5th Circuit Bankruptcy Summary: Clovis Prince v. Michele H. Chow, Chapter 7 Trustee (In re Clovis Prince), No. 13-40130 (5th Cir. Dec. 12, 2013)

Prior to filing Chapter 7 bankruptcy, the debtor transferred assets to a trust.  The debtor was the trustee of the trust.  After the filing, the Chapter 7 Trustee sued the debtor (in his capacity as trustee of the trust) seeking to recover the funds as a fraudulent transfer.  The Chapter 7 Trustee won and the debtor appealed.  The bankruptcy court held that the debtor did not have standing and the district court affirmed.  The Fifth Circuit affirmed on the grounds that a Chapter 7 debtor did not have standing because he was not a “person aggrieved” – that is, he could not show that he (individually) was directly and adversely affected pecuniarily by the bankruptcy court order.

Chapter 7 Trustee, fraudulent transfer, insolvency-insights