Nonetheless, if the transaction is leveraged, and either the parent or the spunoff subsidiary becomes insolvent within the statute of limitations, a successful fraudulent transfer action may undo the transaction 72 The constructive fraud
theory here usually is that the cash (or assumption of debt) by the spunoff entity was for less than reasonably equivalent value, resulting in the entity's insolvency.
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.
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.
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.
He is suing the couple and Sharon Osbourne Management for breach of contract and constructive fraud
The court also found that the manufacturer merely made statements of opinion about how the product would perform in the future, which could not be the basis for actual or constructive fraud
. (McMillion v.
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.
In that case, the court held that when proceeding on the theory of "sham to perpetrate a fraud," a tort claimant or contract creditor need only prove constructive fraud
. 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." (Castleberry v.
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.(6)