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Re:Related party loan (1 viewing) (1) Guest
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TOPIC: Re:Related party loan
#7080
Mark (User)
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Related party loan 7 Years, 4 Months ago Karma: 3  
Facts leading to the question:

I have two clients, which own a shopping center held in an LLC. The clients are brothers. In Dec 2008 one of the brothers (brother#1) borrowed money from the other brother (brother#2) and as collateral we executed a secured promissory note and security agreement to secure brother#1 interest in the shopping center in favor of brother#2. Now, brother#2 wants to transfer his interest in the shopping center to brother #2 so that brother#1 can file personal bankruptcy.

Question:
If brother#1 transfers his membership interest in the LLC to brother#2 to satisfy the debt, will this transfer be considered a preference? Should brother#2 wait a certain amount of time after the transfer of the membership interest before he files for bankruptcy?
 
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#7089
jbg (User)
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Re:Related party loan 7 Years, 3 Months ago Karma: 0  
If the debt is legitimately owed by brother 1 and if he has a paper trail to prove this such as proper loan docs and the money was loaned directly by brother 2 to brother by check and NOT CASH, then the preference period is one year. If they cannot properly document the loan ur if cash, then the waiting period is 2 years (presumption if fraud ) to 6 years (burden on trustee to show Debtor was insolvent and to otherwise comply with 11 USC 548).
 
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