Transfer

“A transfer of the debtor’s property or an interest in the debtor’s property to another party. The Code defines “transfer” as the creation of a lien or security interest, the retention of title as a security interest, the foreclosure of a debtor’s equity of redemption, or any other mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing with property or an interest in property.

To illustrate how broad the concept can be, the revocation of a SubChapter S Election has been deemed to be a transfer (of possible tax benefits or attributes from the corporate debtor to its shareholders).

Transfers by the debtor are subject to rigorous scrutiny in bankruptcy, and the broad definition of “transfer” helps to ensure that all transactions affecting the debtor’s property or its interests in property can be examined to determine whether they are subject to avoidance as preferences, fraudulent transfers, or otherwise.”

This definition is courtesy of our friends at Polsinelli who publish the Devil’s Dictionary of Bankruptcy Terms. You can access the Devil’s Dictionary here.

For more information about transfers, read An Introduction to Bankruptcy Claims Trading and Fraudulent Transfer Remedies: How Much is Enough?