A Second Look: United States Bankruptcy Court for The District of New Jersey Clarifies Start of Look-Back Periods for Avoidance Actions Involving Real Property
Debtors and trustees seeking to avoid the hardship of a foreclosure often attempt to employ sections 547 and 548 of the Bankruptcy Code. In accordance with the former section, a debtor may avoid any transfer of an interest in property “on or within 90 days before the date of the filing of the petition.” When there is an allegation of a fraudulent transfer, the latter section provides, “The trustee may avoid any transfer . . . incurred by the debtor that was made or incurred on or within two years before the date of the filing of the petition.”
Because these look-back periods extend the time when a debtor can avoid certain transfers, the threshold determination of when the applicable period starts is crucial to assess whether these provisions are available to the debtor. A recent adversary proceeding in the United States Bankruptcy Court for the District of New Jersey, Cedrick Goodman v. MTAG as Custodian for Alterna Funding I, LLC, et al. Adv. Pro. No.: 20-01162, provides important guidance applicable when a lender files a lis pendens years before the debtor files for bankruptcy.
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Patterson Belknap Webb & Tyler LLP. by Lance Kodish and Daniel A. Lowenthal. Published September 9, 2021.