Justia Bankruptcy Opinion Summaries

The purchaser of viatical settlements paid approximately $507,000 for life settlements with the debtor and received $9,000,000 in death benefits when he died shortly thereafter. The bankruptcy trustee filed an adversary proceeding to recover the market value of the life settlements. The court held that debtor's interests in the term life insurance policies, including the secondary market value of the policies and resulting life settlements, constitute a recoverable “interest of the debtor in property” pursuant to 11 U.S.C. 548(a)(1). In this case, debtor had a legal and equitable interest in the property at issue within the meaning of section 541(a), the property was not excluded from the estate under section 541(b), and the property was not the subject of a proper exemption in this case. The court further concluded that the district court properly held that the trustee's avoidance action was not time-barred because debtor's fraudulent concealment equitably tolled the statute of limitations from commencing. Finally, the district court correctly concluded that the bankruptcy court should have granted the trustee leave to amend her avoidance action. View "Gladstone v. U.S. Bancorp" on Justia Law