Many cases deal with debtors who fraudulently convey away their assets before filing bankruptcy. But what about the situation where the debtor is the victim of a fraudulent conveyance rather than the perpetrator? In Galaz v. Galaz (In re Galaz), No. 13-50781 (5th Cir. 8/25/14), which can be found here, the Fifth Circuit answers important jurisdictional and Stern questions about the debtor's quest to recover wayward assets.
Lisa and Raul Galaz were once married to each other. One of their assets was an interest held by Raul in Artist Rights Foundation, LLC ("ARF"), a company which owned the rights to the Ohio Players music catalog. The other owner of ARF was Julian Jackson. When Lisa and Raul were divorced in 2002, Raul assigned Lisa 50% of his 50% interest in ARF. Because the transfer was made without Julian's consent, Lisa received a 25% economic interest in the company but was not a member. While it is not really relevant to the opinion, another significant occurrence in 2002 was that Raul pled guilty to mail fraud and surrendered his California law license.