The Chapter 7 trustee commenced an adversary proceeding against the Debtor’s (non-debtor) widow to recover fraudulent transfers under the Colorado Uniform Fraudulent Transfer Act (“CUFTA”), Colo. Rev. Stat. §38-8-105(1)(a) and (1)(b), and 11 U.S.C. §544. In addition, the trustee brought an unjust enrichment claim to obtain a declaratory judgment that the bankruptcy estate held an interest in residential real property which was solely owned by the widow. After a three-day trial, the Court held that the trustee had not sustained his burden on any of his eight (8) claims for relief. The Court entered judgment in favor of the defendants and against the trustee.
The Court’s findings of fact and conclusions of law included legal analysis of the following: the elements of both actual and constructive fraud under CUFTA and the “badges of fraud”; CUFTA’s narrow definition of “insider” in contrast to the broader Bankruptcy Code definition of “insider” at 11 U.S.C. § 101(31); “reasonably equivalent value” under CUFTA and whether “love and affection” in exchange for a transfer constitutes reasonably equivalent value; the balance sheet insolvency test under CUFTA and its definition of “assets” which excludes property to the extent encumbered by a lien or property to the extent exempt before the time of the transfer; fair valuation of contingent liabilities; constructive fraud under CUFTA and the transferor’s “ability to pay debts as they become due”; analysis of CUFTA’s “ability to pay debts as they come due” does not exclude exempt assets as a source of repayment; 11 U.S.C. § 551 and preservation of avoided transfers requires that the transfer be avoided in fact, not merely alleged to be avoidable; 11 U.S.C. § 502(d) and disallowance of the claim of a target of avoidance action requires that the target be adjudged liable for a fraudulent transfer; 11 U.S.C. § 544(a) encompasses trustee’s claim for unjust enrichment and constructive trust and are subject to statute of limitations under 11 U.S.C. § 546(a); elements of unjust enrichment under Colorado law; 11 U.S.C. § 108(c) applies only to actions against the debtor and does not toll the time for the trustee to bring his claim for unjust enrichment claim against the widow of Debtor.