2014 Legal Seminar for Credit Professionals

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AML + OFAC + FCPA Compliance
Considerations 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)
Electronic Transfer
Cross-border nature of the trade
and exchange means that the law of
at least two jurisdictions or
markets/countries apply

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U.S.
Export
laws
U.S.
Finance +
Banking
Laws
Foreign
Market
Import
Laws
Laws of foreign
market through
which goods may
pass or from
which payments
Foreign
Market
Finance +
Banking
Laws
are made

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Growth of Global Exports Trade
$1 Trillion
1977 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 system
Response: 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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September 29, 2014
“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

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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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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 + PEPs
Financial 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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REDFLAGS
in 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 criminal
gangs, 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 officials
2. 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):
3. BAE (UK):
4. Snamprogetti Netherlands
B.V./ENI S.p.A (Holland/Italy):
5. Technip S.A. (France):

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Focus on Prosecution of Individuals
+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

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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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Diligence
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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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 Counsel
Kegler Brown Hill + Ritter
lalcalde@keglerbrown.com
keglerbrown.com/alcalde
614.462.5480
@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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Even if your customer’s
account is not delinquent
you 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 on
his 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 and
should 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 TRANSFER
a 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?
PREFERENCE
a 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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How do you know if it’s worth pursuing?
Investigate as much as possible
Ask for updated financial
statements regularly
Ask about disposition
of missing assets
Run asset searches
for customer + transferees

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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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Questions?
Christy A. Prince
(614) 462-5444
cprince@keglerbrown.com
Keglerbrown.com/prince

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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 transaction
2. Personal PIN numbers
3. E-mails
4. “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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Thank You!
Dan Bennett, Director
dbennett@keglerbrown.com
keglerbrown.com/bennett
614.462.5448

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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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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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4) made –
A. on or within 90 days before the date of the filing of the petition; or
B. 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; and
C. such creditor received payment of such debt to the extent provided
by the provisions of this title.

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(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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(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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(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; and
B. on account of which new value the debtor did not make an
otherwise unavoidable transfer to or for the benefit of such
creditor;

z
Transfers Avoidable for Fraud
+Actual Fraudulent Intent
+Constructively Fraud

z
Thank You!
Larry J. McClatchey, Director
lmcclatchey@keglerbrown.com
keglerbrown.com/mcclatchey
614-462-5463

2014 Legal Seminar for Credit Professionals

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2014 Legal Seminar for Credit Professionals