The Bankruptcy Code allows avoidance of transfers made without “reasonably equivalent value” within two years prior to the Bankruptcy filing.
The trustee may avoid a transfer of the debtor’s property (or avoid an obligation incurred by the debtor) made with actual intent to hinder, delay or defraud an existing or future creditor.
The trustee may also avoid a transfer of the debtor’s property, or an obligation incurred by the debtor, if the debtor received less than a “reasonably equivalent value” in exchange and the debtor:
•Was or became insolvent as a result of the transfer; or
•Was engaged in business, and was left with unreasonably small capital after the transfer; or
•Intended to incur debts after the transfer, or believed he or she would incur debts after the transfer, that would be beyond his or her ability to pay as they matured.
“Reasonably equivalent value” is defined as “property, or satisfaction or securing of a present or antecedent debt of the debtor . . .” so it includes all consideration received in exchange for the transfer, not just cash. In Texas, the consideration received from a noncollusive, real estate mortgage foreclosure sale conducted in conformity with applicable state law conclusively satisfies the “reasonably equivalent value” requirement, rendering a transfer not voidable.