The Trustee sought to recover a transfer made by the Debtor to James Smith, the principal of the Debtor, pursuant to 11 U.S.C. §§ 547 and 550(a). At issue was whether the Debtor was insolvent at the time of the transfer. The Trustee argued that based on the Debtor’s tax returns and the presumption of insolvency during the 90 days preceding the filing of bankruptcy, that the Debtor was insolvent, whereas Smith asserted that based on the scheduled value of assets and amount of liabilities, the Debtor was solvent.
Pursuant to 11 U.S.C. § 101(32)(A), insolvency is defined as a “financial condition such that the sum of such entity’s debts is greater than all of such entity’s property, at a fair valuation….” Following In re Heilig-Meyers Co.… Read More
As evidence of the insolvency of the Debtor in support of a long-running preference action, the Trustee sought to introduce Affidavits from his paralegal, from the Director of Financial Services of one of the Debtor’s largest creditors, from the Examiner appointed in the case and from himself. The bankruptcy court found that there were numerous foundational and authentification issues with these Affidavits that would need to be addressed and was sufficient to deny the Trustee’s motion for summary judgment as to the Debtor’s insolvency at the time of the transfers in question.
Further, based on questions regarding whether the Debtor received any benefit from these transfers, arising from inconsistencies in the deposition testimony of James Winslow, the owner of the Debtor, the court held that there was a genuine issue of material fact with respect to whether the Debtor received less than a reasonably equivalent value.… Read More