When examined in isolation, that mortgage could not be avoided as constructively fraudulent. Even if the mother were regarded as an insider, the rule that preferential payments to insiders are per se lacking in good faith, see, e.g., Farm Stores, Inc. v. School Feeding Corp., 102 A.D.2d 249, 477 N.Y.S.2d 374, 378 (1984), aff'd, 64 N.Y.2d 1065, 489 N.Y.S.2d 877, 479 N.E.2d 222 (1985), did not apply, since the mortgages secured a contemporaneous advance of funds--not a pre-existing debt--and thus had no net effect on the debtor's balance sheet. See HBE Leasing, 48 F.3d at 635.

When examined in isolation, that mortgage could not be avoided as constructively fraudulent. Even if the mother were regarded as an insider, the rule that preferential payments to insiders are per se lacking in good faith, see, e.g., Farm Stores, Inc. v. School Feeding Corp., 102 A.D.2d 249, 477 N.Y.S.2d 374, 378 (1984), aff'd, 64 N.Y.2d 1065, 489 N.Y.S.2d 877, 479 N.E.2d 222 (1985), did not apply, since the mortgages secured a contemporaneous advance of funds — not a pre-existing debt — and thus had no net effect on the debtor's balance sheet. See HBE Leasing, 48 F.3d at 635.

Absent an allegation that Chemical assumed a status more substantial than that of a creditor, we refuse to impose upon it any special fiduciary duty. Cf. Farm Stores, Inc. v. School Feeding Corp., 102 A.D.2d 249, 477 N.Y.S.2d 374, 378 (2d Dep't 1984), aff'd, 64 N.Y.2d 1065, 479 N.E.2d 222, 489 N.Y.S.2d 877 (1985) (Creditor who exercised his influence as a shareholder in decisions that directly affected his investments, consented to challenged fraudulent distributions had a fiduciary duty to the rights of general creditors). Atlanta already has ample recourse, of which it is taking full advantage, against IMH's other creditors.

Considering whether the mortgage given to the mother could be avoided as a constructive fraudulent conveyance, the court noted that "New York courts have carved out one exception to the rule that preferential payments of pre-existing obligations are not fraudulent conveyances: preferences to a debtor corporation's shareholders, officers or directors are deemed not to be transfers for fair consideration." HBE Leasing Corp., 48 F.3d at 634 (citing, inter gilia, Farm Stores. Inc. v. School Feeding Corp., 102 A.D.2d 249, 477 N.Y.S.2d 374, 378 (2d Dep't 1984), aff'd, 64 N.Y.2d 1065, 489 N.Y.S.2d 877 (1985)). The court found, however, that the Farm Stores exception to the rule that preferential payments of pre-existing obligations are not fraudulent conveyances could not be applied to invalidate the mother's mortgages, even though she was an insider, because the mortgages secured a contemporaneous advance of funds.

ants undertook the Transfers in good faith. However, preferential transfers of a corporation's funds to its directors, officers and shareholders, in derogation of the rights of the corporation's general creditors, do not fulfill the requirement of good faith and, therefore, are deemed not to be transfers for fair consideration ( see e.g. Matter of Mega Personal Lines v Halton, 9 AD3d at 555 [stating that "the transfer of corporate assets to an insider establishes a lack of good faith as a matter of law"]; Matter of Superior Leather Co. v Lipman Split Co., 116 AD2d 796, 797 [3d Dept 1986]; Farm Stores v School Feeding Corp., 102 AD2d 249, 254 [2d Dept 1984] [stating that, even "[a]ssuming, arguendo, that the shareholders [in that case] were able to establish that the funds they received from [the corporation] were equivalent to the value of the loans and services they had previously advanced, the transfers to them were still invalid inasmuch as they were not made in good faith"], affd 64 NY2d 1065 [1985]; Laco X-Ray Sys. v Fingerhut, 88 AD2d 425,433 [2d Dept 1982]; In re Sharp Intl. Corp. v State St. Bank, 403 F3d 43, 54 [2d Cir 2005] [applying New York law]; HBE Leasing Corp. v Frank, 48 F3d 623, 634-635 [2d Cir 1995] [applying New York law]). The Transfers were made in two steps or phases, first from SNV, Inc. to SNV, LP and then from SNV, LP to its partners.

Moreover, preferential transfers to investors are per se not made in good faith. Farm Stores, Inc. v. School Feeding Corp., 102 AD2d 249 (2nd Dept 1984), affd in part 64 NY2d 1065 (1985); P.A. Building Co. v. Silverman, 298 AD2d 327 (1st Dept 2002). There is a factual issue whether International was insolvent, or was rendered insolvent, as a result of the distributions.