Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts
Posted: January 1, 2018

Allegations of Badges of Fraud Sufficient to Support Actual Fraudulent Conveyance Claim

On December 14, 2017, Justice Scarpulla of the New York County Commercial Division issued a decision in Capital One Equipment Finance Corp. v. Corrigan, 2017 NY Slip Op. 32632(U), holding that allegations of badges of fraud are sufficient to support a claim for actual fraudulent conveyance, explaining:

Capital One also sufficiently states a claim against the Levine defendants for actual fraudulent conveyance pursuant to DCL 276 and 276-a. Debtor and Creditor Law §§ 276 and 276-a require proof that the transferor intentionally hindered, delayed, or defrauded present or future creditors. Due to the difficulty of proving actual intent to hinder, delay, or defraud creditors, the pleader is allowed to rely on badges of fraud to support its case, such as: a close relationship between the parties to the alleged fraudulent transaction; a questionable transfer not in the usual course of business; inadequacy of the consideration; the transferor’s knowledge of the creditor’s claim and the inability to pay it; and retention of control of the property by the transferor after the conveyance. Here, Capital One pleads that the alleged conveyances were made from Levine to his wife, with no consideration, not in the ordinary course of business, and with knowledge that he could be liable under the guaranty. The causes of action are pled with enough specificity to permit a reasonable inference of the alleged conduct.

(Internal quotations and citations omitted).

We have substantial experience in helping judgment creditors collect on judgments and search for and attach assets worldwide. A big part of that effort is using the legal tools–such as claims for fraudulent conveyance discussed in this opinion–for recovering property that has been transferred to a third party to avoid its being seized to satisfy a judgment. Contact Schlam Stone & Dolan partner John Lundin at if you or a client need help collecting on a judgment.

Click here to subscribe to this or another of Schlam Stone & Dolan’s blogs.

View posts