Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller

Exercise 21

Fraudulent Transfers. John Stanley served as the chief executive officer of TransTexas Gas Corp. Under his employment agreement, he would receive $1.5 million if he was dismissed for cause and nothing if he resigned. Later, when TransTexas was about to dismiss Stanley for cause, the parties agreed that he would resign and the company would pay him $3 million. Within the year, TransTexas filed a petition for bankruptcy. Were the payments to Stanley avoidable fraudulent transfers? Discuss. [ In the Matter of TransTexas Gas Corp., 597 F.3d 298 (5th Cir. 2010)] (See Chapter 7-Liquidation.)