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Minimizing Lender Risks of Fraudulent Transfer in Bankruptcy and Under the Uniform Voidable Transactions Act

Navigating the Contours of Lender "Inquiry Notice" and Due Diligence

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

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Conducted on Tuesday, March 14, 2017

Recorded event now available

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This CLE course will discuss risks lenders face when a borrower or other creditor challenges payments made by the borrower to the lender as a fraudulent transfer either in bankruptcy or under the Uniform Voidable Transactions Act. The program will discuss lender strategies for minimizing the risks of fraudulent transfer challenges before and after the loan is made.


The Seventh Circuit’s 2016 Sentinel Management Group decision illustrates the risks lenders face if they fail to exercise due diligence with respect to a borrower’s collateral. The court ruled that the lender could not assert a good faith defense to the debtor’s fraudulent transfers because the lender had knowledge of a potential problem with the collateral and/or the operations of the borrower and failed to follow up.

Senior lenders also face risks with respect to highly leveraged borrowers such as in a leveraged acquisition financing situation such as a leveraged buyout or a leveraged recap. In transactions which add substantial debt and give rise to a substantial risk of bankruptcy or insolvency, fraudulent transfers by a highly leveraged borrower to the lender may result in invalidation of the security interest or subordination of the lien.

Counsel to lenders must recognize red flags with respect to questionable conduct on the part of the borrower or high risk financial transactions that may give rise to fraudulent transfers, and take effective due diligence measures to investigate the conduct and proposed transaction and take steps to protect its lien.

Listen as our authoritative panel of finance attorneys analyzes fraudulent transfer risks that lenders face when payments made by the borrower to the lender are challenged under the Uniform Voidable Transactions Act. The panel will suggest measures lenders should take to minimize the risks of fraudulent transfer challenges before and after the loan is made.



  1. Overview of fraudulent transfer law
  2. “Inquiry notice” to lenders
  3. Effective due diligence measures
  4. Lessons from recent case law


The panel will review these and other key issues:

  • Under what circumstances is a lender at risk of unknowingly receiving a fraudulent transfer?
  • What information is likely to put a lender on “inquiry notice” to further investigate the borrower’s situation?
  • What are best practices for preventing secured lenders from becoming the target of a fraudulent transfer action?


Salzberg, Mark
Mark A. Salzberg

Squire Patton Boggs

Mr. Salzberg focuses his practice on bankruptcy litigation, creditors’ rights, debtor reorganizations...  |  Read More

Michael L. Molinaro
Michael L. Molinaro


Mr. Molinaro dedicates his practice to representing parties in the financial services industry. For more than 30 years,...  |  Read More

Jonathan M. Landers
Jonathan M. Landers

Scarola Malone & Zubatov

Mr. Landers focuses his practice on corporate bankruptcy and restructuring, insolvency and litigation matters. His...  |  Read More

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