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Posts tagged "Supreme Court bankruptcy fraudulent conveyance transfer actual fraud Husky Ritz"

Debtor May Not Discharge Fraudulent Conveyance Liability in Bankruptcy

Resolving a split among the lower courts, the United States Supreme Court has held that a provision of the Bankruptcy Code that prohibits debtors from discharging debts "obtained by...false pretenses, a false representation, or actual fraud," can include transactions by which a debtor tranfers its assets to a third-party for little or no consideration, i.e., so-called fraudulent conveyances. Husky International Electronics, Inc. v. Ritz, 136 S.Ct. 1581 (May 16, 2016). This decision addresses the frequent circumstance in which a debtor transfers its assets to related persons or entities for little money and then files bankruptcy to discharge all its debts to creditors.