UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
DEBTOR CASE NO. 90-00311
MAXIE HIGGASON, TRUSTEE PLAINTIFF
VS. ADV. NO. 90-0280
RAY CORNETT and
RAYMOND CORNETT DEFENDANTS
This matter is before the Court on the trustee's Motion for Summary Judgment asking that a conveyance by the defendant/debtor, Ray Cornett, to his father, defendant Raymond Cornett, be vacated and set aside. The trustee maintains that there is no genuine issue of material fact to be determined and that he is entitled to judgment as a matter of law. This Court has jurisdiction of this matter pursuant to 28 U.S.C.'1334(b); it is a core proceeding pursuant to 28 U.S.C. '157(b)(2)(F) and (H).
The record in this case reveals that the defendant/debtor filed a Chapter 7 petition on May 10, 1990. Prior to the filing he had, on February 1, 1990, conveyed a tract of property to his father, defendant Raymond Cornett. The defendants admitted in their Answer filed in this matter that Raymond Cornett paid the sum of $1.00 and forgave a debt that his son owed him as consideration for the transfer. The cumulative debt owed to Raymond Cornett was in excess of $11,000.00.
In a'2004 examination of the defendant/debtor conducted on February 5, 1991, he stated that his intent in conveying the tract of property to his father was to pay him back money that he owed him because he did not have the money to repay the debt. In addition, he acknowledged that he was having a hard time paying other debts and was contemplating filing bankruptcy. (Examination of Ray Cornett, pp. 3-4). He testified that he felt that the tract was worth $2500.00. (Examination of Ray Cornett, p. 4).
The deposition of defendant Raymond Cornett was taken on the same day as the'2004 examination. Therein he testified that his son conveyed the tract of property to him because he had no way of paying the debt that he owed. (Raymond Cornett depo., p. 4). He also testified that at the time of the conveyance, his son was having a hard time paying his bills. (Raymond Cornett depo., p. 5). He testified that his son's total indebtedness was around $11,000.00. (Raymond Cornett depo., p. 9). He agreed that the fair value of the tract was $2500.00. (Raymond Cornett depo., p. 12).
The trustee alleges that the facts adduced in this case establish the elements necessary to prove violations pursuant to 11 U.S.C.'547 and '548. The record and the testimony offered in this case establish the following:
1. the transfer was to a creditor;
2. the transfer was for a debt owed by the debtor before the transfer was made;
3. the transfer was made while the debtor was insolvent;
4. the transfer was to an insider and made more than 90 days but less than one year before the filing of the bankruptcy petition;
5. the transfer enables the creditor to receive more than he would have received if---
a) the case were a Chapter 7 case; and
b) the transfer had not been made; and
c) the creditor had received payment to the extent provided by Title 11.
The trustee has therefore established a violation of 11 U.S.C.'547(b), enabling him to avoid the defendant/debtor's transfer of the tract of property pursuant to that statute.
By the Court -
Maxie Higgason, Esq., Trustee
David Howard, Esq.