Actual And Constructive Fraudulent Transfer

In this article, you can discover:

• The essential elements of actual and constructive fraudulent transfers,
• The significance of intent in actual fraudulent transfers, and
• The importance of standing in pursuing a fraudulent transfer claim.

What Are The Elements Of Actual And Constructive Fraudulent Transfers?

To establish an actual or constructive fraudulent transfer in bankruptcy, the debtor must be under the protection of the bankruptcy code, and the transfer must have been made within two years before the date the bankruptcy case was filed. Actual fraudulent transfers can be found in Section 548(a)(1)(A) of the bankruptcy code, while constructive fraudulent transfers can be found in Section 548(a)(1)(B).

What Is The Difference Between Actual And Constructive Fraudulent Transfers?

Actual fraudulent transfers involve the debtor’s actual intent to hinder, delay, or defraud creditors. The party bringing the action must have the proper standing to do so, meaning they must be a creditor, a person with interest in the asset, or have the consent of the debtor or trustee in the bankruptcy case.

Constructive fraudulent transfers, on the other hand, focus on whether the debtor made the transfer for less than the reasonable equivalent value, whether the debtor was insolvent at the time of the transfer or the transfer left them insolvent, and whether the transfer was made for the benefit of a friend, family member, or outside the regular course of business.

Why Is Standing Important In Pursuing A Fraudulent Transfer Claim?

Standing is crucial in fraudulent transfer cases because it determines who has the right to bring the action in the bankruptcy court. To have standing, the party must be a party in interest or file a motion with the court to explain why they should be allowed to file the motion.

For more information on Actual And Constructive Fraudulent Transfer, an initial consultation is your next best step. Get the information and legal answers you seek by calling (847) 440-5998 today.