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Commercial Fraud Committee


Post date: Wednesday, January 10, 2018

Section 101(54) defines “transfer” to mean “each mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with[] (i) property; or (ii) an interest in property.”[1] But is a deposit or wire transfer into a debtor’s bank account a “transfer” within the meaning of § 101(54)?

Post date: Wednesday, January 10, 2018

Bankruptcy trustees have tested the limits of the § 546(e) safe harbor since its enactment. In case after case, the courts, with few exceptions, have expanded those limits — that is, perhaps, until now. On Monday, Nov. 6, 2017, the U.S. Supreme Court heard argument in the case of Merit Management Group LP v.

Post date: Monday, September 25, 2017

Section 727(b) of the Bankruptcy Code provides for the discharge of debts that arose prior to the petition date.

Post date: Monday, September 25, 2017

The U.S. Supreme Court has, for four decades, been rocking the boat [that’s Justice Blackmun’s metaphor] on bankruptcy court authority. First, they almost killed the Code, coming within one vote of declaring the entire Bankruptcy Code unconstitutional. Then, they limit and mess with it some more.

Abigail B. Willie, Career Law Clerk
Post date: Monday, September 25, 2017

Section 523(a)(2)(B) provides that an individual debtor’s debt is not discharged to the extent the debt was obtained by use of a statement in writing that (1) is materially false, (2) is respecting the debtor’s financial condition, (3) is one on which the creditor reasonably relied and (4) was caused by the debtor to be made or published with intent to deceive. Recently, in Privitera v.

Post date: Wednesday, June 21, 2017

Commingling of funds frequently occurs in fraud cases and is notably common in Ponzi scheme cases. It occurs when funds belonging to one party are deposited into the same bank account as funds that belong to a different party. Because money is fungible, it is not possible to trace exactly which dollars belong to which party if they reside in the same bank account.

Post date: Wednesday, June 21, 2017

On May 15, 2017, the Supreme Court in Midland Funding, LLC v.

Post date: Wednesday, June 21, 2017

When the trustee of a bankrupt company sues to avoid allegedly fraudulent transfers, one threshold element that he or she must generally show is that the transfer left the debtor with “unreasonably small capital.” Recent appeals in the SemCrude and Adelphia bankruptcy cases demonstrate that this a tough showing to make.

Post date: Wednesday, June 21, 2017

Section 544(b)(1) of the Code enables a trustee to “avoid any transfer of an interest of the debtor in property or any obligation incurred by the debtor that is voidable under applicable law by a creditor holding an unsecured claim that is allowable under section 502....”[1] Pursuant to § 544(b), a truste

Post date: Friday, April 28, 2017

In a recent decision, the U.S. Court of Appeals for the Sixth Circuit found itself “obliged to explore some uncharted territory of Ohio substantive and procedural jurisprudence” arising out of fraudulent transfer and related claims from a Ponzi scheme.


Tue, 06/06/2017

In Janvey v. Golf Channel, Inc., No. 13-11305 (5th Cir. Aug. 22, 2016), arising from the SEC enforcement action against Stanford International Bank, Ltd., pending in the U.S. District Court for the N.D. Tex., the U.S. Court of Appeals for the Fifth Circuit addressed the issue of whether trade creditors who fully perform in the ordinary course at market rates provide reasonably equivalent value to a Ponzi scheme, under the Bankruptcy Code and fraudulent transfer law in Texas (and beyond).

Tue, 11/29/2016

The topic of the most recent Commercial Fraud Committee call, discussed the Uniform Voidable Transactions Act (UVTA), formerly named the Uniform Fraudulent Transfer Act (UFTA), which was amended (and retitled) in 2014 for the first time since its creation in 1984.  According to the Uniform Law Commission, the amended Act, which strengthens creditor protections by providing remedies for certain transactions by a debtor that are unfair to the debtor’s creditors, addresses a small number of narrowly-defined issues and is not a comprehensive revision of the Act.

Mon, 09/19/2016

Guest speaker, James Lodoen, Esq., a partner at Linquist & Vennum, PLLP in Minneapolis, discusses Finn v. Alliance Bank (S. Ct. Minn. 2015), Kelley v. Opportunity Finance, LLC, et al. (In re Petters Company, Inc., et al.) (Bankr. D. Minn. May 31, 2016), and the Ponzi-scheme presumption.

Tue, 05/31/2016

The Commission recommended that section 550 be amended to permit the trustee to name an alleged subsequent transferee as a defendant in the original complaint to avoid any transfer under Bankruptcy Code sections 544, 545, 547, 548, 549, or 553(b), and to recover such property under section 550, rather than filing an avoidance action prior to filing a recovery action, as the Code currently requires.

Fri, 04/15/2016

People and Assets on the Move Overseas: What You Need to Know to Hold Everything Still and Seize the Assets

Tue, 01/19/2016

The Chapter 11 Commission Report recommended that the burden of proof for appointing a Chapter 11 Trustee under 1104(a) be changed from clear and convincing evidence to a preponderance of the evidence. The Commissioners determined that the existing more stringent standard has a chilling effect on parties-in-interest seeking the appointment of a Trustee, that the benefits of having a Trustee in appropriate cases outweigh the risks of abuse and unnecessary distractions that a lower standard could bring, and that adopting a preponderance of the evidence standard would resolve a split among the courts on this issue.

Thu, 11/12/2015

During this call, Geoffrey L. Berman discussed the ABI’s Commission Report to Study the Reform of Chapter 11, particularly its recommendations related to In Pari Delicto. In addition, the committee’s leadership discussed the various projects and presentations the committee is working on in the coming months.

Sat, 04/18/2015

Advanced Defenses to Avoidance Actions: Understanding Them Can Make All The Difference

Mr. Eric D. Madden
Reid Collins & Tsai LLP
Thanksgiving Tower 1601 Elm St Ste 4250
Dallas TX
(214) 420-8901

Mr. Eric S. Rein
Horwood Marcus & Berk Chartered
500 W Madison St Ste 3700
Chicago IL

Mr. Ryan W. Blackney
Freeborn & Peters LLP
311 S Wacker Dr Ste 3000
Chicago IL
(312) 360-6617

Mr. Walter F. McArdle, Esq.
Newsletter Editor
Spain & Gillon, LLC
2117 2nd Ave N Ste 100 The Zinszer Bldg
Birmingham AL
(205) 581-6295

Ms. Virginia Tate
Communications Manager
FAI International, Forensic Accounting & Investigations
101 W Ironwood Dr Ste 164 PO Box 3821
Coeur D Alene ID
(208) 765-5432

Ms. Melissa Davis, CPA, CIRA, CFE
Education Director
KapilaMukamal, LLP
1000 S Federal Hwy Ste 200
Fort Lauderdale FL
(954) 761-1011

Mr. Nathaniel J. Palmer
Membership Relations Director
Reid Collins & Tsai LLP
1301 S Capital of Texas Hwy Ste 300C
Austin TX
(512) 647-6107

Mr. Stephen V. Falanga, Esq.
Special Projects Leader
Walsh Pizzi O'Reilly Falanga LLP
1037 Raymond Blvd 6th Flr
Newark NJ
(973) 757-1107