Tuition as a Fraudulent Transfer

Authors

David G. Carlson, Benjamin N. Cardozo School of LawFollow

Publication Date

2020

Journal

Emory Bankruptcy Developments Journal

Abstract

Bankruptcy trustees are suing universities because the insolvent parent of an adult student has written a tuition check while insolvent. The theory is that the university is the initial transferee of a fraudulent transfer that has provided benefit to the student but not to the parent debtor. This article claims that the university is never the initial transferee of tuition dollars. Rather, the student is. Where the university has no knowledge of parent insolvency, the university can count educating the student as a good faith transfer for value, thus immunizing the university from liability. The unpleasant side effect is that the student is liable as the initial transferee of a fraudulent transfer, and this liability is not dischargeable should the adult student seek refuge in bankruptcy.

Volume

36

Issue

1

First Page

15

Last Page

58

Publisher

Emory University School of Law

Keywords

bankruptcy, fraudulent transfer, tuition, higher education, mere conduit

Disciplines

Bankruptcy Law | Commercial Law | Contracts | Education Law | Law

Recommended Citation

David G. Carlson, Tuition as a Fraudulent Transfer, 36 Emory Bankr. Dev. J. 15 (2020).
https://larc.cardozo.yu.edu/faculty-articles/796