Opinion ID: 2785010
Heading Depth: 3
Heading Rank: 3

Heading: Polaroid’s Solvency

Text: “‘Among the more common badges of fraudulent intent at the time of transfer [is] . . . insolvency or other unmanageable indebtedness on the part of the debtor.’” Nat’l Credit Union Admin. Bd. v. Johnson, 133 F.3d 1097, 1102 (8th Cir. 1998) (quoting FDIC v. Anchor Props., 13 F.3d 27, 32 (1st Cir. 1994) (quoting Max Sugarman Funeral Home, Inc. v. A.D.B. Investors, 926 F.2d 1248, 1254 (1st Cir. -12- 1991) (applying 11 U.S.C. § 548(a)(1)))); accord Minn. Stat. § 513.44(b)(9) (explaining “whether . . . the debtor was insolvent or became insolvent shortly after the transfer was made” is a factor to be considered when determining a debtor’s intent). The parties dispute whether Polaroid was insolvent at the time of the transfer. Polaroid had a cash shortage and was having trouble paying creditors as its debts came due, but Ritchie contends Polaroid’s valuable trademarks put its assets far above its liabilities. We construe the facts in the light most favorable to Ritchie, see Citizens State Bank, 849 N.W.2d at 61, and assume that Polaroid was solvent when it executed the TSA. Regardless, the undisputed facts show Polaroid had serious financial difficulties before it granted the TSA, difficulties which Petters knew. These financial issues only worsened after Polaroid granted Ritchie the liens: the TSA was signed on September 19, 2008, and Polaroid filed for bankruptcy ninety days later on December 18, 2008. Polaroid’s financial struggles and its inability to pay creditors shortly before and after the execution of the TSA necessarily enter into our consideration of whether Petters executed the TSA with the intent to defraud Polaroid’s creditors. See Nat’l Credit Union, 133 F.3d at 1102 (listing “‘insolvency or other unmanageable indebtedness on the part of the debtor’” as a badge of fraud (quoting FDIC, 13 F.3d at 32) (emphasis added)); cf. Sholdan, 217 F.3d at 1010 (deciding the fact that the debtor had filed for bankruptcy “immediately upon the heels of” the allegedly fraudulent transfer was relevant to a finding of intent to defraud).