Fraud in bankruptcy can take many different forms. There is the case of actual fraud – what you normally think of as fraud. Then there are the bankruptcy specific types of fraud, which may not be fraud at all. One example of this is payments made to creditors within 90 days (or a year if a relative or a business partner) of filing are considered fraud as those payments could have been paid evenly to all creditors.
Apparently, fraud in bankruptcy may extend to business decisions, prior to the business entering for bankruptcy protection, either Chapter 7 or Chapter 11. In an article from Bloomberg.com found here, Bankruptcy Judge Carey may eventually decide that the business decision made by the Chairman of Tribune Co., Sam Zell, to purchase other companies prior to bankruptcy was a fraudulent way to incur more debt prior to entering bankruptcy to the detriment of its other creditors.
Thank you for taking the time to read this blog post by Tempe, Arizona lawyer Glenn W. Roethler, partner at Greeves, Price & Roethler, PLC.