Eighteen months before filing bankruptcy, Todd sells his motorcycle to his brother for $1 with the agreement that his brother will sell it back to Todd after Todd files for bankruptcy and receives a discharge of his debts. If the trustee can prove that Todd intended to defraud creditors with this transaction, which of the following is likely to happen?
A. Nothing because this is a valid contract with consideration given by both parties.
B. This transaction will be reversed because it was a preference
C. Nothing, because eighteen months is longer than 90 days, so the trustee has no power to take the motorcycle.
D. Todd’s brother will be charged with the crime of theft from the bankruptcy estate.
E. Todd’s brother will have to deliver the motorcycle to the trustee as this is a fraudulent transfer.
Answer: E. Todd’s brother will have to deliver the motorcycle to the trustee as this is a fraudulent transfer.
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