Zeddun v. Griswold

Dist. Ct. did not err in affirming Bankruptcy Ct.’s order in Chapter 7 proceeding, finding that debtor’s transfer of her 40-acre farm to father of her children constituted fraudulent transfer, where debtor was insolvent at time of transfer, and where debtor had failed to receive reasonable equivalent value in exchange for said property. Record showed that: (1) debtor and father of her children were involved in litigation over ownership of said farm at time of transfer; (2) debtor received no cash for transferring property, but received promise from father of her children to drop his lawsuit against her and to assume $149,000 in farm-related liabilities; and (3) farm had fair market value of $300,000 at time of transfer. As such Bankruptcy Ct. could properly find that debtor had not received reasonably equivalent value for her farm, where: (1) value of litigation was next to nothing where father of her children had lost his case against debtor at trial court level; and (2) debtor did not receive anything for her $151,000 in net equity in farm. Moreover, any benefit in avoiding further family conflict over ownership of farm was too nebulous to constitute reasonable equivalent value, where said transfer would put debtor’s property beyond reach of creditors.