- Topic: Fraudulent Transfers
Providers of services acting as mere conduits for parties transferring money remain protected from fraudulent conveyance actions under the United States Bankruptcy Code, at least according to a recent bankruptcy court decision in the Eleventh Circuit.
- New Jersey District Court Holds That a Real Estate Tax Foreclosure Sale Can Be Set Aside as a Preference under Section 547 of the Bankruptcy Code
Recently in Hackler v. Arianna Holding Co., the U.S. District Court for the District of New Jersey held that a real estate tax foreclosure sale can be set aside as a preferential transfer under Section 547 of the Bankruptcy Code.
On January 11, the Third Circuit issued a decision in a case that limited the reach of the Rooker-Feldman doctrine as a defense to bankruptcy avoidance actions. The court’s reasoning, however, has implications that go well beyond the particular facts of the case.
Despite the Supreme Court cautioning that the “reasonably equivalent value” principle would in most cases remain similar to a market-value definition, and refusing to force its holding on other forced-sale proceedings, on Sept. 8, 2016, the Ninth Circuit became the third federal appeals court to extend BFP’s holding to real estate tax sales.
On September 8, 2016, the Ninth Circuit held in In re Tracht Gut, LLC v. L.A. Cnty. Treasurer & Tax Collector that California real estate tax sales are for reasonably equivalent value and cannot be set aside as fraudulent transfers.
- Client Alert
On January 20, 2016, the Seventh Circuit held that Illinois real property tax sales cannot be deemed to be for “reasonably equivalent value” as a matter of law. Applying the general rule of §548(a)(1)(B), the Court noted that tax sales do not involve competitive bidding and the bid amount bears no relationship to the value of the underlying real estate.
- Client Alert
The thought of more litigation can be intimidating, but through awareness of the process, working with your attorney to focus the issues, and analyzing the possibility of a recovery, the process can be mastered and work in your favor to turn your paper judgment into cash.