Comments on: What is the difference between a preference and a fraudulent transfer? http://www.thebklawyer.com/thebkblog/2006/05/02/what-is-the-difference-between-a-preference-and-a-fraudulent-transfer/ Personal Bankruptcy tips and tricks moderated by Atlanta lawyer Jonathan Ginsberg Tue, 17 Jan 2012 01:57:46 +0000 hourly 1 By: Subhashhttp://www.thebklawyer.com/thebkblog/2006/05/02/what-is-the-difference-between-a-preference-and-a-fraudulent-transfer/#comment-8309 Subhash Mon, 04 Feb 2008 04:51:48 +0000 http://host.jonathanginsberg.com/~thebklaw/thebkblog/?p=29#comment-8309 whether all donations made to ligitmate charties are exempt from fraudulent transfer rule in bankruptcy. Thanks whether all donations made to ligitmate charties are exempt from fraudulent transfer rule in bankruptcy.

Thanks

]]> By: Anonymoushttp://www.thebklawyer.com/thebkblog/2006/05/02/what-is-the-difference-between-a-preference-and-a-fraudulent-transfer/#comment-971 Anonymous Wed, 03 May 2006 13:52:02 +0000 http://host.jonathanginsberg.com/~thebklaw/thebkblog/?p=29#comment-971 Assuming that the debtor you refer to is the one who returned the assets to the insider, you have to note that if the debtor merely gave back what was borrowed, it is not a fraudulent transfer under 548 because 548's definition of value includes satisfying a present or antecedent debt. That definition of value is incorporated into "reasonably equivalent value" (see BFP). Thus, if all you do is give back what was owed, you have reasonably equivalent value in the satisfaction of a debt; you may have preferred someone but not committed a fraudulent transfer. As the Glenn treatise says, a preference is never a fraudulent transfer; see also In re AppliedTheory. Now, that is the general rule. However, please note that the UFTA treats preferences to insiders as fraudulent transfers where the insider knew of the transferor's insolvency. Thus, depending on the applicable state law, you may have a fraudulent transfer because it was a preference to an insider, even though it was outside the federal preference statute lookback period. Assuming that the debtor you refer to is the one who returned the assets to the insider, you have to note that if the debtor merely gave back what was borrowed, it is not a fraudulent transfer under 548 because 548′s definition of value includes satisfying a present or antecedent debt. That definition of value is incorporated into “reasonably equivalent value” (see BFP). Thus, if all you do is give back what was owed, you have reasonably equivalent value in the satisfaction of a debt; you may have preferred someone but not committed a fraudulent transfer. As the Glenn treatise says, a preference is never a fraudulent transfer; see also In re AppliedTheory. Now, that is the general rule. However, please note that the UFTA treats preferences to insiders as fraudulent transfers where the insider knew of the transferor’s insolvency. Thus, depending on the applicable state law, you may have a fraudulent transfer because it was a preference to an insider, even though it was outside the federal preference statute lookback period.

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