Plaintiff does not dispute that Rule 9(b) applies to the claims for actual fraudulent transfers. Kerr v. Venetian Casino Resort (In re Medici), 524 B.R. 902, 905 (Bankr. N.D.Ga. 2014) (Ellis-Monro, J.) ("To successfully plead a fraudulent transfer under section 548(a)(1)(A), the plaintiff must meet the heightened standards of Rule 9(b)….").
Think3 Litig. Tr. v. Zuccarello (In re Think3, Inc.), 529 B.R. 147, 197 (Bankr.W.D.Tex.2015) ; see also Paradigm Air Carriers, Inc. v. Tex. Rangers Baseball Partners (In re Tex. Rangers Baseball Partners), 498 B.R. 679, 712 (Bankr.N.D.Tex.2013) (finding it unnecessary to decide if 9(b) must apply because movant met the standard anyway).See Wagner v. Galbreth, 500 B.R. at 53 ; Zazzali v. AFA Fin. Grp., LLC (In re DBSI, Inc.), 477 B.R. 504, 509 (Bankr.D.Del.2012) ; Kerr v. Venetian Casino Resort (In re Medici), 524 B.R. 902, 905 (Bankr.N.D.Ga.2014) ; Silverman v. Meister Seelig & Fein, LLP (In re Agape World, Inc.), 467 B.R. 556, 569 (Bankr.E.D.N.Y.2012) ; Dershaw v. Ciardi (In re Rite Way Elec., Inc.), 510 B.R. 471, 480 (Bankr.E.D.Pa.2014). It is important to note that, for fraudulent transfer actions, courts often apply a somewhat relaxed but still heightened standard.
However, as Defendant points out, Debtor's insolvency on the Petition Date, by itself, does not necessarily mean that he was insolvent at the time of the Transfers, some of which took place almost two years before the Petition Date. Courts sometimes rely on a debtor's insolvency on the petition date to make inferences about the debtor's financial condition before he filed bankruptcy. See, e.g., Briden v. Foley, 776 F.2d 379, 383 (1st Cir. 1985); Haynes & Hubbard, Inc. v. Stewart, 387 F.2d 906, 907 n.1 (5th Cir. 1967); Kerr v. Venetian Casino Resort (In re Medici), 524 B.R. 902, 907 (Bankr. N.D. Ga. 2014). Those inferences are stronger where the date in question is close to the petition date or the debtor's insolvency is particularly egregious. See Angell v. Augusta Seed Corp. (In re Tanglewood Farms, Inc. of Elizabeth County), 2013 WL 474704, at *3 (Bankr.
For this proposition, Regions cites a Georgia bankruptcy case interpreting a federal fraudulent transfer statute. See In re Medici, 524 B.R. 902, 907 (Bankr. N.D.Ga. 2014).
However, to the extent the Debtor does seek avoidance on an actual fraud theory under Section 548(a)(1)(A), the Complaint fails to state such a claim under the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). In re Medici , 524 B.R. 902, 905 (Bankr. N.D. Ga. 2014). Rule 9(b) is satisfied where the complaint "alerts the defendant to the precise misconduct with which they are charged." Id.
This creates a reasonable inference that Debtor was insolvent at the time of the transfer and that the transfer amounted to a transfer of substantially all of Debtor's assets. See Kerr v. Venetian Casino Resort (In re Medici), 524 B.R. 902, 907 (Bankr. N.D. Ga. 2014) (using debtor's financial status as of the petition date to support an inference about debtor's solvency at the time of the transfer two years earlier). Accordingly, the Trustee has alleged enough facts to support an inference of fraudulent intent.
A complaint satisfies Rule 9(b) "if it alerts the defendant to the precise misconduct with which they are charged." Kerr v. Venetian Casino Resort (In re Medici), 524 B.R. 902, 905 (Bankr. N.D. Ga. 2014) (Ellis-Monro, J.) (internal quotation marks and citations omitted).