The U.S. Supreme Court has turned down an appeal brought by the trustee of a bankruptbureau who sought the return of $28 million, which the service bureau collected from its clients as deposits, but which its principals stole.
Upshot: These clients now have no recovery and may have to pay the IRS again for the taxes the service bureau should have deposited. (Wolff v. United States, No. 14-1098, 2015)
The $28 million question. Bankruptcy trustees can sometimes void and recover certain transfers made by an insolvent debtor for the benefit of the creditors, if those transfers are made between 90 days and one year before a bankruptcy petition is filed.
Catch: Transfers aren’t voidable if the debtor didn’t have any interest in the property.
The trustee wanted the Supreme Court to overturn an appellate court’s decision that he couldn’t void transfers and return that money to the defrauded clients, because ...(register to read more)