544(b)(1) Revisited: Silverman V. Sound Around

Law360, New York (May 26, 2009, 12:00 AM EDT) -- Section 544(b)(1) of the Bankruptcy Code allows a debtor-in-possession or an authorized representative of a bankruptcy estate to assert fraudulent conveyance claims under state law. This section also gives the estate representative the power of an unsecured creditor, with an allowable claim under applicable state law.

In order to exercise these powers, the estate representative must prove the existence of an unsecured creditor (i.e., a qualified creditor) who existed at the time of the fraudulent transaction; still holds a claim allowed under Bankruptcy Code Section 502...
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