MADOFF CHAPTER 7 TRUSTEE FLEXES TRUSTEE AVOIDANCE POWERS FOR $30 BILLION(Part I)

Bernard Madoff’s epic Ponzi scheme involved huge transfers of money to his clients, family and associates that may be subject to the ‘avoiding powers’ of the Chapter 7 trustee in his bankruptcy case. The bankruptcy code gives the Chapter 7 trustee the power to annul certain kinds of transactions entered into by debtor before filing bankruptcy that may be considered fraudulent because the transactions were intended by the debtor to defraud a creditor. For instance, many people think that a transfer to a trust will protect the asset from bankruptcy but this is not so. §548 of the bankruptcy code states that, ”The trustee may avoid any transaction of an interest of the debtor in property that was made on or within 10 years before the date of the filing of the petition, if (A)Such transfer was made to a self-settled trust or similar device; (B)Such transfer was by the debtor; (C)The debtor is the beneficiary of such trust or similar device; and D)The debtor made such transfer with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date the date that such transfer was made, indebted.” So, if you transferred a million dollars to a trust naming yourself as beneficiary 8 years ago and you file for bankruptcy now, the Chapter 7 trustee will file an adversarial complaint to annul that transfer and void the trust to get the money back into the bankruptcy estate for distribution to your creditors.

《楊清泉律師專欄》MADOFF CHAPTER 7 TRUSTEE FLEXES TRUSTEE AVOIDANCE POWERS FOR $30 BILLION(Part II)