19-82505, 20-96020
The court denied the Defendants’ motion to dismiss the adversary complaint filed by the chapter 7 trustee, which sought, pursuant to 11 U.S.C. § 544(b) and 735 ILCS 5/12-112, to avoid the Defendants’ transfer of their joint tenancy interest in their residence to a newly formed trust for which they are trustees and hold beneficiary interests in tenancy by the entirety. The complaint alleged that the transfer was done with the sole intent to avoid payment to a creditor. The court recognized that, as a matter of Illinois law, the actual intent standard of the Fraudulent Transfer Act, 740 ILCS 160/5, does not apply to property transferred by the entirety, and that the trustee was not incorrect to bring its action under 735 ILCS 5/12-112 by means of section 544(b) of the Bankruptcy Code. The court further found that the trustee’s complaint sufficiently pleaded facts to state a claim that is plausible on its face.