IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
|DO NOT PUBLISH
This case disposition has no value as precedent and is not intended for publication. Any publication, either in print or electronically, is contrary to the intent and wishes of the court.
ADAPTIVE VIDEO, INC, No. 96-11142
RAYMOND A. CAREY, Trustee,
v. A.P. No. 96-1185
JOHNSON CHUA and EGAN CHUA,
Memorandum of Decision
Defendant Johnson Chua was an officer and shareholder of the corporate debtor. Shortly
before the bankruptcy was commenced, he wire transferred $130,000.00 in corporate funds to
the Bahamas bank account of his father, defendant Egan Chua. In this adversary proceeding, the
bankruptcy trustee seeks to avoid the transfer and recover the funds. Egan's motion to quash
service is now before the court.
Egan presently resides in the Philippenes. He has never done business in the United States,
although he has made annual visits to this country. He argues that he has insufficient contacts
with this country to establish jurisdiction over him.
Jurisdiction over a foreign recipient of an avoidable transfer may be established if the
transferee has had minimum contacts with this country and the exercise of jurisdiction over him
is fair and reasonable. In re Schwinn Bicycle Co.
, 192 B.R. 461, 469 (Bkrtcy. N.D.Ill.1996).
Both elements are present in this case.
There is no requirement that a defendant have done business in this country in order to be
subject to suit to recover a transfer. While the transferee's contacts with this country must be
more than random, fortuitous or attenuated, the act of accepting the transfer may itself constitute
a sufficient contact. In re Schwinn Bicycle Co.
, supra, at 473. A fraudulent transfer is
considered to have occurred in the country where the transfer originated. In re Chase &
, 835 F.2d 1341, 1346 (11th Cir.1988), rev'd on other grounds sub nom
Granfinanciera v. Nordberg
, 106 L.Ed.2d 26 (1989).
Moreover, Chua admits that he made annual visits to this country to visit his relatives. The
transfer in this case was effected by one of those relatives. The only reason Johnson Chua
transferred the funds to Egan was their familial relationship. These annual visits therefore
constitute additional contacts with this country sufficient to establish personal jurisdiction to
recover intrafamily transfers.
As to the second test, there is nothing unfair about making Chua defend his right to retain the
transfer in this country, where the transfer is deemed to have occurred. The trustee is not seeking
any additional damages, or anything more than simple return of the funds. Egan can avoid the
burden of litigation in this country merely by returning the transferred funds. If he is allowed
to keep them, then a major goal of this country's bankruptcy system will have been thwarted.
The trustee admits that he has not yet effected service on Egan. Therefore, insofar as Egan's
motion to quash is based on lack of service it will be granted. However, that part of the motion
which seeks dismissal for lack of jurisdiction will be denied. The trustee shall submit an
appropriate form of order.
Dated: September 30, 1996 _______________________