAP.

Writing for the BAP, Judge Gregg first found that the erroneous advice of counsel regarding the bankruptcy and tax refunds did not crate a defense to the turnover action. Further, turnover was appropriate because the tax refunds was property of the bankruptcy estate which was in the Debtor’s possession during the pendency of the bankruptcy proceeding.

The Court noted that under pre-1978 Code law, as held by the Supreme Court in a 1948 case, tax refund turnover would not be permitted if the defendant did not have possession of the tax refund when the turnover action was filed. However, under the 1978 Code amendments, the Trustee’s recovery rights were expanded in section 542 to include recovery of “such property, or the value of such property”. The addition of the words “or the value of such property” where held to specifically apply to this situation, where the Debtors are in control of property and are liable for its unauthorized transfer.

For more information about Bankruptcy and Taxes  – contact Cynthia Remboldt, at the Remboldt Law Firm at 404-348-4081. FREE consultations can be scheduled by calling 404-348-4081.  Evening and Weekend hours are available to meet with an attorney.  If bankruptcy turns out to be the best way to move forward considering your alternatives, goals and financial challenges, payment plans are available if you need them.