Case Roundup, Episode III (Revenge of the Sith)

Avoidance of "fraudulent transfers"

In re International Administrative Services, Inc. (11th Cir. 2005)

Where, despite exercise of due diligence, trustee fails to timely bring avoidance action due to fraud or extraordinary circumstances beyond trustee's control, equitable tolling prevents expiration of §546(a)'s limitations period. Once plaintiff proves that avoidable transfer exists plaintiff can skip over initial transferee and recover from those next in line. Nothing in the language of §550 requires plaintiff in a fraudulent transfer adversary proceeding to avoid the transfer received by the initial transferee before continuing with avoidance actions down the line of transferees. ________________________

"Good Faith" in Chapter 13 subject to "totality of circumstances" analysis

In re Sullivan (1st Cir. BAP 2005)

Court adopted totality of the circumstances test for assessing good faith of a Ch. 13 filing. Obligation of good faith is imposed on debtor at two stages of a Chapter 13 proceeding:

(1) debtor must file petition in good faith;

(2) debtor must file plan in good faith.

In making a "good faith" determination, Bankruptcy courts generally consider:

(a) debtor's accuracy in stating her debts and expenses

(2) debtor's honesty in the bankruptcy process, including whether debtor has attempted to mislead the court

(3) whether the Code is being unfairly manipulated

(4) type of debt sought to be discharged

(5) whether the debt would be dischargeable in a Chapter 7

(6) debtor's motivation and sincerity in seeking Chapter 13 relief.