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In 1998, petitioner filed a petition under chapter 7 of the
Bankruptcy Code. The bankruptcy trustee accused petitioner of
bankruptcy fraud, and filed a complaint against petitioner,
Parker, the Corporations, several other corporations, and the
four partnerships, interests in which petitioner had sold to
Parker in 1996. The parties in the complaint proceeding reached
an agreement. On February 4, 2000, the bankruptcy court entered
a consent order requiring petitioner and Parker to pay $300,000
“in guaranteed funds” to the bankruptcy trustee by February 14,
2000. This consent order further provided that, on the
bankruptcy trustee’s receipt of this $300,000, the transfers of
(1) the stock in the Corporations and (2) the Partnership
Interests “shall be void ab initio under Virginia Code Section
55-80",6 and the bankruptcy trustee shall abandon her interest in
5(...continued)
years beginning after Dec. 31, 1996. Thus, the procedures apply
to the years in issue. However, because the Corporations had
five or fewer shareholders, the procedures do not apply. See
sec. 301.6241-1T, Temporary Proced. & Admin. Regs., 52 Fed. Reg.
3002 (Jan. 30, 1987).
6 Va. Code Ann. sec. 55-80 (Michie 2003) provides as
follows:
Sec. 55-80. Void fraudulent acts; bona fide purchasers
not affected.--
Every gift, conveyance, assignment or transfer of, or charge
upon, any estate, real or personal, every suit commenced or
decree, judgment or execution suffered or obtained and every
bond or other writing given with intent to delay, hinder or
defraud creditors, purchasers or other persons of or from
(continued...)
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