Bankruptcy
In re: Wilkins, 765 F.3d 1012 (9th Cir. 2023)
Study notes for In re: Wilkins: professor notes, cold call prep, exam angles, and memory aids.
Transfers made with the intent to hinder or defraud creditors can be voided under 11 U.S.C. § 548(a)(1)(A).
In re: Wilkins highlights the importance of scrutinizing transfers made by debtors prior to filing for bankruptcy. The court emphasized that an intention to defraud creditors can be established through the timing and nature of the transfers, especially if they are made to close relatives. This case serves as a pivotal reminder of the broad reach of the Bankruptcy Code's provisions against fraudulent transfers, particularly under 11 U.S.C. § 548(a)(1)(A), where the intentionality behind the debtor's actions is key to determining fraudulent intent.
Additionally, the court's interpretation of what constitutes 'intent to hinder, delay, or defraud' creditors underscores the need for debtors to maintain transparency. The ruling reinforces the role of the trustee in monitoring past transactions and protecting the interests of the estate by preventing the insider preferential treatment that could undermine the equitable distribution to creditors. This case should prompt students to think critically about the implications of personal transactions in bankruptcy proceedings.
F.R.A.U.D. = Fraudulent Transfers Require Awareness of Undue Delay.
| Case | Distinction |
|---|---|
| In re: Yost | In Yost, the debtor successfully argued the transfers were legitimate and not made with fraudulent intent, distinguishing it from Wilkins where intent was clear. |
| In re: Sherman | Sherman involved transfers made long before the bankruptcy filing, which reduced the likelihood of finding fraudulent intent versus the close timing in Wilkins. |
Allowing the court to void fraudulent transfers promotes fairness in the bankruptcy system, ensuring that all creditors are treated equitably.
Critics might argue that strict interpretations of fraudulent transfer laws can discourage legitimate family support and asset transfers before filing for bankruptcy.
Students can expect questions on the elements required to prove fraudulent transfers under 11 U.S.C. § 548(a)(1)(A), emphasizing the burden of proof as well as the importance of intent and timing of the transfers.