Yes, the use of the word "Query" is with tongue firmly in cheek...but I have a professor here who does it, apparently that one Wash U guy said it, and it's now an official new heading for my posts...meaning, I have a question I need answered. I figure this would be a useful way for me to ask questions about things I don't understand, and HOPEFULLY solicit some sort of response. So...here:
What the fuck is a fraudulent transfer in creditor/debtor law? My professor just spent two hours trying to relate corporate veil piercing and equitable subordination back to the normative principle of fraudulent transfers...and he never explained what a fraudulent transfer was. There are so many pronouns and vagaries in the definition that I can't quite grasp the baseline principle. So please, someone, tell me. And when you do tell me, use examples.
My impression is that if I lend some Jew a bunch of money (imagine that!), and when the due date came, he lent it all to someone else, let's call him...Antonio...then HIS loaning of the money to Antonio is the fraudulent transfer and I can get it back? Is there actually "fraud" (ie. misrepresentation) involved anywhere in the transaction?
If i'm right, then at least give me more examples, because I still can't quite grasp the core of the idea.
3 comments:
Dick. It's not boring. I just don't get it.
BUT...at Wash U there have been two anonymous blogs started solely for the purpose of mocking either a single gunner, and one that is now just about railing on any and all gunners.
Ten bucks says you're a gunner.
Hey baby
This might have something to do with it. Fraudulent transfers in bankruptcy are those often made right before bankruptcy proceedings are filed. The debtor is trying to get rid of his assets through transfers to creditors he feels more obligated to/prefers/needs etc, who might not be the "priority" secured creditors who are waiting anxiously to "legally" be the first in line to get a piece of the pie once the debtor declares bankruptcy (and his assets are distributed). For a corporation, when it is on the brink of bankruptcy (within the "zone of insolvency"), then creditors can force it to declare an "involuntary" bankruptcy in order to more or less freeze its assets and keep it from spending or tranferring them away. During the "zone of inzolvency period" right before the bankruptcy filing, the directors' fiduciary duties shift from serving the shareholders, to serving creditors. So I would imagine, that if fradulent transfers are proven during the "zone of insolvency" right before the bankruptcy filing, when the creditors are owed the upmost duty of care to preserve or increase assets, then the corporate veil can be peirced by creditors, rather than shareholders, and the directors of the corp could be found personally liable. This piercing would then affect the equitable subordination of creditors (ie how creditors have to get in line once a debtor declares bankruptcy based on the "priority" of their claims-meaning whether or not their claim is secured by collateral), because I am pretty sure equitable priniciples kick in (instead of bankruptcy law which has an order for distributing assets to creditors) since the claim is now in equity (ie fraudulent transfer in light of fid duties owed to creditors) and the order of distribution under bankruptcy law does not have to be followed.
Anyway, this could be a bunch of bs.....just interesting you mentioned it b/c it came up in different ways in corp and bankruptcy recently. Doubt this helps but it was worth a try.... :)
No, I think that makes total sense. But then If I'm not mistaken, then it has nothing to do with "fraud" in the misrepresentation sense, right?
Post a Comment