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Keywords

lawsuittrustcorporation

hearingtrustcorporation

Related Cases

Kerr-McGee Chemical Corp. v. Lefton Iron & Metal Co., Not Reported in Fed. Supp., 2000 WL 36733703

Facts

Kerr-McGee Chemical Corporation was awarded a judgment against Lefton Iron & Metal Company for cleanup costs related to a polluted site. After Lefton Iron was unable to fully indemnify Kerr-McGee, the company sought to set aside security agreements made by Lefton Iron with its parent company and a family trust beneficiary, arguing that these agreements were fraudulent transfers intended to obstruct Kerr-McGee's collection efforts. The court reviewed the procedural history and financial transactions between the parties leading up to the dispute.

Issue

Whether the security agreements between Lefton Iron & Metal Company and Lefton Enterprises, Inc., and Sarah Lefton should be set aside under the Illinois Uniform Fraudulent Transfer Act.

Rule

Under the Illinois Uniform Fraudulent Transfer Act, a transfer is fraudulent if made with actual intent to hinder, delay, or defraud any creditor, or without receiving a reasonably equivalent value in exchange.

Section 5 of the Illinois Uniform Fraudulent Transfer Act states: (a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation: (1) with actual intent to hinder, delay, or defraud any creditor of the debtor; or (2) without receiving a reasonably equivalent value in exchange for the transfer or obligation.

Analysis

The court analyzed the financial transactions and relationships between the parties, noting that the security agreements were made shortly after Kerr-McGee initiated its lawsuit against Lefton Iron. The court found that several 'badges of fraud' were present, indicating that the agreements were made with the intent to defraud Kerr-McGee. The court concluded that the timing and nature of the transactions supported Kerr-McGee's claims.

The Court infers that the relevant badges briefed in writing are 740 ILCS 160/5(b)(1), (4),(5), (9) and (10). During the evidentiary hearing before the Court, Kerr-McGee argued that all of the badges except for 740 ILCS 160/5(b)(3), (6) and (7), which all generally relate to actual concealment, are applicable.

Conclusion

The court recommended that the security agreements be set aside as fraudulent transfers under the Illinois Uniform Fraudulent Transfer Act.

Ultimately, the court recommended that the security agreements be set aside.

Who won?

Kerr-McGee Chemical Corporation prevailed in the case as the court found that the security agreements were fraudulent and should be set aside.

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