avoidance of personal property transfer

[Mensa1]

In any event, if I were on the other side of this and the trustee came after this assets, I would seek FRCP Rule 11 sanctions for brining a frivolous action and go after the trustees bond.

Sounds good to me, but what are the chances of prevailing with that argument (in this hypothetical situation).?

What are the practicalities of such an argument; costs, etc.? Aren't you entitled only to recover your costs to defend this frivilous claim? If so, it seems like almost a flip of the coin wager since the upside is slight.

Interesting point, as I have looked at seeking Title 11 sanctions in another court proceeding, (non-Bk), and the move seemed quite impractical; but I am all ears.

[HHM]

Hey, give a guy some slack for typos.

I think the section is 547, for preference to an insider, with one year reach back. Some of you are getting real close if not dead on (in my opinion anyway) as to the problem. for the transfer of personal property there is no requirement for recording as there is in real property.

the definition of perfected transfer in 547 of personal property is that the perfection is considered done when the transfer is protected from a judicial lein creditor that would not allow the lein creditor to take a position that is superior to that of the person getting the transfer. For example a unrecorded lein on personal property would take second place to that of a recorded one. But most likely the trustee would not be able to show a position that would be over that of the owner.

So in order unravel this one, it would seem state and federal law would be the standard to see if the transaction was perfected. I do think that california and UCC codes would accept this transfer as being perfected and the father in law does have equitable title to the vehicle. If the father in law does have equitable title, then most likely that would supersede the position of a judicial lein creditor.

Does this sound appropriate.

and why would a trustee go after this, just because he can.

That sounds about right. I don't even think equitable or legal title are even an issue, this is personal property, the father in law has both. If I sell my DVD player to someone, he gives money and I give him the player, the buyer has both legal and equitable title. I see no difference in the transaction at issue.

In any event, if I were on the other side of this and the trustee came after this asset, I would seek FRCP Rule 11 sanctions for brining a frivolous action and go after the trustees bond.

[justbroke]

and why would a trustee go after this, just because he can.

From my experience, case review, and from looking at actual Trustee policies, they are a shoot first ask questions later type organization. When it comes to avoidable transfers... they will sue everyone and then worry about it if someone opposes the Trustee's actions.

Yes, because he can.

[Mensa1]

Hey, give a guy some slack for typos.
and why would a trustee go after this, just because he can.

Isn't there a joke that has the same punch line... why does a dog lick his ............... ?

[HRay]

Hey, give a guy some slack for typos.

I think the section is 547, for preference to an insider, with one year reach back. Some of you are getting real close if not dead on (in my opinion anyway) as to the problem. for the transfer of personal property there is no requirement for recording as there is in real property.

the definition of perfected transfer in 547 of personal property is that the perfection is considered done when the transfer is protected from a judicial lein creditor that would not allow the lein creditor to take a position that is superior to that of the person getting the transfer. For example a unrecorded lein on personal property would take second place to that of a recorded one. But most likely the trustee would not be able to show a position that would be over that of the owner.

So in order unravel this one, it would seem state and federal law would be the standard to see if the transaction was perfected. I do think that california and UCC codes would accept this transfer as being perfected and the father in law does have equitable title to the vehicle. If the father in law does have equitable title, then most likely that would supersede the position of a judicial lein creditor.

Does this sound appropriate.

and why would a trustee go after this, just because he can.

[Mensa1]

I think that this is a battle that the Trustee would lose, easily.

The mere fact that it is NOT a requirement to transfer a title in order to transfer ownership, unless you want to tag the vehicle, is extremely relevant. The fact that insurance was placed by the father and dropped by the son in the 14-15-16 month time frame would indicate a TRANSFER to me. This seems like an elementary argument that is cut and dried. As stated, outside the 12 month period, is a non-issue.

Also the type of property here may not even be classed as a vehcile unless it is tagged, which would make it essentially like son gave dad his super-nice sofa 16 months ago. And where is the problem.......?

[backtoschool]

What trustee misspells 'debtor' "debitor"

This is a state law question. I am not sure you have any standing here to avoid this transfer.
It doesn't appear to be a section 547 preference, the timeline is to old and you still need to prove the debtor was insolvent at the time. Preferences only have a 90 day shelf life if made to 3rd parties and a 12 month shelf life if made to insiders. Based on what you described above, this transaction took place beyond the 12 months. And this is true in ALL districts. (sorry backtoschool, but preference is no more than one year. The 2 year look back is for Fraudulent Transfer).

If CA does not require a title, any perfection argument you have is dead in the water. For personal property unless specifically required to by law, is perfected upon transfer of possession. The old adage that possession is 9/10's the law, is actually true. Registration would probably be held in this case as merely administrative to allow legal use, but is not a requirement of ownership. If a person does not renew vehicle registration (and just lets the car sit in the drive way) no one considers that surrendered ownership.

This leaves 548 Fraudulent Transfer, so far there appears to be no badges of fraud, the facts to support this claim have little to do with perfection of title.

So, just tuck your tails between your legs and stop wasting your time

Ahh....I thought the two year look back included preferences as well, my bad. This is clearly not a fraudulent transfer in my opinion.

[HHM]

What trustee misspells 'debtor' "debitor"

This is a state law question. I am not sure you have any standing here to avoid this transfer.
It doesn't appear to be a section 547 preference, the timeline is to old and you still need to prove the debtor was insolvent at the time. Preferences only have a 90 day shelf life if made to 3rd parties and a 12 month shelf life if made to insiders. Based on what you described above, this transaction took place beyond the 12 months. And this is true in ALL districts. (sorry backtoschool, but preference is no more than one year. The 2 year look back is for Fraudulent Transfer).

If CA does not require a title, any perfection argument you have is dead in the water. For personal property unless specifically required to by law, is perfected upon transfer of possession. The old adage that possession is 9/10's the law, is actually true. Registration would probably be held in this case as merely administrative to allow legal use, but is not a requirement of ownership. If a person does not renew vehicle registration (and just lets the car sit in the drive way) no one considers that surrendered ownership.

This leaves 548 Fraudulent Transfer, so far there appears to be no badges of fraud, the facts to support this claim have little to do with perfection of title.

So, just tuck your tails between your legs and stop wasting your time

[backtoschool]

This is a preferential transfer that is dated back from the date the transfer was recorded. Since that date falls within the one or two year window (depending on district) for transferring property to family members, the trustee can have the transfer voided and claim the car for the estate in my opinion.

[frogger]

the transfer was eventually recorded

If I were in a trustee position, this is the date that I would consider for it to have been transferred.

[HRay]

frogger; you are correct, it could be a prefrential transfer to an insider, however the legal question is, When did this occur? if upon the date the debitor gave up paperwork, and gave up possession, and removed insurance from it does that establish the date of transfer, of so then it is outside the 12 month reach back timeframe.

justbroke; I think you are correct, since this was not a lein or secured interest but a total transfer of legal title then no reqirement to record the lein with dmv in order to be first in line, he who files first has the first rights.
so the transferee will most likely attempt to use this argument.

the transfer was eventually recorded so the father in law could use it legally by being listed as the registered owner on the registration forms. This took place within the 1 year reach back timeframe.

I have found this delima to be very troublesome as to how to determine the date of transfer under BK law. Under section 547 personal property does not have to be recorded like real property in order for avoidance to take place.

The problem with perfection being recorded, is not a real issue. The problem that not recording something does, is that is removes the owner's rights in a court of law or equity against creditors. That's why recordation is usually what determines line priority. The old, first to file... wins.

In the end you have an unrecorded, yet perfected transfer of title and the property. The question is whether it needs to be recorded in that particular State. I think that it would only be required to record it, if you were a lienholder in order to "protect" your rights under some underlying agreement. Otherwise, if just sold or transferred to another party, as is this case, the person named on the certificate of title, is the new owner and that the title is perfected upon signature of the prior owner.

[justbroke]

The problem with perfection being recorded, is not a real issue. The problem that not recording something does, is that is removes the owner's rights in a court of law or equity against creditors. That's why recordation is usually what determines line priority. The old, first to file... wins.

In the end you have an unrecorded, yet perfected transfer of title and the property. The question is whether it needs to be recorded in that particular State. I think that it would only be required to record it, if you were a lienholder in order to "protect" your rights under some underlying agreement. Otherwise, if just sold or transferred to another party, as is this case, the person named on the certificate of title, is the new owner and that the title is perfected upon signature of the prior owner.

[frogger]

On the present conconsideration concept, nothing in bk code would require that, it was a transfer based upon the antecedent debit.
Ray

Therefore a preferential payment.

[HRay]

thanks for responses;

on perfection: I am trying to put myself in the shoes of the receiver now;

I would attempt to argue that perfection was accomplished when I took possession, that I held equitable title, and the debitor is going to show release of equitable or legal title when he gave up possession, and further shows release of interest upon removing from his insurance.

there are several ucc codes and california codes that would possibly support his argument of Perfection upon possession.

Unlike real property that is generally perfected upon recording for filing. or unlike secured financial interests that must be recorded on titles, or as lein holders with DMV.

Back as the trustee now: I seem to be missing something in this situation,
Perhaps it will occur to someone on this board or I will find it as I research case law on this. So far I have not been able to find case law that is exactly on point here.

On the present conconsideration concept, nothing in bk code would require that, it was a transfer based upon the antecedent debit.
Ray

[NoMoreCards]

My question would be not "can you?" but should you?

I have to tell you, this is the first time I've seen a trustee in here asking questions.

I have to agree with Newbie2. Just because you can does not mean you should. There are plenty of people that you should go after, but with what you said regarding this debtor, this is not one of those IMHO.