at 1589 ("If that recipient [here, the Debtor] later files for bankruptcy, any debt traceable to' the fraudulent conveyance
, will be nondischargeable under [section] 523(a)(2)(A).") The fact that the creation of the [$160,000 debt] itself--i.e., the obligation owed by Chrysalis to Husky--was not due to any fraud (but rather due to the fact that Chrysalis failed to pay the obligations that it owed to Husky under the Master Credit and Sales Agreement) does not change this conclusion.
Account must be taken of the remedial section of the Uniform Fraudulent Conveyance
Act (still the law in New York).
As one scholar explained, "because LBOs are premised on the existence of hidden value not recognized in book values, using book values to measure solvency in LBOs would render almost every LBO target insolvent, effectively voiding every LBO challenged in court as a fraudulent conveyance
." (88) This is also a perfect example of hindsight bias, which I will discuss next: the judge used the fact that the target was currently in liquidation to impose a liquidation value on the target months earlier when it underwent the buyout.
"Not only has GEA sought no injunctive relief; it waited two years after discovering the alleged fraudulent conveyance
to file suit at all.
Such a gift could be recovered by the company as a fraudulent conveyance
regardless of whether the children were in any way at fault.
Further, the Court noted that prior to the Reform Act of 1978, fraudulent conveyance
claims were not decided by a bankruptcy trustee but were decided as a separate jury trial in a state or federal court.
The bondholders allege the going-private deal -- financed by banks who are ahead of them in the line for access to Tribune's post-bankruptcy assets -- was a "fraudulent conveyance
," a legal term meaning the banks financed the transaction knowing it would lead to an unsustainable business operation.
If the target company's creditors successfully argue that the target was insolvent at the time of the acquisition (or was rendered insolvent by the acquisition), and that the price paid was less than the "reasonably equivalent value" of the assets acquired, the court may find that a fraudulent conveyance
occurred, regardless of whether there was any intent on behalf of the parties to defraud creditors.
A fraudulent conveyance
is generally defined as one made with
The transfer may be considered a fraudulent conveyance
. If it is, they could lose both the property and their right to a bankruptcy discharge.
Moreover, nearly all states have adopted either the Uniform Fraudulent Transfer Act or Uniform Fraudulent Conveyance
"Our legal theory is fraudulent conveyance
, and we think it is a powerful legal theory," Cuomo said.