Asked by Patricia Tucker’Hicks on Jun 22, 2024
Verified
Which of the following transfers would be considered fraudulent under the 2005 revisions of the Bankruptcy Code?
A) Transfers that are intended by the debtor and creditor to be a contemporaneous exchange for new value.
B) Transfers that led to the creation of a security interest in new property where new value was given by the secured party to enable the debtor to obtain the property.
C) Transfers made in payment of a debt incurred in the ordinary course of the business of the debtor and the transferee.
D) Transfers to or for the benefit of an insider under an employment contract and not in the ordinary course of business.
Fraudulent Transfers
Transactions made to evade creditors by transferring assets to another party, typically considered illegal.
Employment Contract
A formal agreement between an employer and an employee outlining the terms of employment, including duties, duration, and compensation.
- Recognize the occurrence of fraud transfers and priority payments in bankruptcy situations.
Verified Answer
CD
Carley DeBiaseJun 28, 2024
Final Answer :
D
Explanation :
The 2005 revisions also explicitly authorize the trustee to avoid two types of transfers as fraudulent.First,he may avoid transfers to or for the benefit of an insider under an employment contract and not in the ordinary course of business.The second type of transfer that the trustee was explicitly authorized to avoid as fraudulent is transfers to a self-settled trust made within 10 years of the filing by a debtor where the debtor is a beneficiary and the transfer was made with actual intent to hinder or delay.
Learning Objectives
- Recognize the occurrence of fraud transfers and priority payments in bankruptcy situations.