Executing on Fraudulently Transferred Assets

Altus Brands II LC filed for a writ of garnishment against two officers of Swordfish Financial, Inc., seeking to enforce a $289,886 judgment from Minnesota against Swordfish. The trial court permitted Altus to execute on specific stock transferred to the officers by Swordfish in 2010, but refused to enter a money judgment against them. Altus appealed. The opinion is lengthy and exceedingly fact-specific — it’s the kind of case where dozens of findings of fact and conclusions of law get dropped into a single footnote.

Because the value of the stock had declined since the date of its transfer, the Court of Appeals held that the trial court had erred in only permitting Altus to execute on the stock, and that a money judgment was necessary to ensure that Altus’s position was not prejudiced by the fraudulent transfer. However, the amount of that money judgment was not to exceed the the value of the stock at the time of transfer, so as not to create a windfall in favor of Altus. The Court also affirmed the trial court’s findings regarding the cancellation of a $3.5 million promissory note from Swordfish to the officers, which Altus was apparently trying to use as further proof of its fraudulent transfer claim for the full amount of the Minnesota judgment.

Altus Brands II LLC v. Alexander, No. 05-13-06660-CV