FRAUDULENT CONVEYANCES Nassau Academy of Law CLE Live ...

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302 B.R. 760 Page 20302 B.R. 760(Cite as: 302 B.R. 760)1. lack or inadequacy of consideration;2. family, friendship or close associate relationshipbetween the parties;3. retention of possession, benefit or use of theproperty in question by the debtor;4. the financial condition of the party sought to becharged both before and after the transaction inquestion5. the existence or cumulative effect of a pattern orseries of transactions or course of conduct after theincurring of debt, onset of financial difficulties, orpendency of threat of suits by creditors; and6. the general chronology of the events and transactionsunder inquiry.See Salomon v. Kaiser (In re Kaiser), 722 F.2d 1574,1582-83 (2d Cir.1983). The Bankruptcy Courtpointed out that Sharp had not alleged any of thebadges of fraud in this case. See Bankr.Dec. at 522.Sharp protests that the badges of fraud are irrelevanthere because of the clear showing of the Spitzes' actualfraudulent intent, as demonstrated by the allegationsthat Sharp was grossly inflating its reportedsales and revenues, and using these inflated financialstatements to induce the Noteholders to advancesums far in excess of what they would have beenwilling to provide had they known Sharp's true financialpicture. See Sharp Mem. at 23-24.For the reasons state above, the judgment of theBankruptcy Court is affirmed. The clerk of the courtis directed to close this case.302 B.R. 760END OF DOCUMENT[25] Although the presence of any particular badgeof fraud is by no means a prerequisite to a finding ofactual intent to defraud, the badges of fraud appropriatelyfocus the inquiry on the circumstances that suggesta conveyance was made with fraudulent intent,viz. with the purpose of placing a debtor's assets outof the reach of creditors. As in Boston Trading, thefraud detailed in Sharp's complaint concerns themanner in which the debt to the Noteholders arose,not the subsequent conveyance of those funds toState Street, which was a legitimate creditor of Sharp.Finally, Sharp asserts that payment to State Streetwas made with the actual intent to defraud creditorsbecause it was made for the purpose of "buying"State Street's continued silence, and thus its assistancein the fraud. As noted supra, State Street owedno duty to Sharp or its creditors, and its silence didnot constitute an act of participation in the Spitzes'fraud. For these reasons, Sharp's intentional fraudulentconveyance claim fails.Conclusion© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
394 B.R. 721 Page 1394 B.R. 721, 50 Bankr.Ct.Dec. 192(Cite as: 394 B.R. 721)Westlaw Delivery Summary Report for DANIELS,JEFFREYDate/Time of Request:Wednesday, October 21, 2009 18:38 EasternClient Identifier:NALDatabase:FBKR-CSCitation Text: 394 B.R. 721Lines: 1560Documents: 1Images: 0The material accompanying this summary is subject to copyright. Usage is governed by contract with Thomson Reuters,West and their affiliates.United States Bankruptcy Court,S.D. New York.In re M. FABRIKANT & SONS, INC., et al., ReorganizedDebtors.The Official Committee of Unsecured, Creditors of M.Fabrikant & Sons, Inc.;and Fabrikant-Leer, International, Ltd., Plaintiff,v.JP Morgan Chase Bank, N.A.; ABN Amro Bank N.V.;Bank of America, N.A.; HSBCBank USA, National Association; Bank Leumi USA; IsraelDiscount Bank of NewYork; Antwerpse Diamantbank, N.V.; Sovereign PreciousMetals, Llc; andSovereign Bank, Defendants.Bankruptcy Nos. 06-12737 (SMB), 06-12739(SMB).Adversary No. 07-02780.Oct. 10, 2008.Background: Chapter 11 debtors' unsecured creditors'committee brought adversary proceeding against lendersand company from which one of the debtors had purchasedgold that was subsequently transferred to affiliatedentities, seeking to recover from defendants on fraudulenttransfer theory by collapsing transactions between debtorsand defendants on the one hand and debtors and affiliateson the other. Defendants moved to dismiss.Holdings: The Bankruptcy Court, Stuart M. Bernstein,Chief Judge, held that:(1) fraudulent transfer avoidance counts in complaint filedby unsecured creditors' committee, to extent grounded onactual, and not just a constructive, fraud theory, lackedparticularity required to satisfy heightened federal pleadingstandard;(2) committee's failure to allege facts supporting inferencethat lenders knew, or had reason to suspect, that loan proceedswould subsequently be transferred for less thanreasonably equivalent value to affiliates, or thatdebtors were insolvent at time, prevented committee fromstating avoidance claim against lenders on collapsedtransaction theory;(3) initial transferees that no longer retained any interestin the transferred property were not "necessary party" incause of action to recover from immediate or mediatetransferees; and(4) committee would be granted leave to amend.Motion granted in part; claims dismissed with leave toamend pleading.West Headnotes[1] Bankruptcy 2645.151k2645.1 Most Cited CasesUnder appropriate circumstances, multiple transactionswill be collapsed and treated as steps in a single transactionfor fraudulent transfer avoidance purposes. 11U.S.C.A. §§ 544, 548.[2] Bankruptcy 2645.151k2645.1 Most Cited CasesParty seeking to collapse a series of transactions forfraudulent transfer avoidance purposes must satisfy twoelements or prongs by demonstrating, first, that considerationreceived from initial transferee was reconveyed bydebtor for less than fair consideration or with actual intentto defraud creditors, and secondly, that initial transfereehad actual or constructive knowledge of entire scheme© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
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FRAUDULENT TRANFERENCESRonald M. Te
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Nursing home case_ Transfer of pers
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Sections 548 and 544 work in concer
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Ron Terenzi is a founding partner a
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