Montoya v. Goldstein, No. 22-2073 (10th Cir. 2023)
Annotate this CaseThe United States Court of Appeals for the Tenth Circuit decided in favor of a debtor, Chuza Oil Company, and its related parties, who were alleged to have made fraudulent transfers during bankruptcy proceedings. The court affirmed the bankruptcy court's decision that the transfers were not fraudulent, rejecting the trustee's argument that the transfers depleted the bankruptcy estate by replacing subordinated debt with unsubordinated debt. The court held that Chuza Oil Company did not have an interest in the transferred funds as they were earmarked for a specific creditor and were not part of the bankruptcy estate. The court further held that the earmarked funds did not diminish the estate, finding that the bankruptcy court's conclusion that the estate was not diminished by the combination of payments into and out of Chuza Oil Company was not clearly erroneous. The court also found that the statutory exceptions to the trustee's preferential transfer and constructive fraudulent transfer claims were satisfied, as Chuza Oil Company received much more in loans from the defendants than it paid to the specific creditor.
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