Debtor paid for the air tickets to her husband

[mayojones]

Very many thanks again. The debtor was already insolvent when the air tickets for her son were purchased from her money. Her argument is that she received reasonable value in return because he completed her tasks in Asia and, unless her son did not go to Asia, she must have traveled to Asia by paying the same air fare from her pocket (in that case also, that money was not available to me- the creditor) thereby she had no intent to prevent that airfare from the creditor just because she paid for her son's airfare.

"Mayojones, why can't you locate and levy her bank account? " she is receiving pay check (not direct deposit) of her salary and getting it cashed. I will come to this point later on. The above flight ticket issue happened when there was direct deposit of salary.

 

[Litigator22]

[

What is the name of your state? Texas
I am judgment creditor. When I verified the financial transactions of the debtor (she), she bought air tickets for her husband’s journey to a country in Asia few times (each time he spent few weeks in that country). Her husband has almost no income. Debtor testified that she bought the air tickets for her husband because her husband visited the other country based on her request to take care of her parents (on her behalf) living in that country and to physically perform some required religious ceremonies on her behalf in that country. It seems to me that he visited to meet his own parents living in that country but I have no solid proof. Will this air ticket payment comes under fraudulent transfers?

Before offering some professional comments on the complex issue legal presented here * (i.e., provided you are interested), let me first ask you some questions.

Suppose that the purchase of the airline tickets for both your debtor's husband and her son passes muster as being fraudulent transfers under the TUFTA? What then?

What's your understanding as to the legal implications? How are you to benefit? What legal remedies, if any are you thereby afforded? Surely you aren't thinking of seeking reimbursement from the airlines that booked the flights and provided the services in good faith, or that some economical or disciplinary sanctions can be judicially imposed on your debtor.

In that regard are you aware that in some states the wording "voidable transfers" has been substituted in lieu of "fraudulent transfers "? (Obviously, meant to denude the statutes of any inference of immoral or illegal wrongdoing.)

How do you intend to deal with the strong likelihood that - particularly in the instance of the husband's tickets -they were purchased with joint money - his and his wife's?

Have you given any thought as to how to overcome the presumption that the wife's salary (which you admit was the source used) was anything other than community property in which each husband and wife are equally vested and have equal control?

What if neither the husband nor the son had flown, but the wife did? Would you still be pursuing the matter? If not, why not? If, so why so?
________________________

[*] If you are wondering why a say "complex legal issues", study the Texas Supreme Court Case of Janvey vs. The Golf Channel, Inc. 487 SW3d 560
for an in depth discourse on the subject of reasonably equivalent value under the TUFTA

 

[mayojones]

Great many thanks. Let me make this question simple and straightforward: If a debtor purchased air tickets for someone (that someone can be a friend or any one else), and that someone traveled using those air tickets and get some work done at a distant place for the debtor (and the debtor and that someone testify that it is true), then the amount spent by debtor on those air tickets for that someone is treated a fraudulent transfer from the debtor to that someone, as per Texas law https://statutes.capitol.texas.gov/Docs/BC/htm/BC.24.htm ?

 

[PayrollHRGuy]

Great many thanks. Let me make this question simple and straightforward: If a debtor purchased air tickets for someone (that someone can be a friend or any one else), and that someone traveled using those air tickets and get some work done at a distant place for the debtor (and the debtor and that someone testify that it is true), then the amount spent by debtor on those air tickets for that someone is treated a fraudulent transfer from the debtor to that someone, as per Texas law https://statutes.capitol.texas.gov/Docs/BC/htm/BC.24.htm ?

NO!

 

[cbg]

No. If a debtor purchased air tickets for someone, and that someone traveled using those air tickets and got some work done at a distant place for the debtor then the amount spent by debtor on those air tickets for that someone is NOT treated a fraudulent transfer from the debtor to that someone, as per Texas law, no matter how many people testify that it is true.

I hope that this is now clear to you.

 

[Litigator22]

Great many thanks. Let me make this question simple and straightforward: If a debtor purchased air tickets for someone (that someone can be a friend or any one else), and that someone traveled using those air tickets and get some work done at a distant place for the debtor (and the debtor and that someone testify that it is true), then the amount spent by debtor on those air tickets for that someone is treated a fraudulent transfer from the debtor to that someone, as per Texas law (?)

Are you inquiring or making a declaration? Not sure.

Are you asking if your hypothetical qualifies as a fraudulent transfer under the TUFTA or proclaiming that it does? Because the sentence you have written functions as declarative and imperative, not interrogative.

The constraints of space and time don't permit me to speak on the many aspect of this type of legislation. Rather I recommend that you read the 2016 Texas Supreme Court's decision in Janvey vs. The Golf Channel, Inc., 487 SW3rd 560. There you will find Judge Eva Guzman's most informative treatment of the subject of consideration and how the courts define/apply the term "reasonably equivalent value" as found in the TUFTA.

I remain curious as to what you anticipate or desire to accomplish by your efforts here. Once again let me ask you what it is that you expect to gain or how your situation with the debtor would benefit or improve if it was decreed that her expenditures amounted to fraudulent transfers of her assets?

 

[not2cleverRed]

Great many thanks. Let me make this question simple and straightforward: If a debtor purchased air tickets for someone (that someone can be a friend or any one else), and that someone traveled using those air tickets and get some work done at a distant place for the debtor (and the debtor and that someone testify that it is true), then the amount spent by debtor on those air tickets for that someone is treated a fraudulent transfer from the debtor to that someone, as per Texas law https://statutes.capitol.texas.gov/Docs/BC/htm/BC.24.htm ?

Let me make this answer simple and straightforward: What kind of transaction listed under the code as fraudulent do you think applies? Please cite the specific portion of code that you believe applies.

It matters not what you THINK the code SHOULD say. What matter is whether the transaction fits into the category of "fraudulent transaction" as defined and described in the code.

 

[zddoodah]

Will the payment of her son’s tickets come under fraudulent transfer?

That you'd ask this question tells me you haven't been reading (or understanding) what you've already been told. If you need clarification about what you've already been told, please ask.

 

[Litigator22]

That you'd ask this question tells me you haven't been reading (or understanding) what you've already been told. If you need clarification about what you've already been told, please ask.

Before we hasten to chasten the OP for want of attentiveness and failure to comprehend the responses to her questions, kindly permit me to review your input; id est. your hypothetical cocaine/rock band scenario.

My point being that I fail to see how you can justify your conclusion that a transaction whereby an insolvent or financially vulnerable debtor exchanges assets for a contraband (or any other illegal goods or services) would satisfy the needed element of "reasonably equivalent value".

Particularly so in view of the following pronouncements from the Texas Supreme Court: (Some paraphrasing for clarity only)

The TUFTA is designed to protect creditors from being defrauded or left without recourse due to the actions of unscrupulous debtors in the failure to obtain consideration reasonable equivalent to the value of the asset." Citing: KVM Fin. LLC v. Bradshaw,457 S. W. 3d 70 (Tex. 2015)

This conclusion is inescapable because, under TUFTA ''value'' must be assessed from the standpoint of (the) creditors and the focus of the value inquiry is "the extent to which the transferors' net worth is preserved." Emphasis mine)

Value is to be determined from the creditors' perspective and makes no exception for . . . love and affection, and other types of consideration that have no utility from a creditors' viewpoint (and) do not confer value for an exchange."

Value must be determined objectively at the time of the transfer and in relation to the individual exchange at hand rather than viewed . . . subjectively from the debtor’s perspective.

There is an implicit requirement that the transfer confer some direct or indirect economic benefit to the debtor as opposed to transactions that merely hold subjective value for the debtor.
___________________________

I'm assuming there is no need to mention the "clean hands doctrine" nor how it would seriously impact your hypothetical.

 

[adjusterjack]

First of all, it's KCM, not KVM.

KCM FINANCIAL LLC v. Bradshaw, 457 SW 3d 70 - Tex: Supreme Court 2015 - Google Scholar

Second, despite your cautionary warning about paraphrasing, the only thing in the KCM decision that is remotely close to what you wrote is:

"The Act is designed to protect creditors from being defrauded or left without recourse due to the actions of unscrupulous debtors" and "The purpose of TUFTA is to prevent debtors from defrauding creditors by placing assets beyond their reach."

The second sentence was cited from Corpus v. Arriaga, 294 S.W.3d 629, 634 (Tex.App.-Houston [1st Dist.] 2009

There is nothing in KCM about "value" other than a debtor "is prohibited from transferring its assets for less than reasonably equivalent value if it is insolvent or would become insolvent by virtue of the transfer.[ "

And that's a quote from the statute.

It's interesting to note that Bradshaw's claim (in the KCM decision) of "fraudulent transfer" failed.

I looked for a more concise definition of "reasonably equivalent value" and found it in Janvey v. Golf Channel, Inc., 487 SW 3d 560 - Tex: Supreme Court 2016

Janvey v. Golf Channel, Inc., 487 SW 3d 560 - Tex: Supreme Court 2016 - Google Scholar

"On rehearing, the Circuit vacated its opinion. Observing that TUFTA, unlike the model Uniform Fraudulent Transfer Act (UFTA), specially defines the term "reasonably equivalent value" to include consideration having value from a marketplace perspective, the Circuit certified the following question to this Court (The Texas Supreme Court):

Considering the definition of "value" in section 24.004(a) of [TUFTA], the definition of "reasonably equivalent value" in section 24.004(d) of [TUFTA], and the comment in [UFTA] stating that "value" is measured "from a creditor's viewpoint," what showing of "value" under TUFTA is sufficient for a transferee to prove the elements of the [good-faith] affirmative defense under section 24.009(a) of [TUFTA]?"

Construing the relevant statutory provisions, we conclude TUFTA's "reasonably equivalent value" requirement can be satisfied with evidence that the transferee (1) fully performed under a lawful, arm's-length contract for fair market value, (2) provided consideration that had objective value at the time of the transaction, and (3) made the exchange in the ordinary course of the transferee's business."

That's a little better but doesn't really help with Mayojones' case.

I soldiered on and found Essex Crane Rental Corp. v. Carter, 371 SW 3d 366 - Tex: Court of Appeals 2012

Essex Crane Rental Corp. v. Carter, 371 SW 3d 366 - Tex: Court of Appeals 2012 - Google Scholar

"A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or within a reasonable time after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation ... with actual intent to hinder, delay, or defraud any creditor of the debtor." TEX. BUS. & COM. CODE ANN. § 24.005(a)(1)"

The court goes on to explain how intent to defraud may be show. I'll comment on each element.

"The actual intent to defraud is shown by, among other things, evidence that the transfer was made to an insider, including a relative"

That element does appear to apply since a relative was the recipient of the debtor's largesse.

"the debtor retained possession or control of the transferred property after the transfer;"

Nope, she didn't. The tickets were used and the trip taken. She had no control over whether the relative would actually use the tickets or turn them in for cash and keep the cash.

"the transfer or obligation was concealed;"

Hmm. Don't know. How and when did Mayojones find out about the tickets?

"the debtor was sued or threatened with suit before the transfer was made or the obligation incurred;"

Yep, looks like we have that.

"the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred;"

I don't see where the debtor received any consideration at all. The tickets were apparently a gift.

"the debtor was insolvent or became insolvent shortly after the transfer was made or obligation incurred;"

I don't think so. If I remember correctly, it was the husband that was unemployed, not the debtor. Insolvency is basically debts exceed assets. That some assets are untouchable under Texas law does not mean that the debtor was insolvent.

"the transfer occurred shortly before or after a substantial debt was incurred;"

I don't think we know when the tickets were purchased in relation to the date of the judgment.

The decision includes further analysis which can be read by anyone interested.

Frankly, I'm not convinced that the debtor engaged in a fraudulent transfer. She could have easily bought the tickets on an active credit card and is paying it off out of her wages (which are untouchable under Texas law). Nothing wrong with that. What's the difference between that and an online debit from her account for the full amount?

Mayojones had opportunities to levy the debtor's bank account and hasn't explained why that didn't happen.