Constructively Fraudulent Transfer

A transfer of a property interest by a debtor that is avoidable—not on account of actual fraudulent intent—but because the debtor made a transfer in exchange for less than reasonably equivalent value. Such a transfer is avoidable if the debtor can show that at the time of the transfer it was insolvent or that the transfer rendered the debtor insolvent.

Fraudulent transfers occurring within two years prior to the bankruptcy filing are avoidable under Section 548 in bankruptcy cases filed on or after October 17, 2006 (or within one year in bankruptcy cases filed before October 17, 2006). State laws on fraudulent transfers utilize longer reach-back periods than two years (typically, four years) and can be used by estate representatives under some circumstances under Section 544.

Bankruptcy Code §§ 544, 548(a)(1)(B). See also Avoidance Action, Intentionally Fraudulent Transfer, Strong Arm Powers.

Email Term