Trustee Appeals Bankruptcy Court’s Decision: Pre-bankruptcy Payment of a Child’s Tuition Fee Is Not a Constructively Fraudulent Transfer
Massachusetts, September 14, 2016 – The Massachusetts bankruptcy court, in DeGiacomo v. Sacred Heart University, Inc. (In re Palladino), recently held that debtors’ pre-bankruptcy payment of their child’s college tuition was not avoidable as a constructively fraudulent transfer because they received reasonably equivalent value in exchange. The Court stated that a parent can very well reasonably assume that paying for a child to obtain an undergraduate degree will enhance the child’s financial well-being and that will confer an economic benefit on the parent later on.
Although, the bankruptcy court’s decision in Palladino represented a notable step toward barring these types of avoidance claims, the issue is still undecided. Earlier this month, the Palladinos trustee appealed the bankruptcy court’s decision and sought direct certification to the United States Court of Appeals for the First Circuit. It is still unclear whether the issue gets resolved with this appeal or not. However, until then, educational institutions need to prepare themselves to take measures to mitigate the risks so that the payments made to them by parents on behalf of students are protected from avoidance later on.
Trustee Continues to File Clawback Actions in Telexfree LLC Bankruptcy
April 1, 2016, Massachusetts – On April 13, 2014, Debtors Telexfree, LLC and its affiliates…Read More
Puerto Rico Court Ruled for Defendant as Trustee’s Complaint Fails to Meet Plausibility Standards or State Sufficient Factual Information
In re Editorial Flash, Nos. 13-08014 BKT, 14-00224 BKT, 2016 Bankr. LEXIS 2435 (U.S. Bankr….Read More
Intraday Overdrafts by Banks Do Not Give Rise to an Antecedent Debt
Sarachek v. Luana Sav. Bank (In re Agriprocessors, Inc.), No. 15-CV-1015-LRR, 2016 U.S. Dist. LEXIS…Read More
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….Read More
Former Professional Football Player Charged for Running $10 Million Fraud
Washington D.C., Aug. 10, 2016 — The Securities and Exchange Commission allegedly charged Merrill Robertson…Read More