PSU was defended by Dickie McCamey attorney, Sam Grego.
I. INTRODUCTION
These adversary complaints constitute an attempt by the Chapter 7 Trustee in the underlying main bankruptcy case (the “Trustee”), to recover funds from Pennsylvania State University (“Penn State”) pursuant to a relatively new legal theory. The United States Department of Education (the “Department”) paid the proceeds of Parent Plus loans directly to Penn State. The Trustee incorrectly claims such payments were fraudulent transfers under both the Bankruptcy Code 1 and the Pennsylvania Uniform Fraudulent Transfer Act (“PUFTA”). 2 The Parent Plus loans, made in the name of Debtor, David Alan Lewis (“Mr. Lewis”), paid the tuition and other qualified educational expenses of two of his children. The Trustee filed two separate complaints, each of which seeks the recovery of the loan proceeds from Penn State for each child. The legal issues raised by the complaints are identical. Penn State filed motions to dismiss each complaint pursuant to Bankruptcy Rule 7012, 3 arguing that the Trustee has failed to state claims upon which relief can be granted.
I agree with Penn State that (1) neither Mr. Lewis nor his estate hold or ever held an interest in the proceeds of the Parent Plus loans and (2) Mr. Lewis received reasonably equivalent value in exchange for the transfers. I will therefore grant Penn State’s motions and dismiss both complaints.
II.DISCUSSION
Prior to filing his Chapter 7 bankruptcy petition, Mr. Lewis applied, and was approved, for several Parent Plus loans to pay tuition and other qualified educational expenses of two of his children so they could attend Penn State. The proceeds from the Parent Plus loans were paid directly from the Department to Penn State without passing through either Mr. Lewis or his children. The total balance owed by Mr. Lewis on the Parent Plus loans, as of June 13, 2016, was $142,990.46. 4 The Trustee filed the complaints to recover the Parent Plus loan proceeds that were paid by the Department to Penn State as fraudulent transfers under both the Bankruptcy Code and PUFTA. Again, I agree with Penn State’s arguments in its motions and will dismiss both of the complaints.
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