Bankruptcy – Fraudulent Transfer

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7^th Circuit Court of Appeals

Case Name: Laura A. Wierzbicki v. Greg Griswold

Case No.: 16-1334

Officials: WOOD,Chief Judge, and ROVNER and HAMILTON,Cir‐ cuit Judges.

Focus: Bankruptcy – Fraudulent Transfer

Transfer of debtor assets prior to filing for bankruptcy constitutes fraudulent transfer.

“The district court also found that the benefit of avoiding further family conflict was too “nebulous” to “support a finding of reasonable equivalence” in the bankruptcy context, where a transfer would put an insolvent debtor’s valuable property beyond the reach of creditors. See In re Hinsley, 201 F.3d 638, 643 (5th Cir. 2000) (explaining that under Texas Uniform Fraudulent Transfer Act intangible, non‐economic benefits, such as preservation of marriage, did not constitute reasonably equivalent value); Image Worldwide, 139 F.3d at 577 (explaining that UFTA took phrase “reasonably equivalent value” from 11 U.S.C. § 548(a)(2)); In re Bargfrede, 117 F.3d 1078, 1080 (8th Cir. 1997) (concluding that “non‐economic benefits in the form of a release of a possible burden on the marital relationship and the preservation of the family relationship” are “sufficiently analogous to other intangible, psychological benefits” that they do not constitute reasonably equivalent value under 11 U.S.C. § 548); In re Treadwell, 699 F.2d 1050, 1051 (11th Cir. 1983) (concluding that love and affection do not constitute “reasonably equivalent value” under § 548). As cold and unsentimental as that rule might seem, it is easier to understand from the perspective of creditors, most of whom would probably be unwilling to volunteer to pro‐ vide a financial subsidy to enhance the insolvent debtor’s family relationships by allowing the debtor to put valuable property beyond their reach.

Affirmed

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