Paloian v. LaSalle Bank, N.A.

Dist. Ct. erred in affirming Bankruptcy Ct.'s finding that debtor was insolvent no later than August of 1997, and that certain payments made by debtor to defendant-creditor from August 1997 to July 1998 were fraudulent for purposes of seeking return of said payments pursuant section 550(a)(1) of Bankruptcy Code. Record showed that debtor was current in paying its creditors up to date of its April 2000 bankruptcy petition and had positive financial statements, and Dist. Ct. could not consider debtor's $18.5 million Medicare penalty that occurred in 1999/2000 to determine debtor's insolvency without factoring in fact that said penalties were actually paid by debtor's majority stockholder. Remand, though, was required for determination as to whether and when debtor became insolvent after August 1997.