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Fraudulent Transfers

Satija v. United States (In re Colliau) (June 14, 2017)
The Colliaus paid estimated taxes, $28,000, to the IRS a day before filing for relief under Chapter 7 of the Bankruptcy Code. The Chapter 7 Trustee sought to avoid the payment as a fraudulent transfer. Both the Trustee and the Colliaus moved for summary judgment. The trustee first argued that the Colliaus’ intended to hinder, delay, or defraud their creditors by paying a post-petition obligation the day before filing bankruptcy. In response, the Colliaus stated that they did not intend to hinder, delay, or defraud their creditors but, rather, that they made the payment at that time because they could better estimate their tax liability for the year. The Court denied summary judgment to both parties on this issue because on the question of the Colliaus’ intent there was a genuine dispute of material fact.
The Trustee also argued that the Colliaus received less than a reasonably equivalent value when they paid their estimated taxes because they were not yet due. The Court agreed that if the payment was for taxes not yet due, it might not meet the statutory definition of value and could be avoided as a fraudulent transfer. However, because neither party adequately addressed the issue of the amount of estimated taxes that was actually due when the transfer was made, the Court denied both summary judgment motions on this ground as well.
Satija v. United States (In re Colliau), Adv No. 16-01102, 2017 WL 2589337, at *1 (Bankr. W.D. Tex. June 14, 2017).