Bankruptcy Trustee Can’t Claw Back Money Debtor Gave to Family

A Chapter 7 trustee can’t recover a debtor’s pre-bankruptcy filing transfers of $1 million to family members who supported him with “love, support, and advancement of legal defense funds” when he was wrongly prosecuted and imprisoned, the U.S. Bankruptcy Court for the District of Utah held.

The transfer was supported by adequate consideration under Missouri law based on the family’s advancement of money to fund Theodore White Jr.'s legal defense and prosecution for wrongful incarceration, Judge Kevin R. Anderson wrote Sept. 6.

Twenty years ago, White was prosecuted for a crime he didn’t commit. Seven years later he was exonerated ...