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Is There Standing to Prosecute Fraudulent Transfer Claims if Unsecured Creditors Have Been Fully Paid?

The answer depends, in part, on where the debtor's case is pending. In the Second Circuit, courts allow defendants to escape exposure to fraudulent transfer actions if the debtor's estate cannot identify at least one general unsecured creditor who would benefit from a recovery in that litigation. Not so in other courts.

23 minute read June 02, 2014 at 12:00 AM
By
Paul A. Rubin and Leslie W. Chervokas
Is There Standing to Prosecute Fraudulent Transfer Claims if Unsecured Creditors Have Been Fully Paid?

The answer to this question depends, in part, on where the debtor's case is pending. In the Second Circuit, courts allow defendants to escape exposure to fraudulent transfer actions if the debtor's estate cannot identify at least one general unsecured creditor who would benefit from a recovery in that litigation.

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