Tag «Fraudulent Transfer»

Fifth Circuit Defends Prior Rulings that Ponzi Scheme Trade Creditors Do Not Provide Value Under Bankruptcy Code and Fraudulent Transfer Law Beyond Texas

Fifth Circuit Defends Prior Rulings that Ponzi Scheme Trade Creditors Do Not Provide Value Under Bankruptcy Code and Fraudulent Transfer Law Beyond Texas, After Texas Supreme Court Says They Do Under Texas UFTA if They Fully Perform in the Ordinary Course at Market Rates For nearly twenty years, R. Allen Stanford operated Stanford International Bank, …

Tolling Statute of Limitations for Claims of Entities in Receivership or Bankruptcy Previously Controlled by Wrongdoer

Adverse Domination Doctrine Under the adverse domination doctrine, the statute of limitations for bringing an action against the corporate wrongdoers is tolled when those wrongdoers continue to control or dominate the corporation and prevent it from discovering the malfeasance and taking remedial action against the malefactors. See Favila v. Katten Muchin Rosenman LLP, 188 Cal. …

Objective “Knew or Should Have Known” Standard Applies to Good Faith Defense to Actual Fraudulent Transfer Claim

While a defendant who received transfers from an insolvent or fraudulent enterprise in good faith and for reasonably equivalent value may ultimately defeat an actual fraudulent transfer claim, the plaintiff is not required to negate an anticipated good faith defense in the complaint to adequately state a claim. Such a defense is an affirmative defense …

A Receiver Has Standing to Pursue Fraudulent Transfer Claims on Behalf of Receivership Entity

As set forth in Scholes v. Lehmann and adopted by courts across the country, a Receiver has standing to pursue fraudulent transfer claims because the receivership entity in whose shoes the Receiver stands is deemed to be creditor of the Ponzi scheme or other fraudulent enterprise that was placed in receivership.  That seminal case and its ever-growing progeny …

Debtor/Transferor’s Actual Intent to Defraud May be Established Through Ponzi Scheme Presumption Based on Fraud Determination in Prior Action Against Debtor/Transferor

Application of the Ponzi Scheme Presumption To satisfy the intent element of a claim for actual fraudulent transfer for purposes of surviving a motion to dismiss, the plaintiff must either plead the facts establishing the debtor’s intent to hinder, delay or defraud its creditors with particularity (in Federal Court, pursuant to Rule 9 of the …

Receivership Estate, as Legal Identity Separate and Distinct From Receivership Entity, is Creditor of Receivership Entity for Purposes of Fraudulent Transfer Claims

Most court have adopted the traditional view that a receiver stands in the shoes of the entity that has been placed in receivership such that it can only assert those claims that the entity could have asserted.  See Scholes v. Lehmann, 56 F.3d 750 (7th Cir. 1995); Eberhard v. Marcu, 530 F.3d 122 (2d Cir. …

For Fraudulent Transfer Claims, Courts Should Apply Law of Jurisdiction in Which Debtor Is Located, Was Injured and Made the Transfer

For purposes of fraudulent transfer claims, courts should apply law of jurisdiction in which the debtor is located and was injured and from which the debtor made the transfer, notwithstanding any choice of law provision in a contract between the debtor and the transferee. A receiver bringing state law fraudulent transfer claims on behalf of …

Receivers’ Fraudulent Transfer Claims Are Not Barred by In Pari Delicto Doctrine: A Survey of Federal and State Court Decisions

A growing list of federal and state courts have determined that fraudulent transfer claims brought by an equity receiver are not barred by the doctrine of in pari delicto. While the following list includes many of the significant and most frequently-cited decisions setting forth or upholding this proposition of law, it is by no means …