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Chapter 7 Debtor Escapes Creditors’ Fraudulent Transfer Suit

March 25, 2021, 10:09 PM

Creditors of a Chapter 7 debtor lost their appeal to sue him for transferring assets to his sons to avoid paying a securities fraud judgment that they won.

A bankruptcy court had ruled that Charles Morrison Sr. wasn’t allowed to wipe out the state court judgment in his now-concluded bankruptcy case.

But Morrison’s creditors can’t sue him for transferring the assets, the U.S. Court of Appeals for the Eleventh Circuit held Thursday. The securities fraud judgment is distinct from the creditors’ attempt to collect on that debt through fraudulent transfer claims, the appeals court said.

The “fact that the underlying...

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