2014 Legal Seminar for Credit Professionals
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Kegler Brown, in conjunction with NACM Great Lakes Region, presented its annual Legal Conference for Credit Professionals on October 16, 2014. The half-day seminar is central Ohio's premier legal conference providing compelling and timely topics that are imperative for credit managers. This year's topics included handling corruption in international sales, recovering assets transferred by debtors, electronic commerce and a bankruptcy law update.
Transcript of 2014 Legal Seminar for Credit Professionals
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AML + OFAC + FCPA ComplianceConsiderations for Credit Professionals in
International Trade Transactions
presented by Luis M. Alcalde
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Goods, services, technology, contract rights, money and/or people are moving from one market or legal jurisdiction to another
market or legal jurisdiction
Physical Transfer
Transfer of Rights (Patents, Trademarks, Trade Secrets such as
business systems for franchise)
Cross-border nature of the trade and exchange means that the law of
at least two jurisdictions or markets/countries apply
Electronic Transfer
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U.S. Export laws
U.S. Finance + Banking
Laws
Foreign Market Import Laws
Foreign Market
Finance + Banking
Laws
Laws of foreign market through
which goods may pass or from
which payments are made
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Growth of Global Exports Trade
$1 Trillion1977 value of global exports
2013 value of global exports
World Trade Organization Stats
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Growth of Global Illicit Trade
+Growth of transnational criminal organizations with coordinated and sophisticated criminal operations
+Global Terrorism/attacks of 9/11 to achieve political and criminal aims
+Terrorism funded through charity + illicit activity
+Criminal activity accounts for 8 to 15 percent of world GDP
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U.S. Response to Global Crime + Terrorism
View: U.S. view is that organized criminal activity, terrorism and bribery undermine the democratic process and disrupts the free market systemResponse: U.S. response is a global attack on the problem and therefore it is a foreign policy response involving diplomatic, intelligence, military, law enforcement and legal assets.
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Three Major Compliance Topics for International Trade
AML: Bank Secrecy + Patriot Acts
OFAC Regulations
Foreign Corrupt Practices Act
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U.S. Response is Fundamental Foreign Policy of the U.S.
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Regulations Affect Businesses
+AML, OFCA + FCPA regulations affect business but were not enacted with business purpose in mind
+Primarily tools to achieve basic U.S. foreign policy goals
+How they are enforced compel businesses to actively enter the role of traditional law enforcement in areas that have nothing to do with their core business
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Enforcement Focus
+Tweaked with changing short and long term foreign policy objectives
+ Information and policy recommendations come from State Department, CIA, Homeland Security, Treasury, Military among other agencies
+Violations can lead to severe administrative, civil and criminal penalties for entities and individuals
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Illicit Uses of Trade Financing
1. To avoid taxes and trade restrictions
2. To launder money
3. To conceal bribery + other illicit activities
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Trade-Based Money Laundering
The process of disguising the proceeds of illegal activity and moving value through the use of trade transactions so they appear to come from legitimate sources or activities.
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“Money launderers are increasingly looking for ways to avoid tight controls at major banks . . . Trade-based money laundering schemes are
not new, but we believe they are becoming more prevalent as it becomes harder to use the
banking system to move money.”
-Angela Byers, section chief of the financial crimes section of the FBI’s criminal investigative division
September 29, 2014
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Due Diligence
+ Hard to due diligence on multiple parties+ Use of shell/front companies
Multiple Jurisdictions
+ Trade parties located in jurisdictions with lax AML + Financial Regulations
+ Different Privacy Laws, Corruption, Cultures
Complex Arrangements
+ Complex payment/finance arrangements with many documents
+ Lack of transparency to banks + other financial institutions
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Anti-Money Laundering
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Bank Secrecy Act
+31 U.S.C. sections 5311 et seq
+Applies to national banks, federal savings institutions, federal branches and agencies of foreign banks.
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Reports
1. Currency Transaction Reports regarding deposit, withdrawal, exchange, payment or transfer exceeding $10,000
2. Monetary Instrument Reports (MIL) purchases totally $3,000 to $10,000 (Anti-Drug Abuse Act of 1988)
3. Currency Monetary Instruments Reports for transportation, mailing or shipment of cash/monetary instruments exceeding $10,000 (applies to person)
4. Report of Foreign Bank and Financial Account
5. Suspicious Activity Report (SAR)
6. Exempt Person Reports
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About the Patriot Act
+Greatly expanded the definition of “financial institution”+New “Customer Identification Program” or KYC rules+Implemented information sharing provisions with law enforcement and among financial institutions “Section 314 Requests”
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Enhanced Requirements for AML Programs+Requires financial institutions to have compliance officer, employee training, independent testing, risk assessment, CIP or KYU, SAR program for monitoring, investigation and reporting of suspicions activities, information sharing, record keeping and retention program and board reporting
+Enhanced due diligence of correspondent and private accounts of non-U.S. persons
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Accounts of Senior Foreign Political Figures + PEPsFinancial Institutions must have policies, procedures and controls to:
+ detect money laundering and possible proceeds of foreign corruption in private banking accounts associated with senior foreign public officials and their immediate family or close associates
+ monitor the regular accounts of Politically Exposed Persons (PEPs) and their immediate families and close associates
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REDFLAGSin Trade Transactions
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Customers who provide insufficient or suspicious Information
New business account cannot provide reasonable information about:
+ the nature and purpose of its business+ prior, current and anticipated account activity
and customers+ prior banking relationships+ names of its officers and directors including
controlling owners and beneficiary parties, or information on its business location
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Products purchased are inconsistent with the nature of the customer’s business
Customers conducting business in higher-risk jurisdictions
Customers shipping items through higher-risk jurisdictions, including transit through non-cooperative countries
Customers involved in potentially higher-risk activities, including activities that may be subject to export/import restrictions such as “dual use” items
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Customer does not want discounts or other pricing concessions shown on invoice
Customer requests payment from or to a third party
Transaction structure appears unnecessarily complex and designed to obscure the true nature of the transaction
Shipment locations or description of goods not consistent with letter of credit
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Enforcement of AML as to Institutions +Office of Currency Controller performs examinations of institutions
+Treasury Department Office of Financial Crimes Enforcement Network (FinCEN) and OFAC investigations combined with Dept. of Justice and other agencies
+Whistleblowers under Dodd-Frank and SEC or CFTC enforcement
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Office of Foreign Assets Controls
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About the OFAC
+Administers a series of laws imposing economic sanctions on countries, organizations and individuals to further U.S. foreign policy objectives
+Iran, Ukraine/Russia, Syria, Cuba, Belarus, Balkans, Burma, Central African Republic, Ivory Coast, North Korea, Iran, Iraq, Lebanon, Somalia, South Sudan, Yemen, Zimbabwe
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Nature of OFAC Country Sanctions
+Broadly apply to all economic activity and travel and foreign governments such as Cuba, Iran, North Korea
+Apply to specific economic sectors, entities and individuals such as Russian energy with Ukraine related sanctions
+Apply to specific entities and individuals such as Congo, Zimbabwe, Somalia sanctions
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Specially Designated Nationals (SDN)
Country/Sanction Program Specific
Not Country/Sanction Program Specific
Individuals (government, sectoral, WMD, finance)
Individuals (terrorist, transnational criminal gangs, WMD)
Groups (government, sectoral, WMD, finance)
Groups (terrorists, transnational criminal gangs, WMD)
Entities (government, sectoral, WMD, finance); can be front companies or companies directly/indirectly controlled by blocked persons or groups
Entities (terrorist; transnational criminalgangs, WMD); can be front companies or companies directly/indirectly controlled by blocked persons or groups
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Prohibition to Dealing with SDNs
+U.S. Persons cannot deal with SDNs –All assets are blocked
+No dollar limit –all transactions with SDNs are subject to regulations
+No specific due diligence safe harbor- the law prohibits transactions with SDNs
+OFAC Sanctions List Search states: “The use of Sanctions List Search does not limit any criminal or civil liability for any act undertaken as a result of, or in reliance on, such use.”
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SDN Property
+“Property" is very broadly defined, including present, future or contingent interests
+Property and interests in property of an entity are blocked if the entity is owned, directly or indirectly, 50% or more by a person whose property and interests in property are blocked pursuant to an Executive Order or regulations administered by OFAC
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Foreign Sanctions Evaders (FSEs)
+Individuals and entities determined to have violated, attempted to violate, conspired to violate, or caused a violation of U.S. sanctions on Syria or Iran
+Foreign persons who have facilitated deceptive transactions for or on behalf of persons subject to U.S. sanctions
+Transactions with FSEs are prohibited
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OFAC Penalties
Penalties are program specific but include:+Civil + Criminal Penalties+Fines+Imprisonment+Debarment+Forfeitures
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Foreign Corrupt Practices Act
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About the FCPA
U.S. law known primarily for two of its main provisions:1. Prevention of bribery of (foreign) governmental officials2. Duty to keep accurate financial books and records and have
adequate internal controls to accurately reflect the transactions of the business
+ Scope + operation of FCPA is not restricted to U.S. territorial boundaries
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Why Should FCPA be of Concern?
1. Siemens (Germany): $800 million in 2008
2. KBR / Halliburton (USA): $579 million in 2009
3. BAE (UK): $400 million in 2010
4. Snamprogetti Netherlands B.V./ENI S.p.A (Holland/Italy): $365 million in 2010
5. Technip S.A. (France): $338 million in 2010
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+U.S. Justice continues to focus on individuals+Companies settle, pay fines + forfeit profits+Guilty employees go to jail, pay fines + must make restitution
+Average jail term is two years in federal prison but range is very broad with one sentence up to 15 years
Focus on Prosecution of Individuals
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Persons Subject to the FCPA
+Potentially applies to U.S. companies, citizens, foreign subsidiary, officer, director, employee, or agent of a U.S. company or its foreign subsidiary and any stockholder acting on behalf of the company
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Territorial Applications
+For acts taken within the territory of the U.S., Issuers and Domestic Concerns are liable, if the Act is undertaken in furtherance of a corrupt payment to a foreign official using U.S. mails or other means or instrumentalities of interstate commerce
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Nationality Applications
+Issuers and Domestic Concerns are liable for any act in furtherance of a corrupt payment undertaken outside the U.S.
+May be held liable for payment authorized by employees or agents operating entirely outside the U.S., using money from foreign bank accounts, and without any involvement by personnel located within the U.S.
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Liability of Parent Companies of Foreign Subsidiaries
+U.S. parent corporations may also be held liable for the acts of wholly owned foreign subsidiaries where they authorized, directed, or controlled the activity in question
+Also U.S .citizens or residents, who were employed by or acting on behalf of such foreign-incorporated subsidiaries
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Anti-Bribery Basic Prohibition
FCPA makes it unlawful for companies/persons subject to U.S. jurisdiction to bribe foreign government officials to obtain or retain business, including through intermediary
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Corrupt Intent
The person making or authorizing the payment must have a corrupt intent, and the payment must be intended to induce the recipient to misuse his official position to direct business wrongfully to the payer or to any other person.
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“Willful Blindness”
Conviction is possible if there is evidence that a person exhibits a conscious disregard or deliberate ignorance of known facts that should reasonably alert one to the high probability of a violation
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Payment + Anything of Value
+FCPA prohibits paying, offering, promising to pay (or authorizing to pay or offer) money or anything of value (i.e. No minimum value)
+FCPA does not require that a corrupt act succeed in its purpose
+A mere offer or promise can constitute a violation of the statute
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Recipient
+Prohibition extends only to corrupt payments to a foreign official, a foreign political party or party official, or any candidate for foreign political office
+“Foreign official” means any officer or employee of a foreign government, a public international organization, or any department or agency thereof, or any person acting in an official capacity
+Could include an employee of a state-owned enterprise
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Business Purpose Test
+FCPA prohibits payments in order to assist the company in obtaining or retaining business for or with, or directing business to, any person
+The term “obtaining or retaining” business is broadly defined and encompasses more than mere award or renewal of a contract
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FCPA Books + Records Requirements
+Pursuant to FCPA companies must make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company
+Company can be guilty of this independently of anti-bribery provisions
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Permissible Payments +Affirmative Actions Under FCPA“Grease Payments”
+ Facilitating payments for routine governmental actions+ Exception to the anti-bribery prohibition are payments to facilitate
or expedite performance of a “routine governmental action”
+Does not include any decision by a foreign official to award new business or to continue business with a particular party
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Affirmative Defenses
+ Payment was lawful under the laws of the foreign country
+ Money was spent as part of demonstrating a product or performing an otherwise lawful contractual obligation
+ Whether a payment was lawful can be difficult to determine
+ Seek advice of counsel experienced in these issues
+ Burden of proof is on the defendant to demonstrate that the payments did not constitute a violation of FCPA
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Internal Controls
Provide reasonable assurances that:+transactions are done as management has authorized+transactions are recorded accurately+there is proper accountability for company assets
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DiligenceDiligenceThe terms "reasonable assurances" and
"reasonable detail" mean such level of detail and degree of assurance as would satisfy prudent officials in the conduct of their own affairs
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Dilemma of Due Diligence
+Must be done as part of a compliance program to maintain a system of internal controls
+Reasonably assure accurate books and records +Transactions are executed in accordance with management directives
+Not doing due diligence is a violation of the law+Doing due diligence is not a defense to bribery
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Practical Defense to Corrupt Intent
+If one does everything that is reasonably possible, then it is difficult to prove a corrupt intent
+The terms "reasonable assurances" and "reasonable detail" mean such level of detail and degree of assurance as would satisfy prudent officials in the conduct of their own affairs.
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What is Reasonable Under the Circumstances?+Has risk analysis identified any general and/or specific risks of corruption?
+ In what market is the consultant working? Is it a market with a reputation for corruption or is it a transparent market?
+ India has high incidence of corruption, so we know there is high risk.
+ Is the consultant going to have to interact with government officials?
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Sanctions
+Civil + criminal penalties+Barred from government contracts+Denial of licenses+Suspension from selling securities+Tax problems for improper deductions in tax filings+Disgorgement of profits+Employees prosecuted and jailed
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Best Practices
+Financial Controls+ Monitoring process, legitimate vendor transactions, employee
advances, petty cash, training
+Contract Review+ Analyze all current and future contracts+ Outsourcing bribery
+Compliance Program + Culture+ UK Bribery Act compliance defense (not under FCPA)+ Broad definition of bribery, includes commercial
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Legal Advice
The content of this presentation is for educational purposes only. Each legal issue is fact dependent, this presentation should not be used or viewed as legal advice; your legal counsel should be consulted on the application of your particular factual situation to the current law.
Copyright: 2014 Kegler Brown Hill + Ritter
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Thank You!
Luis M. Alcalde, Of CounselKegler Brown Hill + [email protected]/alcalde614.462.5480
@LMAlcalde
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Give It Back!Recovering Assets Transferred by Debtors
presented by Christy A. Prince
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Voidable Transfers
You have a claim against Debtor
Debtor transfers assets or incurs an obligation in an unfair way
The transfer/obligation diminishes Debtor’s value in a way that hurts
Debtor’s creditors
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When Does This Come Up?
+Customer transfer some or all assets to a new company+Guarantor places assets beyond reach of creditors+Customer shuts down and pleads poverty+Customer incurs new obligation and can’t pay its creditors
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Who Can Bring an Action?
+Anyone with a right to payment whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.
+Even if debtor disputes your claim+Even if the debt is not yet due+Even if your claim is contingent or unmatured
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Practice
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Even if your customer’s account is not delinquentyou still have the right to avoid a voidable transfer
Even if the customer’s guarantor isn’t on the hook YET
you still have the right to avoid a voidable transfer
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What Assets are We Talking About?
Money Tangible Assets
inventory, equipment, real property, vehicles
Intangible Assets
contract rights, accounts, customer lists, IP
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What Assets are EXCLUDED?
+Property encumbered by a valid lien+ Building is under water with its mortgage no asset+ Car has no equity no asset
+Property exempt from creditors+ i.e., $450 in cash; $132,900 in homestead property equity;
$3,675 of equity in a single vehicle; retirement accounts; etc.
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Elements of Voidable Transfer
1. The debtor made a transfer or incurred an obligation
2. The creditor’s claim arose:+ Before the transfer/obligation, or+ Within a reasonable time (not to exceed four years)
after the transfer/obligation
3. Either Bad Intent or Sweetheart Deal
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Third Element – Bad Intent
Debtor made the transfer/obligation with actual intent:+ To hinder any creditor+ To delay any creditor+ To defraud any creditor
How can you tell if the intent was bad?
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Selected Badges of Fraud
+Was the transfer to an insider?+Was the transfer hidden?+Was transfer around the time a substantial debt was incurred?
+Did debtor retain possession or control of the property?+Was debtor insolvent at the time?
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+Customer’s employee is texting while driving onhis way to a meeting
+He causes an accident+Customer has no liability insurance+Customers transfer its bank account funds to its owner and transfer its equipment, customer list, and vehicles to an affiliate, leaving only its fully-mortgaged building for creditors
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Sweetheart Deal, Version One
+Debtor did not receive reasonably equivalent value in exchange for the transfer/obligation, and
+“The debtor was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction.”
- R.C. 1336.04(A)(2)(a)
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+Christy transfers all her money, property, and interests to her husband
+She leases office space, purchases photography equipment, computers, internet servers, and hires web designers
+She starts a pay website of funny cat pictures+Website fails because the internet is full of free funny cat pictures.
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Sweetheart Deal, Version Two
+Debtor did not receive reasonably equivalent value in exchange for the transfer/obligation, and
+Insolvency component
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Insolvency Component
+Debtor was insolvent at the time of the transfer/obligation, or
+Debtor became insolvent as a result of the transfer/obligation, or
+Debtor was on the path to insolvency andshould have known it.
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+Your customer shuts down its operation and pleads poverty.
+A new company is now running a remarkably similar business, using the same equipment and servicing the same customers.
Is this okay?
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+Ask: Did the new company pay your customer reasonably equivalent value for the equipment and customer list?
+The new company shows you the purchase agreement showing that it paid reasonably equivalent value for the customer’s equipment and customer list.
Is this okay?
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+Ask the customer where the money went.
+If the customer’s owner took the money, that could be voidable.
+If the customer used the money to pay back loans from its owner, that could be voidable.
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+If the money truly went to pay operating costs and non-insider creditors, but the money ran out before they paid you, that’s probably legitimate.
+The assets often go to the secured creditor. That’s legitimate.
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+Your customer shuts down its operation and pleads poverty.
+Former owner’s brother started a company running a remarkably similar business, using the same equipment and servicing the same customers.
+Former owner is now working at the new company.
Is this okay?
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Run through the same analysis, but be skeptical because there are badges of
fraud involved
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+Customer incurs an obligation and can’t afford to pay its creditors as a result
+Customer agrees to pay its Owner/CEO $300,000 per year when annual gross revenue is $600,000
+Customer signs a promissory note for $1,000,000 due in three months in exchange for $500,000 now
Is this okay?
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Voidable Transfer v. Preference
VOIDABLE TRANSFERa transfer or obligation that
dissipates the debtor’s assets in a way that is unfair to the
debtor’s creditors
Look at the nature of the transfer – did the transferee pay for it?
PREFERENCEa payment or transfer to a
creditor, shortly before bankruptcy
Look at nature of relationship between debtor + transferee
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Defenses to Voidable Transfer
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Transfers Made for Value
+Transferees who took the transfer in good faith and for reasonably equivalent value
+If transfer is avoided, transferee is entitled to a lien in the amount of what it paid
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Antecedent Debt Counts as Value
+This means you can accept transfers or payment from your customers
+Exception: can’t repay insiders if the insiders have reasonable cause to believe the debtor was insolvent at the time
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Transfers Made in the Ordinary Course of Business
+Employees and owners can continue to collect wages and salary in the ordinary course of business
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Remedies
+Lawsuit against the transferee, not the debtor+Recover the transferred asset+Get a money judgment for the lesser of the value of
+ The transferred assets at the time of the transfer, or + The amount of the creditor’s claim
+Other remedies if appropriate + Appointment of receiver, etc.
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Practice
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Investigate as much as possible
Ask for updated financial statements regularly
Ask about disposition of missing assets
Run asset searches for customer + transferees
How do you know if it’s worth pursuing?
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Uniform Voidable Transfer Act
+Uniform Fraudulent Transfer Act is law in 43 states+New version was finalized in July 2014+Not yet adopted in Ohio, but likely will be adopted soon +Will change wording from “Fraudulent” to “Voidable”+Highlights the fact that transfer can be avoided and asset recovered even if there was no actual fraud
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Customer Transfers Some or All Assets to a New Company +Did the new company pay the fair value of the assets?
+What happened to the money received by the customer?
+Did the customer receive a benefit from the acquisition while stiffing its creditors?
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Guarantor Places its Assets Beyond the Reach of its Creditors+This can be hard to detect
+Ohio Legacy Trust Act = lemons for creditors
+Inquire about financial statement asset ownership
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Customer Shuts Down +Pleads Poverty+Where did the assets go?
+Did the customer’s owner transfer the company assets for less than fair value?
+The assets often go to the secured creditor. That’s legitimate.
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Electronic Signatures on Credit Applications + More
presented by Dan Bennett
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Background – Legislation
+The E-Sign Act+ Federal statute adopted in 2000+ Applies to interstate or foreign commerce
+Uniform Electronic Transactions Act+ Adopted in Ohio (R.C. 1306) in 2000
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Statutory Basics
+Electronic signatures and records as well as agreements entered into electronically, such as via e-mail and facsimile, are generally valid and enforceable so long as the send intended to affix his or her (or its) signature to the document
+Both statutes are technologically neutral
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Statutory Exemptions
+E-Sign Act does NOT apply to:+ Wills, trusts, etc.+ Adoption, divorce or other family law matters+ The UCC
+UETA does NOT apply to:+ Wills, trusts, etc.+ Certain provisions of the UCC
(including secured transactions)
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Electronic Signatures Under the UCC
+UCC Article 9 requires, for security agreements to be enforceable, that “the debtor has authenticated a security agreement that provides a description of the collateral.”
+What does “authenticated” mean?+ (a) to sign (i.e., hard copy writing needed) and (b) “with present
intent to adopt or accept a record, to attach to or logically associate with the record an electronic sound, symbol, or process.”
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So Do E-Signatures Work?
+Whether under E-Sign Act, UETA, or UCC, e-contracts (including security agreements) will be valid and enforceable so long as the signor intended to sign, and the party seeking to enforce the electronically signed contract is able to reasonably demonstrate the signor’s intent.
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The Spectrum of E-Sign Options
+Proving debtor’s intent to sign – different options provide different degrees of security
+At least five different ways:1. Click-through transaction2. Personal PIN numbers3. E-mails4. “Digital signatures”5. Biometrics
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“Digital Signatures”
+Existing software/third party vendors – i.e., EchoSign (by Adobe), DocuSign
+How does EchoSign handle:+ Authentication?+ Chain of custody/evidentiary concerns?+ Alleged repudiation?
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Belt + Suspenders
+Additional proof of intent to execute cannot hurt
+ Send confirmatory e-mail requesting debtor to respond
+ Confirm by telephone (and note conversation in writing, who talked to, what was said, etc.)
+ Reference contracts in orders
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Drafting Tips
+“Use of Electronic Transmissions” – mutual agreement to conduct transactions via electronic means
+ Also designate E-Sign Act and UETA as applicable
+Debtor Acknowledges Intent to Be Bound+ i.e., “I acknowledge that by clicking ‘Accept and Submit,’ I am
indicating my intent to sign this ___________ and that this shall constitute my signature.”
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Drafting Tips, Con’t
+Merger and Integration provision (the “Entire Agreement” provision)
+Severability
+Governing Law
+Jurisdiction/Venue/Service of Process
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New + Challenging Issues in Preference Defense
presented by Larry J. McClatchey
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Priority Claims Under 503(b)(9)“Twenty Day Goods”
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11 U.S.C. § 547 : U.S. Code –Section 547: Preferences
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Section 547: Preferences
Except as provided in subsections (c) and (i) of this section, the trustee may avoid any transfer of an interest of the debtor in property –
1) to or for the benefit of a creditor;
2) for or on account of an antecedent debt owed by the debtor before such transfer was made;
3) made while the debtor was insolvent;
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Section 547: Preferences
4) made –A. on or within 90 days before the date of the filing of the petition; orB. between ninety days and one year before the date of the filing of the petition, if
such creditor at the time of such transfer was an insider; and
5) that enables such creditor to receive more than such creditor would receive if –
A. the case were a case under chapter 7 of this title;
B. the transfer had not been made; andC. such creditor received payment of such debt to the extent provided
by the provisions of this title.
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Section 547: Preferences
(c) The trustee may not avoid under this section a transfer –
1. to the extent that such transfer was –A. intended by the debtor and the creditor to or for whose benefit such
transfer was made to be a contemporaneous exchange for new value given to the debtor; and
B. in fact a substantially contemporaneous exchange;
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Section 547: Preferences
(2) to the extent that such transfer was in payment of a debt incurred by the debtor in the ordinary course of business or financial affairs of the debtor and the transferee, and such transfer was –
A. made in the ordinary course of business or financial affairs of the debtor and the transferee; or
B. made according to ordinary business terms;
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Section 547: Preferences
(4) to or for the benefit of a creditor, to the extent that, after such transfer, such creditor gave new value to or for the benefit of the debtor—
A. not secured by an otherwise unavoidable security interest; andB. on account of which new value the debtor did not make an
otherwise unavoidable transfer to or for the benefit of such creditor;
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Transfers Avoidable for Fraud
+Actual Fraudulent Intent+Constructively Fraud
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Thank You!
Larry J. McClatchey, DirectorKegler Brown Hill + [email protected]/mcclatchey614-462-5463
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