CBS Fraudulent Transfers & Avoidance Actions

Question 1

Under the Bankruptcy Code, what is the standard look-back period for avoiding fraudulent transfers made to non-insiders?

Accepted Answer

2 years before the bankruptcy filing

Answer

1 year before the bankruptcy filing

Answer

4 years before the bankruptcy filing

Answer

6 years before the bankruptcy filing

Question 2

Which of the following elements must a trustee prove to avoid a transfer as an 'actual' fraudulent transfer under Section 548?

Accepted Answer

The debtor made the transfer with actual intent to hinder, delay, or defraud creditors

Answer

The debtor received less than reasonably equivalent value

Answer

The debtor was insolvent at the time of transfer

Answer

The transfer occurred within 90 days of filing

Question 3

A 'constructive' fraudulent transfer under Section 548 requires proof that the debtor received less than reasonably equivalent value AND which of the following?

Accepted Answer

The debtor was insolvent, undercapitalized, or unable to pay debts as they came due

Answer

The transferee had knowledge of the fraud

Answer

The transfer exceeded $10,000 in value

Answer

The transfer was made to a family member

Question 4

Under Section 544 of the Bankruptcy Code, the trustee is granted the 'strong arm' powers of which party?

Accepted Answer

A hypothetical lien creditor, judgment creditor, and bona fide purchaser of real property

Answer

A secured creditor with a perfected lien

Answer

The bankruptcy court itself

Answer

The U.S. Trustee Program

Question 5

A debtor transfers property to a creditor on account of an antecedent debt while insolvent, 45 days before filing bankruptcy. This transfer is most likely avoidable as a:

Accepted Answer

Preferential transfer under Section 547

Answer

Fraudulent transfer under Section 548

Answer

Post-petition transfer under Section 549

Answer

Statutory lien avoidance under Section 545

Question 6

Which 'badges of fraud' is most commonly cited as evidence of actual fraudulent intent in transfer avoidance litigation?

Accepted Answer

The transfer was made to an insider shortly before filing bankruptcy

Answer

The transfer was made for fair market value

Answer

The transfer was made to an unrelated third party

Answer

The debtor had substantial assets remaining after the transfer

Question 7

If a trustee successfully avoids a transfer under Section 548, what remedy is typically available under Section 550?

Accepted Answer

The trustee may recover the property transferred or its value from the transferee

Answer

The transferee receives an administrative expense priority claim

Answer

The debtor is automatically denied a discharge

Answer

The court imposes criminal penalties on the transferee