In re Reed

In the month before filing for chapter 7 bankruptcy, Hugh Reed and his wife (the Reeds) sold guns, antiques, and stock for roughly 20 percent of their value and sold gold coins at market value, mostly to a single buyer just 10 days before filing, and applied the roughly $35,000 in proceeds to liens on their homestead, which was exempt under Texas law. The bankruptcy trustee challenged the Reeds' entitlement to keep the homestead exempt, arguing the conversion was flagrant prebankruptcy planning showing fraudulent intent, since the Reeds received less than reasonably equivalent value for the nonexempt property they sold.