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Conducting a thorough investigation of a debtor’s pre-petition activity can yield potential preference and fraudulent-transfer claims that can be valuable assets in a bankruptcy estate. Identifying potentially avoidable transfers goes hand in hand with evaluating the debtor’s financial condition to determine whether the debtor was insolvent when the transfer was made.
Bank records are of particular interest and importance to forensic accountants and receivers, as they reflect an entity’s actual financial history. In fact, bank records can tell a powerful story. We identified bank statements in several of our investigations that were electronically manipulated to reflect deceptive and fraudulent statement entries. Both the descriptions and amounts were changed for electronic payments, such as wire transfers and debit card transactions reflected on statements.
2020 presented many challenges to our personal and professional lives. It is a year we will not soon forget. On a positive note, it was a great opportunity for many of us to get to know our colleagues on a more personal level. By Zooming from our home offices, kitchen counters or in some cases, a laundry room, it provided us insights we would not have had without COVID-19. For that, we are extremely thankful.
The COVID-19 pandemic has wreaked economic havoc and created a breeding ground for fraud. Existing swindles will be uncovered as victims seeking liquidity attempt to withdraw their funds only to find that their rock solid investment was nothing but smoke. New scams will arise. Many investors desperately need income or growth that traditional investments can no longer provide. These investors will be primed for opportunities that promise returns untethered from market or general economic risk. Others are simply greedy, looking to profit on others’ misery.
Where chapter 7 Trustees are now increasingly faced with the prospect of avoiding and recovering fraudulent transfers of a debtor’s pre-petition assets that implicate the concepts of extraterritoriality and foreign law, choosing the “right” foreign “applicable law” under Code section 544 causes of action, becomes increasingly important. Cross-border disputes can present unique and complex choice of law issues that may not present themselves in purely domestic bankruptcy cases.
In a factually complex and quickly criticized opinion,[1] a panel of the Tenth Circuit recently held that a chapter 7 trustee cannot maintain a fraudulent transfer action against subsequent transferees of a fraudulent transfer if the subsequent transferee receives only proceeds of the “property that was set aside as fraudulently transferred.”[2] Almost immediately, experts lamented that “the Tenth Circuit gutted fraudulent transfer law and blessed a process allowing a fraudster to immunize proceeds from re
Bankruptcy Code § 548 allows creditors and trustees to avoid transactions that unfairly or improperly deplete the bankruptcy estate.[1] Transfers made within two years[2] preceding a bankruptcy filing can be clawed back if either (1) the debtor attempted to defraud creditors, or (2) the debtor did not receive “reasonably equivalent value” in return.
The COVID-19 crisis has made a substantial economic impact on businesses and industries worldwide. The sharp decrease in airline travel has caused the aviation industry to be particularly affected by the crisis. This has caused a detrimental economic effect on airlines, suppliers, manufacturers and other aviation companies.
