By Michael L. Moskowitz and Melissa A. Guseynov

In 2013 the Supreme Court held that funds held in an inherited non-spousal IRA were not exempt under Section 522 of the Bankruptcy Code. You can read our blog article on Clark v. Rameker here. However, in a New Jersey bankruptcy court decision handed down last month, Bankruptcy Judge Christine M. Gravelle held that an inherited IRA is not property of the debtor’s bankruptcy estate, regardless of whether it would be characterized as an exempt asset under the Bankruptcy Code. In re Norris, 2016 WL 2989234 (Bankr. D.N.J. May 20, 2016).

By Michael L. Moskowitz and Melissa A. Guseynov

On March 11, 2016, the Court of Appeals for the Seventh Circuit held that a tenant debtor’s pre-petition lease termination may be voidable as a fraudulent conveyance or a preferential transfer in the tenant’s subsequent bankruptcy case. In re Great Lakes Quick Lube LP, 816 F.3d 482 (7th Cir. 2016).

In this case, fifty-two days prior to filing for bankruptcy protection, Great Lakes Quick Lube LP (“Debtor”), surrendered two profitable commercial leases to its landlord for various business-related purposes. Following Debtor’s chapter 11 filing, its official committee of unsecured creditors commenced an adversary proceeding seeking to void the lease terminations, arguing the lease terminations were either preferential or fraudulent transfers. After trial, the Bankruptcy Court ruled in favor of Debtor holding, among other things, that the lease terminations did not constitute transfers. The decision was directly appealed to the Seventh Circuit.