Attorneys Fees Awarded For Fraudulent Transfer Deemed Not Dischargeable In Kruse

One of the most interesting and talked about creditor-debtor — and thus asset protection — cases in recent years was the one which was the subject of my article Lawyer, Law Firm And Bank Exposed To Civil RICO And Other Liability For Assisting A Debtor Post-Claim In Kruse (Nov. 24, 2021). As the article title suggests, this case involves a debtor who engaged in a number of transfers after a car wreck with the specific purpose of defeating the judgment enforcement rights of the very seriously injured victim in that accident. Today, we examine a subsequent ruling in that case which further illustrates that post-claim planning can not only fail, but also put the debtor in a much worse position than if nothing had been done at all.

Christina Kruse won a judgment in excess of $2.5 million against Steven Weller arising out of a auto accident. Later, Kruse brought a fraudulent transfer lawsuit against Weller and others to set aside Weller’s post-claim transfers of his assets to family member and a newly-created LLC. The Iowa state court ultimately entered an order in 2018 which set aside these fraudulent transfers. These are the background facts.