James Roberts Discusses Fraudulent Transfer Claims in the ABA Banking Journal

Articles / Publications

An article titled "Avoiding Fraudulent Transfer Claims from Loan Workouts" written by Associate James Roberts was published in the Risk and Compliance section of the ABA Banking Journal.

Excerpt from the article:

"There are two types of fraudulent transfers: actual fraudulent transfers, and constructive fraudulent transfers.

An actual fraudulent transfer occurs when the debtor makes a transfer with the intent to defraud its creditors (such as transferring assets for little or no consideration in an attempt to prevent the creditor from going after such assets). Because intent is generally difficult to prove, it can be shown circumstantially through certain “badges of fraud,” including, but not limited to: transfer to an insider, concealment of the transfer, pending lawsuits against the debtor, less than reasonably equivalent value received for the transfer and the debtor’s insolvency. A transferee can defend against an actual fraudulent transfer claim by showing that it acted in good faith (for example, without knowledge of the debtor’s fraudulent intent) and that it provided “reasonably equivalent value” for the transfer, as discussed below.

A constructive fraudulent transfer occurs when the debtor makes a transfer without receiving reasonably equivalent value for the property transferred during a time when the debtor is insolvent or in financial distress, or when the transfer itself causes the debtor to become insolvent."

To read more on this topic and learn about their five tips to guard against fraudulent transfer claims, click here to read the full article.

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