Lariat Companies, Inc. v. Wigley, No. 18-6027 (8th Cir. 2020)
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Years of litigation resulted from Debtor's spouse's personal guarantee of a lease of real property from Lariat. One suit resulted in a state court judgment holding Debtor and Debtor's spouse jointly and severally liable for fraudulent transfers from Debtor's spouse to Debtor. In Debtor's subsequent chapter 11 bankruptcy, Lariat asserted a claim for $1,030,916.74 based on that judgment. The bankruptcy court overruled Debtor's objection but found Lariat's claim was for damages resulting from the termination of a lease of real property (the lease Debtor's spouse had personally guaranteed) and was subject to 11 U.S.C. 502(b)(6)'s cap on such claims. The Eighth Circuit held that Lariat held a claim for $308,805.00 (plus interest). Lariat filed a complaint under 11 U.S.C. 523(a)(2)(A); the bankruptcy court excepted the Lariat claim from discharge, finding seven badges of fraud
The Eighth Circuit Bankruptcy Appellate Panel affirmed. The evidence supported findings that the transfer was to an insider; the debtor retained possession or control of the property after the transfer; before the transfer was made, the debtor had been sued or threatened with suit; the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred; the debtor was insolvent or became insolvent shortly after the transfer; the transfer occurred shortly before or shortly after a substantial debt was incurred.
Court Description: [Nail, Author, with Shodeen and Dow, Bankruptcy Judges] Bankruptcy Appellate Panel - Exemption from Discharge - 11 U.S.C. sec. 523(a)(2)(A). On appeal from bankruptcy court's judgment excepting from discharge debt to Lariat Companies, Inc, resulting from termination of lease of real property, the bankruptcy's finding of seven badges of fraud present are supported by the record. The bankruptcy court's findings the state court fraudulent transfer judgment established both damage suffered by Lariat and the Debtor's liability for those damages were not clearly erroneous. [ September 24, 2020 ]
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