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Respondent also claims that KBI intended to hinder and/or
delay payment to the IRS. Respondent points to the fact that KBI
paid all of its creditors other than the IRS. Under California
law, the preference of one creditor over another is not generally
a fraudulent conveyance. See Wyzard v. Goller, 28 Cal. Rptr. 2d
608 (Cal. Ct. App. 1994). Respondent's argument is one of
preference of one creditor over another and thus fails to
convince us that KBI intended to hinder or delay payment to the
IRS.
Respondent has failed to prove that Mr. Solaas intended to
hinder, delay, or defraud any of KBI's creditors by having KBI
loan him money. We hold that the loans KBI made to Mr. Solaas
were not actual fraud on KBI's creditors.
3. Constructive Fraud
Respondent argues that Mr. Solaas did not give reasonably
equivalent value to KBI for the loans it made to Mr. Solaas from
1988 through 1992. Mr. Solaas argues the contrary.
For the Court to find constructive fraud, KBI must not have
received reasonably equivalent value in exchange for the
transfers it made to Mr. Solaas (the loans it made to him). Cal.
Civ. Code secs. 3439.04(b) and 3439.05. Respondent has conceded
that the alleged transfers were loans. If a promise to repay
money provides the transferor with a sufficient quid pro quo when
given, the fact that later events may deprive the promise of
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