Recovering Fraudulent Transfers: the TOUSA Decision Provides Some Helpful Tools for Expanding the Universe of Potentially Liable Entities

Partner James Millar authored an article for the 2019 edition of the Norton Annual Survey of Bankruptcy Law titled “Recovering Fraudulent Transfers: the TOUSA Decision Provides Some Helpful Tools for Expanding the Universe of Potentially Liable Entities.”

The Eleventh Circuit's decision in In re TOUSA, Inc. provides an opportunity to consider some interesting variations for recovering a fraudulent transfer or its value from “an entity for whose benefit” the transfer was made. One would not necessarily think that, if a debtor repaid its existing senior secured lender with the proceeds of a new senior secured loan specifically meant to repay that existing lender, that in fact the existing lender had received a fraudulent transfer. Indeed, isn't payment of an existing debt defined in Section 548(d)(2)(A) as “value?” Nevertheless, the Eleventh Circuit found the existing lender in that scenario liable for a fraudulent transfer.

In his article, Jim analyzes the TOUSA decision and looks to what guidance it might provide for future cases.

Reprinted from Norton Annual Survey of Bankruptcy Law, 2018 Edition, with permission of Thomson Reuters. Copyright © 2018. Further use without the permission of Thomson Reuters is prohibited. For further information about this publication, please visit https://store.legal.thomsonreuters.com/law-products/law-books/legal-publishers/norton, or call 800.328.9352.