X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Aaron J. Staudinger, left, and Amy Zuccarello, right, with Sullivan & Worcester in Boston. Aaron J. Staudinger, left, and Amy Zuccarello, right, with Sullivan & Worcester in Boston.

1st-Circuit-Column-BugIn a striking blow to colleges and universities across the country, on Nov. 12, 2019, the First Circuit Court of Appeals reversed a decision by the United States Bankruptcy Court for the District of Massachusetts, DeGiacomo v. Sacred Heart Univ. (In re Palladino), 556 B.R. 10 (Bankr. D. Mass. 2016), and held that parents did not receive “reasonably equivalent value” in exchange for the college tuition payments they made to educate their child. DeGiacomo v. Sacred Heart Univ. (In re Palladino), 942 F.3d 55 (1st Cir. 2019). Reasoning that because parents have no obligation to provide for a child’s educational costs once the child reaches legal adulthood, parents receive no benefit from the payment of tuition and associated costs and thus, parents receive no “value” for the payments as the term is used in Section 548 of the Bankruptcy Code.  As a result, the Court of Appeals concluded that the payments in question were voidable by the trustee as constructive fraudulent transfers under 11 U.S.C. § 548(a)(1)(B). This long-awaited decision represents the first instance in which a Federal Court of Appeals addressed the issue of whether a debtor-parent receives “reasonably equivalent value” for the payment of a child’s tuition once the child has attained the age of 18.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

Law Firms Mentioned

 

Reorganizations Under Chapter 11 of the Bankruptcy CodeBook

Discusses all aspects of the Chapter 11 proceeding...very helpful. Legal Information Alert Reorganizations Under Chapter 11 of the Bankruptcy Code is the m...

Get More Information
 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.