I previously blogged about a U.S. Bankruptcy Court decision that required a church to repay over $500,000 in donations. It turns out that a test case, as MinistryWatch reports that because of that result dozens of churches (including some that have settled) are required to repay donations they received. The donors were apparently shareholders in the now-bankrupt Health Diagnostic Laboratory of Richmond, Virginia. And this is in addition to other, non-church charities from which the bankruptcy trustee is also seeking to recover donations. Critical to the court’s holding was that the Bankruptcy Code section at issue does not allow the court to take into account potential hardship to a subsequent transferee, even if that subsequent transferee is unaware of the fraudulent nature of an earlier transfer.
Lloyd Mayer
