Williams v. Fed Deposit Ins Corp. (In the Matter of Positive Health Mgmt)

Summarized by Craig Geno , Law Offices of Craig M Geno, PLLC
11 years 4 months ago

Citation:

Fifth Circuit; No. 12-20687

Tag(s):

Ruling:

In a fraudulent conveyance case, "value" under 11 USC 548(c) is measured by the value that the transferee gave up as its side of the bargain-not the transferor's gain-in determining the "good faith" defense asserted by the defendant. A good faith transferee of a fraudulent conveyance may invoke the good faith defense of Section 548(c) when it gives any value, but only to the extent of that value. Accordingly, to the extent the defendant receives a fraudulent transfer and the value of what is received exceeds the consideration it gave up in return, Section 548(c) requires "netting" and the excess transfers/conveyances must be returned to the debtor.

Procedural context:

Appeal from a District Court decision which affirmed the Bankruptcy Court's decision.

Facts:

Debtor paid $367,681.35 to a bank that was owed money by one of the debtor's principal's entities. The debtor did not owe the bank anything. The debtor filed bankruptcy and its trustee seeks recovery, as fraudulent conveyances, of the money the debtor paid to the bank. The bank asserted good faith defenses under Section 548(c). The trial court found that the debtor received $253,333.33 in value and the Fifth Circuit affirmed that ruling. But, the Fifth Circuit found that amount was the maximum amount of value and that "netting" the difference in the value given, and the total amount paid, was appropriate.

Judge(s):

Stewart, Weiner and Costa

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