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IN RE ADEEB 787 F.2d 1339 (1986) Our conclusion is consistent with cases interpreting “concealed” as used in section 727(a)(2)(A). Those cases state that a “debtor who fully discloses his property transactions at the first meeting of creditors is not fraudulently concealing property from his creditors.” In re Waddle, 29 B.R. 100, 103 (Bankr.W.D.Ky.1983); see 4 Collier on Bankruptcy ¶ 727.02[b] (15th ed. 1985). Although a concealment may be undone simply by disclosing the existence of the property, disclosure does not undo a transfer. However, a transfer may be undone by recovering the property.
We conclude that a debtor who transfers property within one year of bankruptcy with the intent penalized by section 727(a)(2)(A) may not be denied discharge of his debts if he reveals the transfers to his creditors, recovers substantially all of the property before he files his bankruptcy petition, and is otherwise qualified for a discharge.
In re Stern, No. 00-56431 (9th Cir. 02/04/2003) Feb. 6, 2003
TRANSFER OF ASSETS INTO EXEMPT PROFIT-SHARING RETIREMENT PLAN ON EVE OF BANKRUPTCY WAS NOT FRAUDULENT David A. Gill, Bankruptcy Trustee (“Trustee”), appeals the district court’s decision affirming the bankruptcy court’s order, which granted summary judgment in favor of the debtor Steven Stern (“Stern”). Stern cross-appeals the district court’s determination that Stern’s pension plan funds are not excluded from the bankruptcy estate.
Stern filed for bankruptcy after the entry of a sizeable judgment against him in an arbitration proceeding. We must determine whether the transfer of proceeds from an Individual Retirement Account (“IRA”) into a Profit Sharing Pension Plan was a fraudulent conveyance, subject to avoidance by the Trustee.
Constrained by our precedent, we AFFIRM the district court’s holding that, although the pension plan was properly included within the bankruptcy estate, the pension plan assets were exempt from distribution to Stern’s creditors.
In 1978, Stern terminated the 1974 Plan and created a qualified, defined benefit pension plan (“1978 Plan”). In 1989, Stern terminated the 1978 Plan and transferred the plan assets into an IRA account (“IRA”).
We are controlled by our prior opinion in Wudrick v. Clements, 451 F.2d 988 (9th Cir. 1971). In that case, we ruled “that the purposeful conversion of nonexempt assets to exempt assets on the eve of bankruptcy is not fraudulent per se.” In reversing the district court’s determination that Wudrick engaged in a fraudulent conveyance, we clarified that “[t]he finding of fraud was based solely on the fact that nonexempt assets were deliberately converted to exempt assets just prior to filing the bankruptcy petition.” Id. at 990. We explained that this “evidence was insufficient as a matter of law to establish fraud.” Id. Our analysis was impliedly affected by the clarification that a different conclusion might be reached “if on the eve of bankruptcy a debt were created with no intention of repaying the creditor . . . .” We also noted that a finding of fraud must be established by “clear and convincing” evidence.
Property divided pursuant to divorce decree and fraudulent transfer issue:
In re Beverly , 374 B.R. 221 (9th Cir.BAP 2007) affirmed in part, dismissed in part by Inre Beverly, 551 F.3d 1092 (9th Cir. 2008). BAP reversed the Bankruptcy Court by finding that Debtor and his former wife committed fraudulent transfers. Their divorce decree awarded the debt to the future Bankrupt while the former wife got all of the non-exempt property. The non-exempt property would have been enough to satisfy all of the debt. Contrast with In re Bledsoe,569 F. 3d 1106 (9thCir 2009) where the Court of Appeals found that the mere allegation that the property settlement of divorce decree did fairly divide property was insufficient under §548 without proof of actual fraud.