Fraudulent Transfers: More Or Less Insolvent

Richardson v. Checker Acquisition Corp. (In re Checker Motors Corp.), 495 B.R. 355 (Bankr. W.D. Mich. 2013) –

A chapter 11 liquidating trustee brought several proceedings to recover fraudulent transfers under both the Bankruptcy Code and a state version of the Uniform Fraudulent Transfer Act. The question for the court was whether the debtor's estimated liability for withdrawal from a multiemployer benefit plan should be included in determining the debtor's insolvency to support a constructive fraudulent transfer claim.

There are two avenues for asserting fraudulent transfer claims in a bankruptcy:  (1) a claim under Section 548 (the fraudulent transfer section of the Bankruptcy Code), and (2) a claim under state fraudulent transfer law using "strong arm" powers under Section 544 (which, among other things, allows avoidance of a transfer that is voidable by a hypothetical judicial lien or execution creditor).