Asset Protection

Discussion of new developments in Asset Protection and related debtor-creditor issues, primarily from the viewpoint of planning for those who are concerned about unforeseen contingent liabilities, but also some news from the creditors' side as well. Hosted by Jay Adkisson and Chris Riser, authors of "Asset Protection: Concepts and Strategies" with supporting website at http://www.assetprotectionbook.com

Previous Posts

Asset Protection Book | Developments Newsletter Subscription

Tuesday, June 29, 2004

Here is the synopsis if a new Nebraska fraudulent transfer case:
Synopsis
Appellee Roger Parker and appellant Maxine Parker were married with three children, when they divorced. Pursuant to their divorce decree, Roger was to pay $100 per month in child support payments. Roger continued to make payments for three years. But then the payments stopped. Beverly promptly filed a motion for judgment on the back child support, plus interest.
Roger then marries and divorces Lisa Parker. Despite his divorce from Lisa, Roger agrees to co-sign on her new home. Roger and Lisa both appear on the warranty deed as joint tenants. Thereafter, Roger conveyed his interest in their property to Lisa. Beverly claims this transfer was fraudulent. Although the parties agree that by definition Beverly was a “creditor” to Roger as “debtor”, the real issue becomes one of Roger’s intent at the time of the transfer. The court held that Roger’s title was merely a legal title and therefore the judgment lien didn’t attach to Roger’s limited interest in the property.

http://www.assetprotectionbook.com/forum/viewtopic.php?t=884

posted by Alex @ 6/29/2004 09:37:00 AM 0 comments

Thursday, June 24, 2004

States Target 'Geoffrey' Tax Loophole:

http://www.assetprotectionbook.com/forum/viewtopic.php?p=1447#1447

posted by Alex @ 6/24/2004 11:44:00 AM 0 comments

TREASURY ISSUES GUIDANCE ON DETERMINATION OF U.S. INCOME OF FOREIGN INSURANCE COMPANIES:

http://www.assetprotectionbook.com/forum/viewtopic.php?p=1446#1446

posted by Alex @ 6/24/2004 11:40:00 AM 0 comments

TREASURY WARNS AGAINST ABUSIVE TAX REDUCTION SCHEME:

http://www.assetprotectionbook.com/forum/viewtopic.php?p=1440#1440

posted by Alex @ 6/24/2004 10:25:00 AM 0 comments

Tuesday, June 22, 2004

Here is a new fraudulent transfer case out of the 1st Circuit:

Hoult v. Hoult, No. 02-2128 (1st Cir. 06/22/2004)

Synopsis

Back in 1993, appellee obtained a judgment against her father, appellant, for the repeated sexual abuse she suffered at his hands. The case at bar is an attempt to collect on that judgment. In 2002, plaintiff fraudulent transferred some of his assets to avoid collection on the judgment. Shortly thereafter, appellant filed for bankruptcy. Since ERISA qualified plans are exempt from collection in bankruptcy proceedings in Massachusetts, appellee has asked to court to include those accounts in the repayment of the judgment owed to her.

http://www.assetprotectionbook.com/forum/viewtopic.php?t=813

Monday, June 21, 2004

Here is a new Minnesota fraudulent transfer case:

Synopsis

Plaintiff seeks summary judgment on its Amended Petition to Avoid Fraudulent Transfers and Enforce Constructive Trust. Clarinda sued defendants BW Acquisition Corporation, Beowulf Ltd., and Brian Nelson. Plaintiff and defendants compete in the pre-press printing business. The underlying dispute arose when Clarinda sold its business to BWAC. At all times relevant herein, Brian Nelson was the president, director, and sole shareholder of BWAC. Nelson then transferred all of BWAC’s assets into a new business.

The court held that since the transfer was fraudulent, the assets are and were from the time of the fraud -- in a constructive trust for the benefit of plaintiff and successive transfers are therefore void.

http://www.assetprotectionbook.com/forum/viewtopic.php?t=793

Wednesday, June 16, 2004

Here is a new 4th Cir. fraudulent transfer case:

[U] In re Abatement Environmental Resources, Inc.

Synopsis

Downey, a fugitive, was the owner and principal officer of the Debtor. During 1997 and 1998, he drew three checks on Abatement's corporate checking accounts, totaling $212,000, to pay individual income tax liabilities to the IRS. In 1999, IRS refunded Downey $166,294 resulting from overpayments and withholding credits on his individual income taxes. In October 1999, Abatement filed a voluntary petition under Chapter 11 of the Bankruptcy Code. Field, the bankruptcy trustee, filed this adversary proceeding against the United States to recover alleged fraudulent conveyances of the Debtor's assets in the amount of $212,000, the total amount of funds Downey transferred to IRS from Abatement's accounts to pay his individual income tax liability. The court found that the Trustee is correct that the burden of showing solvency to defeat a fraudulent conveyance action lies with the transferee. However, the court held that the Trustee failed to present evidence on the consideration prong, examination of the solvency prong is unnecessary.

http://www.assetprotectionbook.com/forum/viewtopic.php?p=1311#1311

Monday, June 14, 2004

Here is a new 9th Cir. fraudulent transfer case:

In re Northern Merchandise, Inc., No. 02-36065 (9th Cir. 06/14/2004)

Synopsis

Frontier Bank appeals a decision of the Bankruptcy Appellate Panel affirming in part the bankruptcy court's summary judgment in favor of Ronald G. Brown. Debtor, a company that sold general merchandise to grocery stores, was incorporated by Paul Weingartner, Gary David, and Paul Benjamin. In February 1998, Frontier loaned $60,000 to the newly formed company. The loan was evidenced by a promissory note in the amount of $60,000, secured by a commercial financing agreement granting Frontier a security interest in Debtor's inventory, chattel paper, accounts, equipment, and general intangibles.

Later that year, Debtor sought a second loan of $150,000 from Frontier to provide Debtor with working capital. Frontier refused to give such a loan to Debtor after determining that Debtor's financial performance did not support an additional direct loan to the company. However, Frontier agreed to loan $150,000 (the "October Loan") to Paul Weingartner, Paul Benjamin, and Stephen Comer, Debtor's shareholders (collectively, "Shareholders"), whose credit warranted such a loan.

The court finds that “[t]he proper focus is on the net effect of the transfers on the debtor's estate, the funds available to the unsecured creditors. As long as the unsecured creditors are no worse off because the debtor, and consequently the estate, has received an amount reasonably equivalent to what it paid, no fraudulent transfer has occurred.”

http://www.assetprotectionbook.com/forum/viewtopic.php?p=1290#1290

Thursday, June 10, 2004

Here is a new California fraudulent transfer case:

In re Gioia, No. B166803 (Cal.App. Dist.2 06/09/2004)

Synopsis

In the case at bar, Frank and Rona Gioia were married. During the course of their marriage, Frank owned State Produce Brokers, Inc. During that time Frank was embroiled with several PACA claims totaling over $900,000. Frank quitclaimed his interest in the State Produce Brokers property, to Rona. A year later, Frank and Rona separated and later filed for divorce. Shortly after, Frank filed for bankruptcy, where he listed his home on Coffman Drive as an asset.. He asked the court to set aside his transfer of the real property to Rona. The court held that because the bankruptcy estate had no title to or interest in the Coffman Drive residence after the abandonment, the trustee's quitclaim deed conveyed no title or interest to Rona.

http://www.assetprotectionbook.com/forum/viewtopic.php?t=734

Another new California fraudulent transfer case:

In re Slatkin, No. CV 03-02527 RSWL (C.D.Cal. 06/09/2004)

Synopsis

In the case at bar, debtor Slatkin was involved with the formation and operation of what amounted to a Ponzi scheme. The trustee of debtor’s bankruptcy estate began the first of hundreds of adversary proceedings against investors who had allegedly received more on their investments with Slatkin than what they had given him. The Trustee contends that the transfers Slatkin made in furtherance of his alleged Ponzi scheme were fraudulent, and therefore, avoidable and recoverable from those investors who made a "return" on their investments. The court finds that the issue of a debtor's intent in a fraudulent transfer avoidance action is a subjective inquiry. The court held that Slatkin has directly and explicitly admitted his actual fraudulent intent in the context of an elaborate Ponzi scheme.

http://www.assetprotectionbook.com/forum/viewtopic.php?p=1199#1199

New California Fraudulent Transfer Case:

Reilly v. Smith, No. G03170) (Cal.App. Dist.4 06/09/2004)

Synopsis

In the case at bar, respondent and appellant were divorced with one child. Appellee agreed to pay $250 per month in child support. Both parties ended up moving to California. The child support payments continued, but then they abruptly stopped. Appellant and Joanne Knoblock took title to a piece of real property in California, as joint tenants to property. Respondent then filed a complaint for avoidance of a fraudulent transfer action. Appellant contends that he had no actual ownership in the house, and there was no fraudulent intent involved. He claimed that Knoblock had the money for the down payment but did not qualify for a loan because she lacked the required income.

The court considers the value of appellants’ interest in the house. If his interest in the house is a non-exempt amount, then it is not a fraudulent transfer. The court finds that without proof of its value, respondent did not prove that attaching the property could support any net recovery for her if and when the conveyance was set aside.

http://www.assetprotectionbook.com/forum/viewtopic.php?p=1187#1187

Asset Protection

Tuesday, June 29, 2004

Thursday, June 24, 2004

Tuesday, June 22, 2004

Monday, June 21, 2004

Wednesday, June 16, 2004

Monday, June 14, 2004

Thursday, June 10, 2004

Wednesday, June 09, 2004

Wednesday, June 02, 2004

Tuesday, June 01, 2004