As detailed below, ex ante review would be tied to later presumptions of constructive fraud
, would be performed by an independent third party, and would provide opportunity for opposition from existing creditors.
As discussed above, the Bankruptcy Code only limits recovery of transfers to charitable organizations under a constructive fraud
theory thus, under 54a, when transfers were made with "actual intent to hinder, delay, or defraud" (9) any creditor, a charitable organization is not permitted to retain transfers.
Second, the fact that the constructive fraud
provision refers to "reasonably equivalent value" and the affirmative defense provision refers just to "value" is of little consequence to the argument herein.
Case studies and real-life application of fraudulent conveyance laws and recognizing and avoiding exposure in cases premised upon constructive fraud
The insolvency component of constructive fraud
(123) is somewhat
As a result of Zuckerberg's constructive fraud
, as a member of the General Partnership, Ceglia has been deprived of his 50% interest in all consideration received by Zuckerberg or promised to Zuckerberg in exchange for the General Partnership's assets, including, but not limited to, cash, stock, stock options, restricted stock units and/or any other consideration.
Accordingly, the standard of constructive fraud
should be avoided.
For example, plaintiffs who claimed water trapped by synthetic stucco caused structural damage and decreased the value of their homes sued the builder, alleging fraud, constructive fraud
, breach of contract, breach of warranty, violation of the Virginia Consumer Protection Act, false advertising, and negligence per se.
The trustee has two theories of recovery that he or she may exercise to recover funds from a Ponzi scheme investor: constructive fraud
or actual fraud.
According to Herdrich's theory of the case, the HMO committed fiduciary breach and constructive fraud
by having an arrangement that "rewarded its physician owners for limiting medical care" and that this "entailed an inherent or anticipatory breach of an ERISA fiduciary duty, since these terms created an incentive to make decisions in the physicians' self-interest, rather than the exclusive interests of plan participants.
Unlike actual fraud, which requires a dishonest purpose or intent to deceive, constructive fraud
is the "breach of a duty that--irrespective of moral guilt--the law declares to be fraudulent because of its tendency to deceive others.
Although there may be no consensus on the precise normative basis for avoiding transfers of property or the incurrence of obligations by an insolvent debtor for less than reasonably equivalent value, there does seem to be a general consensus that fraudulent transfer law, including the constructive fraud
rules, should be retained.