- In re Aletheia Research and Management, Inc., No. CC-15-1081-KiTaKu (9th Cir. B.A.P. Dec. 10, 2015).
- In a constructive-fraudulent-transfer action, the trustee’s bare allegation that the debtor was insolvent when it made the transfers does not demonstrate plausibility under Twombly. Not-for-publication memorandum.
- Procedural context:
- The trustee brought a constructive-fraudulent-transfer action against defendant. Defendant moved to dismiss the complaint under FRCP 12(b)(6). The bankruptcy court granted the motion and dismissed the complaint without leave to amend. On appeal, the BAP reversed and remanded.
- By alleging that the debtor contracted and paid for services that benefitted only third parties, the complaint sufficiently alleged that debtor did not receive reasonably equivalent value for its payments; it does not matter that debtor “got what it bargained for.” The trustee’s bare allegation that, at the time of the transfers, debtor was insolvent was implausible under Bell Atlantic Corp. v. Twombly, 550 U.S. 554 (2007); the insolvency allegation must be accompanied by some supporting allegations of fact. Under FRBP 7015, incorporating FRCP 15(a)(2), the bankruptcy court should have granted the trustee leave to amend the complaint.
- Ralph B. Kirscher, Laura S. Taylor, and Frank L. Kurtz, Bankruptcy Judges.
IN RE: JOHN FLISS
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