CBS Fraudulent Transfers & Avoidance Actions 3

Question 1

Under Section 545, a trustee may avoid a statutory lien if the lien first becomes effective when:

Accepted Answer

The debtor becomes insolvent or fails to meet a financial test

Answer

The property is sold at a foreclosure auction

Answer

The debtor receives notice of the lien

Answer

A judgment is entered against the debtor

Question 2

What is 'reasonably equivalent value' in the context of Section 548 constructive fraudulent transfer analysis?

Accepted Answer

A fair and reasonable approximation of the value of what was transferred, assessed from the perspective of the debtor's estate

Answer

Exactly 100% of the fair market value of the property transferred

Answer

Any consideration that exceeds $1,000

Answer

The book value of the asset as recorded on the debtor's balance sheet

Question 3

A debtor transfers her home to her daughter for no consideration two years before filing Chapter 7. The trustee avoids the transfer. Which Section is the PRIMARY basis for avoidance?

Accepted Answer

Section 548 (fraudulent transfers)

Answer

Section 547 (preferences)

Answer

Section 549 (post-petition transfers)

Answer

Section 553 (setoffs)

Question 4

The 'new value' defense to a preference claim under Section 547(c)(4) allows a creditor to offset the preference amount by:

Accepted Answer

New unsecured credit extended after the preferential payment that remains unpaid

Answer

Any new credit extended after the preferential payment, even if secured

Answer

Payments made by the creditor to third parties on behalf of the debtor

Answer

The value of goods returned to the creditor after the transfer

Question 5

In a preference action, there is a statutory presumption under Section 547(f) that the debtor was insolvent during the:

Accepted Answer

90 days immediately before the date of filing

Answer

1 year before filing for transfers to insiders

Answer

Entire period of financial distress as shown by tax returns

Answer

6 months before the petition date

Question 6

A Chapter 7 trustee discovers that the debtor, 60 days before filing, paid $50,000 to a supplier for goods regularly purchased on 30-day credit terms, but this payment was made in 45 days. This is most likely:

Accepted Answer

Not a preference because it was made in the ordinary course of business

Answer

A preference that is avoidable because payment took longer than the normal 30-day terms

Answer

A fraudulent transfer because the debtor paid more than market value

Answer

Protected by the new value defense

Question 7

Under the Uniform Voidable Transactions Act (UVTA), which standard determines whether a transfer was made with actual fraudulent intent?

Accepted Answer

A totality of circumstances test weighing multiple badges of fraud

Answer

Clear and convincing evidence of all badges of fraud

Answer

Proof that the debtor confessed to fraudulent intent

Answer

Evidence that the transfer exceeded the debtor's net worth