Virginia Bankruptcy Courts (VA)
Preferential transfers and the Virginia Bankruptcy Court sanctions for violations
The look back period for the propriety of past transactions and conveyances is 1 year. The Virginia Bankruptcy Court is charged with responsibility for disallowing preferential transfers for inadequate consideration and the intentional wasting of assets in anticipation of filing. Specifically, transfers to insiders, family members and other closely associated persons or entities raise the suspicion of the court, and warrant further inquiry by the trustee. In the event of a violation a preferential transfer may be set aside, and if made with intent to defraud creditors, may result in sanctions, fines, penalties, dismissal, and in some circumstances, the imposition of criminal punishment.
Virginia Bankruptcy Court Districts:
Virginia Eastern Bankruptcy Court Divisions: Alexandria, Newport News, Norfolk, and Richmond.
Virginia Western Bankruptcy Court Divisions: Abingdon, Big Stone Gap, Charlottesville, Danville, Harrisonburg, Lynchburg, Roanoke, and Staunton.
The first step for debtors dealing with preferential transfer issues requires thorough investigation. All transactions, and especially any similar transactions, should be tortuously reviewed by an attorney. An isolated incident of selling assets below market value may indicate a cash flow emergency. However, a trend of selling assets below market value, over a period of one, is easily construed as a know and intentional scheme designed to hide, waste, or conceal assets. Because of the potential for criminal penalties, anyone with serious preferential transfer issues should carefully weigh filing risks against other alternatives.