Third Circuit: Pre-Bankruptcy Commercial Lease Termination Not Fraudulent Transfer

Is an insolvent debtor's pre-bankruptcy termination of a commercial lease a fraudulent transfer? The circuit courts seem to be split, however a close reading of cases in the Third and Seventh Circuits shows that the reasoning of both courts can be reconciled on their facts.

7 minute read June 01, 2023 at 12:11 AM
By
Michael L. Cook
Third Circuit: Pre-Bankruptcy Commercial Lease Termination Not Fraudulent Transfer

Is an insolvent debtor's pre-bankruptcy termination of a commercial lease a fraudulent transfer? The Third Circuit said no when it held that a lessor's pre-bankruptcy termination of the debtors' lease and purchase option "was not a transfer under Bankruptcy Code §548(a)(1)(B)."

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