Bankruptcy Appellate Panel Takes A Stand Against Fraud

The Bankruptcy Appellate Panel of the U.S. Tenth CircuitCourt of Appeals made it clear that committing fraud to avoid making paymentsto creditors will not be tolerated. Debtor owned a failing printing company anda substantial portion of a real estate company. Debtor also owed millions in loansand was trying to avoid paying his creditor on the personal guarantee bytransferring his assets to his wife who then moved the assets to an offshoretrust. Following the transfer the debtor filed for voluntary bankruptcy relief.

In re Kendall

, the court held that the transaction had seven of theeleven fraud indicators. The court mentions that looking at the totality of thecircumstances the transaction was fraudulent and affirmed the lower court ruling. In addition to the fraudindicators, the court mentions the significance of the location of theoffshore trust. The trust is located in a place known for asset protection.   

See Jay Adkisson, Tenth Circuit Affirms Fraudulent Transfer Judgment Against Debtor’s Wife and Her Cook Islands Trust , Forbes, May 12, 2013.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.