Fraudulent Conveyance Law: Destroying Free Exercise Rights at a Church Near You
Nicholas C. Rigano, 17 Am. Bankr. Inst. L. Rev. 165 (2009)
(An excerpt is below. To view the full text, please use Westlaw, Lexis, a law library or alternative source.)
In a bankruptcy proceeding, section 548(a) of the Bankruptcy Code allows a trustee to avoid any actual or constructive fraudulent transfer made by the debtor as a fraudulent conveyance. [FN7] The avoidance requires the recipient of the fraudulent transfer to return the property to the trustee for the property’s equitable distribution to the debtor’s creditors. The aforementioned rights clash when a debtor donates money to a religious entity, and files a bankruptcy petition within two years of that donation. Although the Free Exercise clause protects that type of donation, the bankruptcy trustee has the power to avoid it as a constructive fraudulent conveyance . . .
This Comment asserts that section 548(a)(2) violates the Religious Freedom Restoration Act, and that the UFTA violates current Free Exercise clause analysis because neither statute passes strict scrutiny. Specifically, this Comment will discuss the history of Free Exercise clause analysis, the history of fraudulent conveyance law, and finally, the unconstitutionality of current fraudulent conveyance law with regard to the Free Exercise clause.
