Divorce Settlements as Avoidable Transfers: Structuring Against a Trustee’s Clawback

David Lloyd, Owner | The Law Office of David P. Lloyd, Ltd

David Lloyd has practiced in the debtor-creditor field throughout his more than 40-year legal career, with extensive experience in bankruptcy and bankruptcy litigation. During the banking crisis of the 1990s, he served as a senior bankruptcy attorney with the Federal Deposit Insurance Corporation. From 1999 to 2012, he was a partner at Grochocinski, Grochocinski & Lloyd, where he represented bankruptcy trustees, debtors, and creditors in bankruptcy matters. Since 2012, he has maintained a solo practice focused on consumer and commercial bankruptcy cases and bankruptcy litigation. His extensive experience representing both bankruptcy trustees and parties involved in bankruptcy proceedings provides a strong foundation for addressing the risks that can arise when divorce settlements and property transfers are later examined in bankruptcy, including the potential for trustee avoidance and clawback claims.

• Education & Credentials

David P. Lloyd earned his Bachelor of Arts degree from DePaul University in 1979 and his Juris Doctor degree from DePaul University College of Law in 1982. He was admitted to the Illinois Bar in 1982 and is licensed to practice law in Illinois.

• Recognition & Leadership

David P. Lloyd is a member of the American Bankruptcy Institute, the Illinois State Bar Association, and the West Suburban Bar Association. His firm also maintains relationships with the local legal community and has several published cases involving bankruptcy trustee matters.

• Professional Involvement

David Lloyd’s professional career has focused on the debtor-creditor field and bankruptcy law. His experience includes representing bankruptcy trustees, debtors, and creditors, as well as handling consumer and commercial bankruptcy matters and bankruptcy litigation.

• Experience

David Lloyd has more than 40 years of experience practicing in the debtor-creditor field. During the 1990s, he served as a senior bankruptcy attorney at the Federal Deposit Insurance Corporation during that decade’s banking crisis. From 1999 through 2012, he was a partner at Grochocinski, Grochocinski & Lloyd. Since 2012, he has maintained a solo practice focused on consumer and commercial bankruptcy cases and bankruptcy litigation.

Firas M. Abunada, Owner | Firas Law, LLC

Firas M. Abunada is an Illinois attorney and solo practitioner with experience in foreclosure defense, bankruptcy, bankruptcy adversary proceedings, and other civil matters. His practice serves clients in Cook, DuPage, Kane, and Will Counties. Firas is committed to providing clients with the knowledge and information needed to make informed decisions regarding their legal matters and takes an individualized approach to each case. His practice emphasizes thorough attention to detail, advocacy on behalf of clients, and strategic
litigation planning. He is the owner of Firas Law, LLC and maintains a carefully managed caseload to provide individual attention to each matter.

• Education & Credentials

Firas M. Abunada earned a Bachelor of Science in Finance from DePaul University in 2005 and a Juris Doctor degree from The John Marshall Law School in 2012. He has been admitted to practice law in Illinois since 2012 and is also admitted to the U.S. District Court for the Northern District of Illinois.

• Recognition & Leadership

Firas M. Abunada was recognized as a 2020 Emerging Lawyer by Leading Lawyers. He was also selected to the Illinois Rising Stars list in 2022 for his work in bankruptcy, according to Super Lawyers. His LinkedIn profile likewise identifies his recognition as an Illinois Rising Star for Bankruptcy.

• Professional Involvement

Firas M. Abunada has been involved in legal education and professional publications concerning bankruptcy and related matters. His published presentations and materials include topics addressing bankruptcy and domestic support obligations and property settlements, bankruptcy and creditor issues involving elder law, and the basics of bankruptcy. Public professional profiles also identify his memberships in the Chicago Bar Association, Will County Bar Association, and Illinois State Bar Association.

• Experience

Firas M. Abunada has practiced law since 2012. His professional experience includes serving as an associate attorney at a Joliet law firm from 2012 to 2019 and subsequently practicing with Grotta & Associates, P.C. before establishing and operating Firas Law, LLC. His current practice includes foreclosure defense, bankruptcy, adversary proceedings, and other civil matters, with experience representing clients in matters before courts in Illinois, including bankruptcy proceedings in the U.S. Bankruptcy Court for the Northern District of Illinois.

SESSION 1 – How Trustees Avoid Property Transfers Made in a Divorce | 2:30pm – 3:30pm

This session examines the statutory and case-law framework trustees use to attack divorce property transfers in a subsequent bankruptcy, covering §§ 548, 544(b), and 547 of the Bankruptcy Code as well as state fraudulent transfer statutes incorporated by reference. Attorneys will learn how courts apply the reasonably equivalent value standard, the badges of fraud doctrine, and the domestic support obligation shield to inter-spousal transfers. Participants will leave able to identify the conditions under which a completed divorce settlement remains vulnerable to clawback and explain the legal basis for that exposure to clients on both sides of the marriage.

BREAK | 3:30pm – 3:40pm

SESSION 2 – Building the Value Record That Defeats an Avoidance Claim | 3:40pm – 4:40pm

This session teaches divorce practitioners how to construct a contemporaneous documentation record that defeats a bankruptcy trustee’s avoidance claim against property transfers made in a divorce settlement. Attendees will learn how courts measure reasonably equivalent value from the creditors’ perspective, how to negate badges of fraud through specific valuation and disclosure practices, and how to structure the § 548(c) good-faith transferee defense from the moment of settlement. Attorneys leave with an asset-by-asset documentation checklist and a working framework for solvency analysis, independent appraisal standards, and good-faith record-building that survives multi-year look-back windows.