$600K Debt Release Was Fraudulent Transfer, NJ Justices Say
Law360, New York (March 30, 2017, 4:59 PM EDT) -- The New Jersey Supreme Court ruled Thursday that a corporation’s forgiveness of another company’s debt amounted to fraudulent transfer because the corporation's shareholder became insolvent as a result and thus received no value from the transfer.
The justices’ decision gives a Chapter 7 trustee for a shareholder of Motorworld Inc. another chance to convince the Appellate Division that a trial court properly voided the release of Benks Land Services Inc.’s $600,000 debt, which had amounted to Motorworld's only asset.
As part of the ill-fated transfer, Benks’ owner William Benkendorf agreed not to go after shareholder Carole Salkind over the $1 million...
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