SCOTUS Expands Definition of “Actual Fraud”

By Hon. Michael B. Kaplan, United States Bankruptcy Judge, U.S. Bankruptcy Court, District of New Jersey (Trenton)

The Supreme Court of the United States recently issued its opinion in Husky International Electronics v. Ritz, 2016 WL 2842452, putting forth an expanded definition of “actual fraud” to include fraudulent conveyance schemes in the bankruptcy context. The controversy began when the Chrysalis Manufacturing Corp. incurred a debt to Husky International Electronics of approximately $164,000 and rather than paying that debt, Daniel Lee Ritz, the director of Chrysalis, transferred the corporation’s available assets to other entities . . .

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