FRAUDULENT CONVEYANCES Nassau Academy of Law CLE Live ...

397 B.R. 642 Page 13397 B.R. 642(Cite as: 397 B.R. 642)fendant had separate property claims for the loan. Thisratification occurred more than ninety (90) days beforeDebtor filed for bankruptcy protection. As such, theDebtor did receive value for the release of his obligationsfor the loan. Had the loan not been released, the parentsmight have asserted an equitable lien against the MaritalResidence.Based upon the foregoing analysis, this Court holds thatthe Transfer was not a fraudulent transfer, and therefore,the Trustee's Claim under Section 548 must fail. Accordingly,for the reasons stated above, the Court finds thatthat portion of the Debtor's motion seeking summaryjudgment on Count 1 of the Amended Complaint shouldbe granted, and that portion of the Trustee's Cross-Motionon Count 1 of the Amended Complaint should be denied.The Transfer Was Not a Constructive Intent FraudulentConveyanceIn Count 2 of the Amended Complaint, the Trustee allegesthat the Transfer can *657 be avoided under DCL §273 as a constructively fraudulent conveyance. An essentialelement to proving a constructively fraudulent conveyanceis that the transfer lacks fair consideration. Asnoted above, DCL § 272 defines fair consideration. ThisCourt adopts the above analysis of the exchange of considerationas it relates to Count 1 of the Amended Complaint,and hereby incorporates by reference that analysiswith respect to Count 2 of the Complaint. As a result,Debtor received fair consideration as a matter of law.Therefore, that portion of Defendant's motion seekingsummary judgment as to Count 2 of the Amended Complaintshould be granted, and that portion of the Trustee'sCross-Motion as to Count 2 of the Amended Complaintshould be denied.The Transfer Was Not a Conveyance by a Person Aboutto Incur DebtsThe Trustee in Count 3 of the Amended Complaint seeksto avoid the Transfer under DCL § 275 as a conveyancemade by a person about to incur debts. As with DCL §273, an essential element to the DCL § 275 claim is thatthe transfer was made or incurred without fair consideration.The Court adopts its analysis and conclusion above,that Debtor received fair consideration as a matter of law.Therefore, that portion of Defendant's motion seekingsummary judgment as to Count 3 of the Amended Complaintshould be granted, and that portion of the Trustee'sCross-Motion as to Count 3 of the Amended Complaintshould be denied.The Transfer Was Not a PreferenceCount 5 of the Amended Complaint seeks to avoid theTransfer as a preference under Section 547. First, as to theparents of the Defendant, repayment of their loan was notan insider preference. In addition, Defendant did not receivea preference.[13][14] The Trustee bears the burden of proof on allelements of a preference claim under Section 547. Includedwithin those elements are insolvency of the debtorat the time of the Transfer, under Section 547(b)(3), andthat the transferee received more than it would have receivedunder Chapter 7 had the transfer at issue not beenmade, under Section 547(b)(5). The Trustee has failed toraise a genuine issue of material fact on either of theseelements.Section 547(f) creates a presumption that the Debtor wasinsolvent, but that presumption applies only to the ninety(90) days preceding the petition date. Here, the Transferoccurred ninety-four (94) days preceding the petition dateif measured from the Decree of Divorce, or one hundredand twenty-five (125) days prior to the petition date ifmeasured from the date of the Transfer itself. As such,there is no presumption of insolvency.The only evidence of solvency of the Debtor before thisCourt is Debtor's retention of his $92,000 annuity andDebtor's retention of certain personal property. As Debtorclearly had equity in the Marital Residence, and was relievedof all other marital liabilities, the Court cannotconclude that a genuine issue exists as to Debtor's insolvencyat the time of Transfer.Moreover, the Trustee did not provide evidence of insolvency.He simply stated in his Affirmation that "Debtorwas insolvent at the time the parties entered into the SettlementAgreement." [dkt item 17, Ex. 2, 3] This unsupportedconclusion is not adequate under Anderson andMatsushita to raise a genuine issue of material fact. SeeAnderson, 477 U.S. at 249, 106 S.Ct. 2505, andMatsushita, 475 U.S. at 586, 106 S.Ct. 1348. Moreover,the Trustee's assertion does not address November 11,2003, when the Transfer occurred, or December 10, 2003,when the Judgment of Divorce was entered. As such, theTrustee *658 did not raise a genuine issue of material facton Debtor's insolvency.Therefore, that portion of Defendant's Motion seekingsummary judgment as to Count 5 of the Amended Complaintshould be granted, and that portion of the Trustee's© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.