DZ Bank AG Deutsche Zentral-Genossenschaft Bank v. Meyer, No. 15-35086 (9th Cir. 2017)
Annotate this CaseDZ Bank filed an adversary action against the Meyers in bankruptcy court, alleging that the Meyers had fraudulently transferred assets in order to place them out of the bank's reach. The Ninth Circuit reversed the district court's decision affirming the bankruptcy court's judgment in favor of the bank. The panel held that, although the bankruptcy court correctly found that the Meyers engaged in fraudulent transfers under the Washington Uniform Fraudulent Transfer Act and thus committed fraud to the bank's detriment, the bankruptcy court erred by limiting relief to the amount of the collateralized debt. The panel explained that the bankruptcy court should have granted relief for the full $385,000 that the bank would have recovered.
Court Description: Bankruptcy. The panel reversed the district court’s decision affirming the bankruptcy court’s judgment in favor of a creditor in the creditor’s adversary proceeding alleging that the debtors fraudulently transferred assets in order to place the assets out of the creditor’s reach, and that the debt therefore was non- dischargeable under 11 U.S.C. § 523(a). The panel held that the bankruptcy court correctly found that, under the Washington Uniform Fraudulent Transfer Act, the debtors engaged in fraudulent transfers and, therefore, actual fraud, to the creditor’s detriment. The bankruptcy court erred, however, in limiting relief to the value of the assets that were directly traceable to the creditor’s security interest. The panel held that the non-dischargeable debt resulting from the fraudulent transfers was the full amount that the creditor would have recovered if it had been able to execute against the debtor’s ownership interest in the closely- held corporation from which the debtor transferred the assets.
This opinion or order relates to an opinion or order originally issued on July 11, 2017.
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