Fraudulent Transfers and the Subsequent Transferee Defense Under the Bankruptcy Code and UFTA / UVTA

Meeting or Overcoming the Defense for Subsequent Transferees of Payments From the Debtor

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, October 18, 2016

Recorded event now available

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Program Materials

This CLE webinar will discuss the defense to a fraudulent transfer claim for subsequent transferees of a payment from the debtor, the requirements to meet the defense, and the issue of value received in consideration for the transferred payment.

Description

The broad avoidance and fraudulent transfer recovery powers of debtors does not extend to subsequent transferees who provide “value” for the transfers in good faith without knowledge of the avoidability of the initial transfer from the debtor. The subsequent transferee defense is available under Section 550(b) of the Bankruptcy Code as well as the Uniform Fraudulent Transfer Act (UFTA), now known as the Uniform Voidable Transfers Act (UVTA).

“Value” means reasonably equivalent value, and the value does not even have to be provided to the debtor. In a recent ruling favorable to subsequent transferees, the Kansas Bankruptcy Court ruled there does not have to be substantial equivalency between the amount transferred and the amount tendered by the subsequent transferee in consideration of the payment.

The recent Tenth Circuit ruling in Klein v. King & King & Jones allowed a receiver to recover payments to a law firm for services on behalf of a third party made by an entity engaged in a Ponzi scheme. The court ruled the firm was not a subsequent transferee under the UFTA because it received the funds directly from the entity and the third-party beneficiary of the legal services was not involved in the transfer of funds.

Listen as our authoritative panel of bankruptcy practitioners reviews the defense to fraudulent transfer claims for subsequent transferees of a payment from the debtor. The panel will discuss best practices for third-party recipients of the funds to avail themselves of the defense and for debtors to challenge the defense.

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Outline

  1. Section 550(b) and UFTA/UVTA defense for subsequent transferees
  2. Requirements to meet the subsequent transferee defense
    1. What is “value” received in consideration for the transferred payment
    2. What constitutes good faith
    3. Who is a subsequent transferee
  3. Recent case law developments under the Bankruptcy Code and the UFTA/UVTA

Benefits

The panel will review these and other key issues:

  • What is “value” received in consideration for the transferred payment?
  • What must a subsequent transferee show to establish that it accepted the transfer in good faith?
  • What factors can be relied upon in distinguishing between an initial transferee and a subsequent transferee?

Faculty

Marc E. Hirschfield
Marc E. Hirschfield

Partner
Royer Cooper Cohen Braunfeld

Mr. Hirschfield is an experienced practitioner in all aspects of insolvency and reorganization law. He regularly...  |  Read More

Marc Skapof
Marc Skapof

Partner
Royer Cooper Cohen Braunfeld

Mr. Skapof is experienced in all aspects of insolvency and reorganization matters. He regularly represents receivers,...  |  Read More

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