Richard R. Hamlett - Page 6

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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           

          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                  
               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              

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