§ 550

Sanders v. Quan Ky Hang (In re Hoa Ky Hang)

Plaintiff, the chapter 7 trustee, sought to avoid the transfer of the debtor's former residence and the proceeds from the refinancing and sale thereof, pursuant to 11 U.S.C. § 544(b), and to impose liability upon the defendant transferee, the debtor's son, under 11 U.S.C. § 550. The son's defense was that he gave reasonably equivalent consideration in exchange for the transfer.
Ruling: 
Contstructive trust imposed on house purchased by debtor's son with proceeds of sale of house preferentially transferred to him by debtor.
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Rieser v. Moorman (In re Equity Land Title Agency Inc.)

Defendants, recipients of allegedly avoidable transfers, moved to dismiss an adversary complaint filed against them by the chapter 7 trustee to recover those transfers. At issue was whether the trustee might properly pursue a claim per 11 U.S.C. § 550 against defendants based upon the court's earlier decision in a previous adversary proceeding despite the fact that defendants were not parties therein nor in privity with any other party thereto.
Ruling: 
Trustee could not seek to avoid transfers based on court's earlier decision to which transferees were not parties.
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Terry v. Meredith (In re Meredith)

An involuntary chapter 7 bankruptcy proceeding was filed against appellee debtor. Appellant trustee also sought the avoidance of an allegedly fraudulent transfer of the debtor's accounting practice to appellants, a corporation and the debtor's wife, and its return to the estate. The bankruptcy court denied the trustee's prayer for restitution to the estate from the wife. The trustee appealed.
Ruling: 
Transfer of accounting business to corporation of which debtor's wife was sole shareholder was not fraudulent as wife was not initial transferee.
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Huisinga v. Greater Quad City Auto Auction (In re Hocken)

Plaintiff, a chapter 7 trustee, filed an action against defendant, an auto auction company (auction), to obtain turnover of proceeds, pursuant to 11 U.S.C. § 550, that the trustee claimed belonged to the estate.
Ruling: 
Trustee could avoid return of vehicle to auction house where it had been purcahsed by debtor.
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Alexander v. J. Martin & Assocs. (In re Terry Mfg. Co.)

An indicted officer of debtor company retained a law firm. Per the fee agreement, the law firm was to be paid a flat fee plus an investigator fee. The law firm brought in another attorney (not a member of the law firm). The law firm paid both the attorney and investigator (defendants) for services rendered. Plaintiff bankruptcy trustee sought to recover the payments to defendants as fraudulent conveyances. Defendants moved for summary judgment.
Ruling: 
Attorney and investigator paid by debtor's law firm were not liable to trustee as immediate good faith transferees of law firm as initial transferee.
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Dzikowski v. National Trust Bank of Fla. (In re Prudential of Fla. Leasing Inc.)

Plaintiff chapter 7 trustee for the estate of debtor filed an adversary action against defendant bank to recover under 11 U.S.C. § 550 approximately $900,000 from 11 transfers. The parties both moved for summary judgment. The bankruptcy court granted final summary judgment for the bank. The District Court for the Southern District of Florida affirmed the final summary judgment. The trustee appealed.
Ruling: 
Federal common law allowed trustee to seek recovery of funds transferred by debtor to bank as part of a Ponzi scheme.
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Schmidt v. United States Marshall Serv. (In re Villarreal)

Plaintiff bankruptcy trustee filed suit alleging that debtor fraudulently conveyed land to defendant individual, and transferred the same land to a company. The amounts paid by the company were seized as proceeds of drug trafficking. The trustee asserted that the civil forfeiture proceeding against the funds violated the automatic stay. The trustee moved for default judgment against the individual. Defendant marshals service moved to dismiss.
Ruling: 
Bankruptcy court could avoid fraudulent transfer of land involved in concurrent federal drug forfeiture proceeding.
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Broadway Advisors LLC v. Hipro Elecs. Inc. (In re Gruppo Antico Inc.)

Defendant filed a motion for judgment on the pleadings in chapter 11 debtor's adversary proceeding, which alleged that transfers made by debtor to defendant within 90 days prior to the bankruptcy petition date were avoidable as preferences pursuant to 11 U.S.C. §§ 547(b) and 550.
Ruling: 
"Mere conduit" defense to avoidance applied to entity that forwarded debtor's payments to the company it serviced.
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Alberts v. HCA Inc. (In re Greater Southeast Cmty. Hosp. Corp.)

In a jointly administered chapter 11 proceeding, plaintiff, a liquidating trustee for debtors, brought an adversary action against defendant transferees seeking to recover transfers under the Illinois Uniform Fraudulent Transfer Act, 740 Ill. Comp. Stat. 160/1 et seq., pursuant to 11 U.S.C. § 544. One transferee filed a motion for summary judgment as to all counts against it in the trustee's third amended complaint.
Ruling: 
Transferee pursuant to asset purchase agreement for subsidiary debtor which provided for setoff of funds was initial transferee from which trustee could recover.
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Bakst v. Sawran (In re Sawran)

The debtor filed for relief under chapter 7. The trustee was granted a judgment on the pleadings for a preferential transfer that the debtor made to the father. The trustee filed a subsequent action to recapture money that the father had transferred to defendants, a son and daughter-in-law, and a daughter, as subsequent transferees under 11 U.S.C. § 550(a). The court issued findings and conclusions.
Ruling: 
Recovery of preferential payments from subsequent transferors allowed solely to the extent of postpetition payments to debtor.
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