Consumer Bankruptcy Journal Fall 2016 - Page 21

Clawback Periods May Extend to Six or Ten Years By Robert C. Meyer, Esq. Robert C. Meyer, P.A. Miami, Florida A the avoidance actions= limitations period in 11 U.S.C. ‘ 5462 for avoidable transfers under 11 U.S.C. ‘’ 544, 547 or Such actions are not 548.3 recovery. Recovery is handled under 11 U.S.C. ‘ 550. Adversary proceedings, in essence, must follow two steps: (a) avoidance actions; and (b) recovery actions. ACongress dealt separately with the concepts of avoidance and recovery in a number of ways.@4 Among those actions are two different time frames. relief is entered for a voluntary bankruptcy) to commence an Under 11 U.S.C. ‘ 546(a), an action. If the trustee is appointed adversary proceeding may not be after the filing date, the twocommenced after the earlier of year period could be extended if two years from the petition date or the trustee=s appointment was one year after the commencement before the expiration of the twoor appointment of the trustee year period and more than a year B so long as the appointment after the petition date.6 The box occurs prior to the expiration below shows hypothetical dates of the previously referenced to better explain this calculation. two-year period.5 Based upon When to File this fact, trustees essentially know that they have two years The Bankruptcy Code addresses from the filing date (the date trustees litigation counsel must be concerned about two things when lawsuits arise: (a) until when can the lawsuit be filed; and, (b) how far back can the clawback@1 of the avoidance action reach? The former question is relatively simple with statutory guidance making the deadlines effectively well known. The latter is a disputed issue; and, a recent decision in the Southern District of Florida Bankruptcy Court alerted practitioners. This article will review both concepts and outline the associated statutory framework. In addition, this article will discuss the many layered analysis given by numerous courts which deliver reasonable differences of opinion about the clawback period jurisdictionally differing. National Association of Consumer Bankruptcy Attorneys Fall 2016 CONSUMER BANKRUPTCY JOURNAL 21