FRAUDULENT CONVEYANCES Nassau Academy of Law CLE Live ...

397 B.R. 642 Page 2397 B.R. 642(Cite as: 397 B.R. 642)Law §§ 272-275.[4] Fraudulent Conveyances 273186k273 Most Cited CasesBurden of proving actual intent of transferor is on partyseeking to set aside conveyance as actually fraudulent tocreditors under New York law. N.Y.McKinney's Debtorand Creditor Law § 276.[5] Fraudulent Conveyances 15186k15 Most Cited Cases[5] Fraudulent Conveyances 16186k16 Most Cited CasesParty seeking to set aside conveyance as actually fraudulentto creditors under New York law can establish requisiteintent on part of transferor to hinder, delay or defraudby demonstrating existence of certain "badges of fraud,"badges that include: (1) lack or inadequacy of consideration;(2) family, friendship or close associate relationshipbetween parties; (3) retention by transferor of possession,benefit or use of property in question; (4) financial conditionof transferor before and after transfer; (5) existenceor cumulative effect of pattern or series of transactions orcourse of conduct after debt was incurred, after the onsetof financial difficulties, or during pendency of threat ofsuit by creditors; and (6) chronology of events and transactionsunder inquiry. N.Y.McKinney's Debtor and CreditorLaw § 276.[6] Courts 509106k509 Most Cited CasesPrior determination by state divorce court to incorporateprovision of marital settlement agreement awarding residenceto wife did not prevent trustee, in subsequent Chapter7 case filed by debtor-husband, from seeking to setaside transfer of residence to wife as fraudulent conveyanceon theory that any such cause of action threatened tooverturn results of state court's judgment in violation ofRooker-Feldman doctrine; doctrine did not bind trustee,as nonparty to prior divorce action.[7] Courts 509106k509 Most Cited CasesRooker-Feldman doctrine applies only to individuals thatwere parties to state court proceeding; nonparties to statecourt proceeding cannot be bound by doctrine.[8] Bankruptcy 2650(2)51k2650(2) Most Cited Cases[8] Bankruptcy 270451k2704 Most Cited Cases[8] Fraudulent Conveyances 95(11)186k95(11) Most Cited CasesTransfer of debtor's interest in former marital home to hisestranged wife as part of distribution of marital assets instate court divorce action, just 125 days prior to debtor'sfiling for Chapter 7 relief, was not subject to avoidance bytrustee in exercise of strong-arm powers, as constructivelyfraudulent under New York law, nor could it be avoidedunder bankruptcy fraudulent transfer statute, though transferwas effected as part of marital settlement agreementbetween parties, which was only later approved by statecourt and incorporated into judgment of divorce; no evidencewas presented of any fraud or collusion betweenparties, so that state divorce court's subsequent approvalof that division as part of regularly conducted divorceproceedings conclusively established "reasonably equivalentvalue." 11 U.S.C.A. §§ 544, 548(a)(1)(B);N.Y.McKinney's Debtor and Creditor Law §§ 272, 273,275.[9] Bankruptcy 2650(2)51k2650(2) Most Cited Cases[9] Fraudulent Conveyances 95(11)186k95(11) Most Cited CasesAbsent extrinsic fraud or collusion among divorcing parties,the division of marital assets which is agreed to byparties and which is contemporaneously or subsequentlyapproved by matrimonial court, and incorporated intodivorce decree, conclusively establishes "reasonablyequivalent value," so as to prevent subsequent attempt toset that division aside on constructive fraudulent transfertheory.[10] Bankruptcy 2650(1)51k2650(1) Most Cited Cases[10] Bankruptcy 270451k2704 Most Cited Cases[10] Fraudulent Conveyances 95(11)186k95(11) Most Cited CasesBankruptcy court should not interfere with outcome ofstate court divorce action, by setting aside its distributionof marital assets on constructive fraudulent transfer theory,if this distribution was result of regularly conducted© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.