Rajala v. Gardner

Rajala v. Garnder, et al., Case No. 14-3241 (10th Cir. August 31, 2016). Unpublished
The scope of § 541 is broad and should be generously construed, and that an interest may be property of the estate even if it is novel or contingent and every conceivable interest of the debtor, future, nonpossessory, contingent, speculative, and derivative, is within reach of 11 U.S.C. § 541. In a fraudulent transfer case, the determination of whether reasonably equivalent value was given in exchange for the transfer is not a simple calculation, but is instead measured by all direct and indirect benefits received by a seller and requires consideration of whether or not the transferor’s unsecured creditors were better off before or after the transfer.
Procedural context:
This case involves three consolidated appeals. In the first appeal, the 10th Circuit was asked to overturn the District Court’s granting summary judgment in favor of defendants and dismissing the trustee’s fraudulent transfer claims; the 10th Circuit reviewed the ruling de novo and reversed and remanded. On the second and third appeals, the 10th Circuit was asked to reverse the District Court’s denial of defendants’ motion for judgment as a matter of law after the jury verdict, and reverse the award of prejudgment interest. The 10th Circuit reviewed the former de novo and the latter for an abuse of discretion and affirmed both rulings.
The District Court did not repeat extensive factual findings from the lower court. But, in the District Court, the Trustee asserted that Generation Resources Holding Company’s (GRHC) transfer of its interests in the Forward Windpower (FW) and Lookout Windpower (LW) projects was fraudulent because GRHC never received reasonably equivalent value, or, in the alternative, Defendants transferred the interests with actual intent to hinder creditors. The 10th Circuit found that there were genuine issues of material facts including on the issue of whether reasonably equivalent value was exchanged. Those facts included the fact that GRHC was engaged to purchase LW and FW, so their value was more than zero, and that the properties were later purchased for a combined total of almost $13 million. The 10th Circuit stated that this evidence showed that Defendants left GRHC’s unsecured creditors in worse positions after the transfers of LW and FW without receiving reasonably equivalent value.
Gorsuch, Ebel, Bacharach

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