FRAUDULENT CONVEYANCES Nassau Academy of Law CLE Live ...

302 B.R. 760 Page 3302 B.R. 760(Cite as: 302 B.R. 760)subordinated notes, failed to sufficiently identify anyaffirmative act of participation by lender in principals'fraud, as required to support claim againstlender on aiding and abetting theory; allegation thatlender had allowed sale of notes to proceed by notexercising its contractual right to block borrowerfrom further borrowing alleged act that was in natureof one of omission rather than of commission, anddid not suffice.[16] Banks and Banking 10052k100 Most Cited CasesUnder New York law, bank's contractually bargained-forright to prevent borrower from engagingin any further borrowing by selling its subordinatednotes did not confer on bank any affirmative duty toprotect noteholders from actions of borrower's management,in engaging in such borrowing to obtainfunds to repay bank loan at time when bank allegedlyknew of massive fraud by debtor's management inoverstating its sales.[17] Fraudulent Conveyances 159(1)186k159(1) Most Cited Cases[17] Fraudulent Conveyances 162.1186k162.1 Most Cited CasesLender's acceptance of funds from borrower, in dollar-for-dollarrepayment of valid, preexisting loan,did not give rise to constructive fraudulent transferclaim under New York law, though lender allegedlyknew that borrower's management had raised fundsfrom sale of subordinated notes that operated as fraudon noteholders; lender's knowledge of fraudulent actsof borrower's management in connection with sale ofnotes did not affect its "good faith," for purpose ofconstructive fraudulent transfer claim, absent anyallegation of lender's participation in this fraud.N.Y.McKinney's Debtor and Creditor Law § 272.[18] Fraudulent Conveyances 77186k77 Most Cited Cases[18] Fraudulent Conveyances 86186k86 Most Cited CasesThere are three elements to "fair consideration,"within meaning of New York constructive fraudulentconveyance law: (1) recipient of alleged fraudulenttransfer must either convey property or discharge anantecedent debt in exchange; (2) exchange must befor a fair equivalent; and (3) exchange must be ingood faith. N.Y.McKinney's Debtor and CreditorLaw § 272.[19] Fraudulent Conveyances 159(2)186k159(2) Most Cited Cases"Good faith" is not lacking, within meaning of NewYork constructive fraudulent conveyance law, simplybecause transferee knows of transferor's unfavorablefinancial condition at time of transfer.N.Y.McKinney's Debtor and Creditor Law § 272.[20] Fraudulent Conveyances 114186k114 Most Cited CasesMere fact that payment is preferential, in sense that itis made by insolvent debtor to satisfy debt to onecreditor at the expense of others, does not make itconstructively fraudulent conveyance under NewYork law; correction of such preferential treatment isnot aim of fraudulent conveyance law.N.Y.McKinney's Debtor and Creditor Law § 272.[21] Fraudulent Conveyances 159(1)186k159(1) Most Cited CasesLender's acceptance of funds from borrower, in dollar-for-dollarrepayment of valid, preexisting loan,did not give rise to actual fraudulent transfer claimunder New York law, though lender allegedly knewthat borrower's management had raised funds fromsale of subordinated notes that operated as fraud onnoteholders; alleged fraud concerned manner inwhich debt to noteholders arose, and not the subsequentconveyance of those funds to lender, whichwas legitimate creditor of borrower. N.Y.McKinney'sDebtor and Creditor Law § 276.[22] Fraudulent Conveyances 9186k9 Most Cited CasesUnder New York law, if there is actual intent to hinder,delay, or defraud creditors by means of conveyance,then conveyance can be set aside even if debtorremains otherwise solvent, and even if fair considerationis given in exchange for transfer.N.Y.McKinney's Debtor and Creditor Law § 276.[23] Bankruptcy 272451k2724 Most Cited CasesCause of action to avoid transfer as actually fraudulentas to creditors must be plead with particularity asrequired by Federal Rule of Civil Procedure.© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.