Grifco Inc (GFCI)

[cyofish]

Best2listen, there are laws that protect the creditors like RR in this situation Called the Uniform Fradulent Transfer Act.


Notwithstanding the many different sources of fraudulent transfers law, they all "boil down" into essentially four different ways a transaction may be attacked. The four lines of attack are as follows:

(A) that the transfer was intentionally fraudulent;
(B) that the transfer was in "reckless disregard" of the effect it would have on the debtor's ability to service its debt;
(C) that the transfer left the debtor with unreasonably small assets for the continuation of its business; and
(D) that the transfer was made while the debtor was insolvent or which caused the debtor to become insolvent.
(A) Intentional Fraud



An intentionally fraudulent transfer is defined as a: "transfer" made, or obligation incurred with the actual intent to hinder, delay or defraud any creditor of the debtor. The statutory authority for the avoidability of an intentionally fraudulent transfer includes: 11 U.S.C. §548(a)(1) (Bankruptcy Code); 12 Pa.C.S.A. §5104(a)(1) (Pennsylvania UFTA); and §7 of the UFCA.

There is seldom extrinsic evidence of intent. Courts use what are referred to as "badges of fraud" as circumstantial evidence of fraudulent intent. The badges of fraud, as set forth at 12 Pa.C.S.A. §5104(b), are as follows:

(1) the transfer was to an insider;

(2) the debtor retained possession or control of the property transferred after the transfer;

(3) the transfer or obligation was not disclosed and/or otherwise concealed;

(4) the debtor had been sued or threatened with a suit before the transfer was made or the obligation incurred;

(5) the transfer was of substantially all the debtor's assets;

(6) the debtor absconded;

(7) the debtor removed or concealed assets;

(8) the value of the consideration received by the debtor was not reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred;

(9) the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;

(10) the transfer occurred shortly before or after a substantial debt was incurred; and

(11) the debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.
An intentionally fraudulent transfer can be avoided by both present creditors (i.e., those in existence when the fraudulent transfer occurred), and future creditors (i.e., those that extend credit to the debtor after the transfer).


http://www.katzlawoffice.com/fraud.htm