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Fraudulent Conveyance

Fraudulent conveyance means an attempt to avoid debt obligations by transferring money or assets (value) to another person or company. The issue arises in debtor/creditor or shareholder relations. For debtors, the cause of action is often brought by creditors or bankruptcy trustees. A transfer is fraudulent is there is actual intent to hinder, delay or defraud a creditor or interested party.

One example, though not strictly involving debt, could occur merely with a transfer of assets (often intellectual property or IP) to a partially related entity. The "selling" company shareholders who are not stakeholders of the recipient firm may have been defrauded to the extent that they receive less than market value for the assets transferred.

In the above examples, the resulting transfers will not be construed as fraudulent so long as the appraisal of underlying asset(s) or stock support the basis assigned by the receiver. For those cases involving potentially significant fraud amounts, the ultimate test is whether the appraisal can be supported in a civil or bankruptcy court.

The Mentor Group specializes in supporting IP and stock values, whether prior to or involving litigation. We have successfully testified in all manner of legal jurisdictions.

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