Fleet Credit Corp. v. TML Bus Sales, Inc.

*120 ORDER

The memorandum decision filed May 23, 1995, is redesignated as an authored opinion by Judge Kleinfeld with modification.

OPINION

We decide a question of lien priorities arising out of a bankruptcy and a fraudulent conveyance.

I. Facts.

Berthold owned Taylor Bus Service, which filed chapter 11 bankruptcy. TML Bus Sales secured a judgment for more than $17 million against Berthold personally for embezzlement and conversion of TML’s funds. Fleet Credit obtained a default judgment against Berthold personally in the amount of $153,275.89 plus interest.

After the bankruptcy filing, two longtime friends and employees of Berthold’s incorporated Victory Enterprises as a Nevada Corporation. Taylor Bus Service emerged from the bankruptcy and received $1.9 million from the bankruptcy trustee. Taylor Bus loaned the $1.9 million to Victory, using falsified dates on documents to hide the true nature of the transaction. The district court found that the promissory note was a falsely dated instrument drafted to “disguise a fraudulent transfer.”

Victory deposited the $1.9 million into a Schwab brokerage account. Fleet believed that the money in the Schwab account really belonged…