Defendant Provided “Value” for the Alleged Transfer By Paying For the Parties’ Living Expenses From the Transfer
Silagy v. Schroeder (In re Schroeder), Nos. 14-62604, 16-6017, 2017 Bankr. LEXIS 420 (U.S. Bankr. N.D. Ohio Feb. 14, 2017)
Debtor Scott D. Schroeder worked in the financial services industry. Defendant Robbye Schroeder had a master’s degree in education and taught English until 2010. The Debtor and the Defendant got married in 2000. Subsequently, in 2013, they moved to Ohio from California, and at that time the Debtor had several lawsuits against him. In 2014, one of the lawsuits resulted in a $5M+ judgment against the Debtor. On December 1, 2014, Debtor filed an individual Chapter 7 bankruptcy petition and eventually waived his discharge in the case. The parties divorced in 2015 although they continued to cohabitate. After the Debtor had filed for bankruptcy, the Chapter 7 Trustee Anne Piero Silagy filed a motion for summary judgment against the Defendant; the Debtor’s now ex-wife on fraudulent counts. The Defendant opposed.
There were two main transfers were at issue: (i) The Debtor and the Defendant maintained a joint savings account and a joint checking account. However, in 2014, the Debtor opened individual checking and savings accounts in the Defendant’s name and transferred the entire balance of the joint savings, $60,046.40 into the Defendant’s individual savings account. The Trustee sought recovery of this $60,046.40 transfer as a fraudulent transfer. (ii) Next, the Trustee sought to avoid the check transfer of $3000 from the Debtor to the Defendant made on September 9, 2014, as fraudulent. The Defendant contended that the said amount was used for living expenses.
The Court found that the transfer of $60,046.40, into wife’s individual savings account was made with actual intent to defraud creditors under § 548(a)(1)(A) because the transfer was a calculated effort by the Debtor to shield money that he had access to from reach of his creditors. The Court further noted that although the Defendant took funds in good faith without notice of the Debtor’s fraud or insolvency, the amount that was not spent on living expenses and left in the account at the filing date, i.e., $33,500.85, did not qualify as value for transfer under §548(c). Next, the Court concluded that the $3,000 check transfer to the Defendant, his then wife, was made for value and hence not avoidable as the wife deposited the check into her individual account, which she was using consistently to pay for living expenses. The Court stated that courts had accepted the payment of living expenses as reasonably equivalent value. The Court ruled that based on the bank statements, it was clear that the Defendant was using this account to pay living expenses, including food and retail purchases and insurance and utility payments. The Court concluded that the contemporaneous nature of transfer coupled with the Defendant’s consistent use of that account to pay for living expenses convinced the Court that the Defendant took the alleged transfer for value
Clawback Actions Begin in the Bankruptcy Case of Lamar Construction Company
Michigan, June 2, 2016 – Marcia Meoli, the Chapter 7 Trustee for the bankruptcy estate…Read More
Delaware: Claim, Not Invoice , Creates an Obligation to Pay
Pirinate Consulting Grp., LLC v. Md. Dep’t of the Env’t (In re Newpage Corp.), Nos….Read More
Health Diagnostic Laboratory Initiates Second Round of Clawback Litigation
July 28, 2016, Virginia – Last month, Health Diagnostic Laboratory, Inc.’s liquidating trustee (HDL) brought…Read More
Settlement Funds Voluntarily Transferred Under the Pretext of Fraudulent Inducement are Property of the Estate
In re Dreier LLP, No. 08-15051-SMB, 2016 U.S. Dist. LEXIS 92322 (S.D.N.Y. July 15, 2016)…Read More
Delaware Bankruptcy Court Grants Dismissal of Preference and Fraudulent Transfer Claims For Failure to Adequately State Facts
Miller v. Welke (In re United Tax Grp., LLC), Nos. 14-10486 (LSS), 16-50088 (LSS), 2016…Read More