The Briefs: Bankruptcy Law Committee Trade Vendors Beware Liability For Fraudulent Transfers
Given the depressed state of the economy, trade vendors must now use more caution than ever when dealing with customers. Vendors not only face the risk of nonpayment, they also may face liability for certain transfers in the event a customer files for bankruptcy protection. Ironically, this risk remains high even though a bankrupt customer may continue to pay a vendor in full and on time. A bankruptcy trustee can reach back as far as four years to recover money paid to a vendor under several different theories of fraudulent transfer law. A trade vendor who receives money in "good faith" and gives "value," however, should have an affirmative defense to the long arm of a bankruptcy trustee.
Download the full article, "Trade Vendors Beware: Liability for Fraudulent Transfers."