In re: Village Concepts, Inc. ( 2015 )


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  •                                                                 FILED
                                                                     DEC 04 2015
     1                         NOT FOR PUBLICATION
                                                               SUSAN M. SPRAUL, CLERK
     2                                                             U.S. BKCY. APP. PANEL
                                                                   OF THE NINTH CIRCUIT
     3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
     4                            OF THE NINTH CIRCUIT
     5   In re:                        )        BAP No. EC-15-1186-JuFD
                                       )
     6   VILLAGE CONCEPTS, INC.,       )        Bk. No.   12-30911
                                       )
     7                  Debtor.        )        Adv. No. 14-2054
         ______________________________)
     8                                 )
         DAVID D. FLEMMER,             )
     9                                 )
                        Appellant,     )
    10                                 )
         v.                            )        M E M O R A N D U M*
    11                                 )
         MARK WEINER; NANCY WEINER;    )
    12   PARK VILLAGE CORPORATION,     )
         INC.,                         )
    13                                 )
                        Appellees.     )
    14   ______________________________)
    15              Argued and Submitted on November 19, 2015
                            at Sacramento, California
    16
                                Filed - December 4, 2015
    17
                  Appeal from the United States Bankruptcy Court
    18                for the Eastern District of California
    19       Honorable David E. Russell, Bankruptcy Judge, Presiding**
                           ____________________________
    20
         Appearances:     Jeremy Luke Hendrix of Desmond, Nolan, Livaich &
    21                    Cunningham argued for appellant; Michael W.
                          Thomas of Thomas & Associates argued for
    22                    appellees.
                             ____________________________
    23
    24       *
              This disposition is not appropriate for publication.
       Although it may be cited for whatever persuasive value it may
    25 have (see Fed. R. App. P. 32.1), it has no precedential value.
    26 See 9th Cir. BAP Rule 8024-1.
             **
    27        The Honorable Michael S. McManus was assigned to the
       underlying bankruptcy case and heard all pretrial matters in this
    28 adversary. Judge Russell entered the order on appeal.
    
                                          -1-
     1   Before:      JURY, FARIS, and DUNN, Bankruptcy Judges.
     2            Chapter 71 trustee David D. Flemmer (Trustee) filed an
     3   adversary complaint against Mark and Nancy Weiner (collectively,
     4   Weiners or Shareholders), individually and in their capacities
     5   as trustees of The Kopp Family Revocable Living Trust (Trust),
     6   and Park Village Corporation, Inc. (Park Village).       The
     7   complaint sought to avoid pre-petition alleged fraudulent
     8   transfers made by the debtor, Village Concepts, Inc. (Debtor or
     9   VCI), to Park Village and the Trust under Cal. Civil Code
    10   §§ 3439.04 and 3439.05 and §§ 544 and 550.      After a trial, the
    11   bankruptcy court ruled against Trustee and this appeal followed.
    12   For the reasons discussed below, we AFFIRM.
    13                                  I.   FACTS
    14   A.       Debtor’s Business
    15            Debtor was in the business of selling new and used
    16   manufactured homes and managing mobile home parks.       Mark is
    17   Debtor’s president and Nancy is Debtor’s secretary.       The Trust
    18   is Debtor’s sole shareholder, and the Weiners are the sole
    19   trustees and beneficiaries of the Trust.
    20            In March 2009, Park Village was formed.   Its sole
    21   shareholder is the Trust.      Mark is the President and Chief
    22   Financial Officer of Park Village.
    23            The Weiners or the Trust had an interest in at least nine
    24   mobile home parks, including Castle Village, LLC (CV LLC) and
    25
              1
    26        Unless otherwise indicated, all chapter and section
       references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
    27 “Rule” references are to the Federal Rules of Bankruptcy
       Procedure and “Civil Rule” references are to the Federal Rules of
    28 Civil Procedure.
    
                                             -2-
     1   Redding Riverside Village, LLC (RRV LLC) (collectively, CV LLC
     2   and RRV LLC are referred to as the Mobile Home Parks).    CV LLC
     3   was a single asset California limited liability company used by
     4   Debtor to hold its 50% interest in a mobile home park located in
     5   Ione, California.   RRV LLC was a single asset California limited
     6   liability company used by Debtor to hold its 70% interest in a
     7   mobile home park located in Redding, California.   Debtor held
     8   100% of the membership interests in CV LLC and RRV LLC.
     9   B.   The Construction Defect Litigation
    10        In 2005, Donald Harris (Harris) purchased a mobile home
    11   from Debtor and lived at Indian Village Estates.   In early 2006,
    12   Harris complained about numerous defects with the mobile home.
    13   The community manager at Indian Village Estates wrote to Harris
    14   telling him to contact Mark directly due to the complexity of
    15   his issues.   Harris and Mark then attended a mediation which was
    16   required under the sales agreement.   On October 23, 2006, Harris
    17   and Debtor entered into a settlement agreement which required
    18   Debtor to make repairs.
    19        On May 19, 2008, Debtor, along with Champion Home Builders
    20   Co., wrote a letter to the homeowners at Indian Village Estates
    21   which stated in part:    “If you believe you have a claim that may
    22   be covered by your warranty, please submit it in writing to the
    23   dealer or manufacturer, and we will be happy to work with you to
    24   address your particular situation.”
    25        On October 22, 2008, Harris filed a state court complaint
    26   against Debtor alleging that it had breached the settlement
    27   agreement and that his mobile home was unsafe and in violation
    28   of the sale agreement.
    
                                         -3-
     1            On June 8, 2009, attorney Steven H. Haney (Haney) sent a
     2   demand letter to Mark and Debtor at 4101 Mother Load Dr.,
     3   Shingle Springs, CA 95649.2     Haney advised Mark that his firm
     4   represented a number of owners of manufactured homes that had
     5   been purchased from Debtor who complained that the homes were
     6   defectively constructed.      Haney made a settlement demand for
     7   $1,250,000 which remained open until June 30, 2009.       Debtor did
     8   not respond to the demand letter and the letter was not returned
     9   to Haney.
    10            On August 10, 2009, Haney filed a state court lawsuit
    11   against Debtor on behalf of his clients, asserting causes of
    12   action for breach of contract, construction defect, and breach
    13   of warranty.      This case was consolidated with the prior action
    14   filed by Harris.
    15            On June 5, 2012, a trial in the state court commenced.    A
    16   jury was impaneled one week before Debtor filed its bankruptcy
    17   petition.
    18   C.       Debtor’s Litigation With Former Employee
    19            Debtor was also involved in state court litigation with a
    20   former employee, Stanley Palesano (Palesano).       Palesano asserted
    21   whistleblowing claims against Debtor, contending that Debtor had
    22   tried to stop him from alerting the public to harmful and bad
    23   faith construction defect issues.       This case was dismissed in
    24   June 2009 when the parties agreed to walk away.
    25
              2
    26        Debtor’s address was actually 4101 Mother Lode Dr. as
       opposed to 4101 Mother Load Dr. At trial, Mark testified that
    27 Debtor received its mail at P.O. Box 736, Shingle Springs and
       that the Mother Lode address was a sales office and the place
    28 where Debtor stored its books and records.
    
                                           -4-
     1   D.       The Prepetition Transfers
     2            On June 30, 2009, Debtor transferred its interest in the
     3   Mobile Home Parks to Park Village in return for 100% of the
     4   stock in Park Village.      As part of the same transaction, Debtor
     5   transferred its stock in Park Village to its sole shareholder,
     6   the Trust.3
     7            To document these transactions, Debtor and the Shareholders
     8   entered into an Agreement and Plan of Corporate Separation and
     9   Reorganization dated June 30, 2009.        In Recital B, the
    10   Shareholders stated that they believed it was in Debtor’s best
    11   interest to separate its current business into two corporations:
    12   a newly formed corporation, Park Village, would own and operate
    13   the Mobile Home Parks and Debtor would continue to own and
    14   operate the remaining business.        Recital D stated that Debtor
    15   intended to transfer all of its ownership interests in the
    16   Mobile Home Parks to Park Village in exchange for 100,000 of its
    17   shares.      Recital E stated that Debtor offered to transfer to
    18   Shareholders all of Park Village’s shares in a transaction
    19   intended to quality as a tax-free spinoff under Internal Revenue
    20   Code (IRC) § 355 and that Shareholders desired to accept such
    21   offer pursuant to the terms set forth in the agreement.
    22            The Plan of Reorganization also stated that the parties to
    23   the agreement intended to effect a tax-free reorganization under
    24   IRC §§ 361(A), 355, and 368(A)(1)(D) and that the purpose of the
    25   plan was to separate the operations, assets and liabilities of
    26   the business into two corporations with the same shareholders of
    27
    28        3
                  Trustee blends these transfers together in his arguments.
    
                                              -5-
     1   each corporation.
     2        Section 1.2 of the agreement stated:
     3        The CORPORATION shall transfer all of its ownership
              and membership interest and goodwill of the MOBILE
     4        HOME PARKS subject to all of the remaining
              liabilities, debts, obligations and contracts of the
     5        MOBILE HOME PARKS to the SUBSIDIARY in exchange for
              100,000 shares of the SUBSIDIARY’S no-par common
     6        stock. The assets transferred to the SUBSIDIARY are
              shown on Exhibit ‘D’. The transfer and assignment of
     7        assets shall be by transfer of membership interests in
              Castle Village, LLC and Redding Riverside Village, LLC
     8        in form and substance satisfactory to counsel for the
              CORPORATION and the SHAREHOLDERS, in each case with
     9        such other appropriate instruments of title as counsel
              for the SHAREHOLDERS may reasonably request.
    10
    11        Exhibit “D” to the agreement said:    “One thousand
    12   membership units in Castle Village, LLC and Redding Riverside
    13   Village, LLC are to be transferred to Park Village Corporation.”
    14        Finally, the agreement stated that the closing would take
    15   place at 4101 Mother Lode Drive, Shingle Springs, California as
    16   of the end of business on June 30, 2009.
    17   E.   Bankruptcy Events
    18        On June 8, 2012, almost three years after the transfers and
    19   while the state court construction defect litigation was
    20   pending, Debtor filed a chapter 11 petition.    The construction
    21   defect litigation plaintiffs (Creditors) filed proofs of claim
    22   in Debtor’s case, asserting unsecured claims greater than $1.5
    23   million.
    24        The United States Trustee (UST) filed a motion to dismiss
    25   or convert the case because Debtor failed to timely file a plan
    26   and disclosure statement by the deadlines set by the court.   On
    27   March 13, 2013, Debtor filed its chapter 11 plan and disclosure
    28   statement.   Two days later, Creditors filed a motion to appoint
    
                                        -6-
     1   a chapter 11 trustee for the purpose of evaluating whether
     2   reorganization was feasible.    Creditors alleged that there was
     3   strong circumstantial evidence that Mark had caused Debtor to
     4   make fraudulent transfers of its property to its sole
     5   shareholder, an affiliate entity also controlled by Mark, after
     6   he learned of their claims.    They also alleged that they had no
     7   faith in Debtor’s ability or willingness to fulfill its proper
     8   role as debtor-in-possession.   Finally, Creditors complained
     9   that Debtor and its current management had nothing to lose by
    10   continuing to operate Debtor in self-dealing transactions.
    11        The bankruptcy court conditionally denied the UST’s motion
    12   to convert or dismiss.   On April 24, 2013, the bankruptcy court
    13   granted Creditors’ motion to appoint a chapter 11 trustee.    On
    14   May 8, 2013, Flemmer was appointed as chapter 11 trustee.
    15        About two months later, Trustee filed a motion to convert
    16   the case to chapter 7 on the grounds that (1) Debtor did not
    17   have sufficient current and prospective income to sustain
    18   operating expenses and professional fees necessary to a
    19   successful reorganization, and (2) the principal assets of
    20   Debtor consisted of litigation rights and equipment, both of
    21   which could be administered in a liquidation as effectively as
    22   in a reorganization.   The bankruptcy court granted Trustee’s
    23   motion and converted the case to chapter 7 by order entered on
    24   September 11, 2013.    Flemmer was then appointed as the chapter 7
    25   trustee.
    26        1.    The Adversary Complaint For Fraudulent Transfers
    27        On February 13, 2014, Trustee filed an adversary complaint
    28   against the Weiners and Park Village alleging that Debtor’s
    
                                         -7-
     1   transfer of 100% of its interest in the Mobile Home Parks to
     2   Park Village in return for 100% of Park Village stock was
     3   fraudulent.        Trustee also alleged that the issuance of new
     4   shares comprising 100% of the outstanding and issued stock in
     5   Park Village which were transferred to the Weiners in their
     6   capacities as trustees of the Trust was also fraudulent.
     7   Trustee maintained that these transfers were made with actual
     8   intent to hinder, delay, or defraud a creditor of Debtor under
     9   Cal. Civil Code § 3439.04 and §§ 544(b) and 550.        Trustee also
    10   maintained that the transfers were constructively fraudulent
    11   because they were made without receiving reasonably equivalent
    12   value in exchange and that Debtor was insolvent at the time the
    13   transfers were made.        Cal. Civil Code § 3439.05; §§ 544(b) and
    14   550.        Finally, Trustee sought turnover of the transferred
    15   property - Debtor’s membership interests in the Mobile Home
    16   Parks - pursuant to § 542.
    17              2.   Declarations In Lieu Of Direct Testimony
    18              Prior to trial, Debtor filed the declarations of Mark
    19   Weiner, Nancy Weiner, Michael Thomas Kutzman, and Burt Douglass4
    20   in lieu of direct testimony.        Trustee filed the declarations of
    21
    22          4
                Douglass was Debtor’s CPA. Trustee retained Douglass to
    23   prepare Debtor’s tax returns after he was appointed. Debtor
         submitted Douglass’ declaration in lieu of direct testimony on
    24   the issue of insolvency. Trustee opposed Douglass’ declaration
         in part, contending that his testimony concerned specialized tax
    25   knowledge and Douglass had not been disclosed as an expert
    26   witness. At trial, Trustee’s counsel elicited testimony from
         Douglass that Debtor’s counsel argued was in the nature of expert
    27   testimony. After some discussion on the record, Trustee’s
         counsel agreed that Douglass could be designated as an expert and
    28   the bankruptcy court designated him as such.
    
                                             -8-
     1   himself, Haney, and Barbara Lawson.5
     2              Mark Weiner:   Mark testified that in early 2007, he sold a
     3   mobile home park in Southern California and realized a
     4   substantial gain.         As a result, Mark said that he was thinking
     5   of retiring and developing a plan to sell VCI to his children.
     6   As part of that plan, Mark wanted to relieve VCI of indebtedness
     7   and encumbrances.         Therefore, according to Mark, he met with tax
     8   attorney and CPA Michael Kutzman in early 2008 to discuss a
     9   spinoff of VCI assets that would leave VCI in better financial
    10   condition in case his children decided to purchase the company.
    11              Mark further testified that on July 1, 2004, VCI converted
    12   from a C Corporation to an S Corporation.         Consequently, the
    13   sale or transfer of any appreciated assets of VCI within a ten
    14   year period would result in a built in gains tax being levied
    15   against VCI as well as capital gains tax for the shareholders of
    16   VCI.        This was important as the Mobile Home Parks had a low
    17   basis at their acquisition because the parks were acquired as
    18   part of 1031 tax deferred exchanges.         Due to the built in gains
    19   issue, he contacted Kutzman, who proposed the creation of Park
    20   Village and an IRC §§ 350 and 358 spinoff of Park Village to the
    21   Trust.        According to Mark, this would allow the spinoff of the
    22   assets without incurring the built in gain and capital gains
    23   taxes.
    24              Accordingly, on March 16, 2009, VCI formed Park Village to
    25   hold its membership interests in the two LLCs.         VCI was a 100%
    26
                5
    27        Because the testimony of Nancy Weiner and Trustee is
       mostly irrelevant to the issues raised in this appeal, a summary
    28 of their testimony is not included.
    
                                              -9-
     1   shareholder of Park Village.    On June 30, 2009, VCI spun off its
     2   Park Village shares to the Trust.
     3        Finally, Mark testified that at the time he began
     4   discussing the spinoff of the Park Village from VCI with
     5   Kutzman, he was not aware of any threatened or pending
     6   litigation against VCI by the Creditors represented by Haney.
     7        Michael Kutzman:    Kutzman, who was Debtor’s attorney,
     8   testified that it was his understanding that Debtor wanted to
     9   reorganize so that it could focus on manufacturing and sales and
    10   split-off its mobile home park management business.    Kutzman
    11   declared that he prepared and completed the IRC §§ 355 and 358
    12   split-off of the mobile home park related assets and that he was
    13   “not aware of any other reason for the split off.”
    14        Burt Douglass:     Douglass testified that pursuant to his
    15   retention, he reviewed certain documents including Debtor’s
    16   financial records, bankruptcy statements, appraisals for the
    17   Mobile Home Parks, and other accounting records for 2008 through
    18   2012.   He also reviewed Debtor’s balance sheet dated June 30,
    19   2009, that was prepared by Mark.    Douglass testified that based
    20   upon his preparation of tax returns for Debtor, and review of
    21   its accounting records, interviews of Kutzman and Mark Weiner,
    22   and review of its June 30, 2009 Balance Sheet, Debtor was not
    23   left insolvent as a result of the asset spinoffs and was not
    24   insolvent as of June 30, 2009.    Douglass further opined that
    25   Debtor was in a better financial position after the spinoff and
    26   that the spinoff of the assets did not result in Debtor’s
    27
    28
    
                                          -10-
     1   insolvency.6    “Indeed, it appears that VCI continued to operate
     2   its business as a ongoing concern while paying its bills through
     3   early 2012.”     Finally, Douglass testified that his review of the
     4   matter showed that in 2004 Debtor converted from a C corporation
     5   to an S Corporation.       As a consequence, under IRS rules, Debtor
     6   could not sell major assets for ten years without incurring
     7   significant built in gains taxes and capital gains taxes.
     8   However, IRC §§ 350 and 358 allowed for a spinoff of assets
     9   under some circumstances.        In Douglass’ view, it was normal in a
    10   spinoff to separate the companies and business types into
    11   individual units to operate more easily, to find funding more
    12   easily and to prepare for succession planning.
    13           Steven Haney:     Haney testified as to his representation of
    14   Creditors and the sending of the demand letter, which was
    15   addressed to Mark and Debtor.        Haney testified that the demand
    16   letter was not returned.
    17           Barbara Lawson:     Barbara Lawson was Debtor’s employee.7
    18   She was a sales representative and part-time manager at Indian
    19   Village Estates where Creditors lived.        Lawson testified that
    20   she had told Mark about the complaints from residents who were
    21   threatening to sue Debtor due to construction problems with the
    22   manufactured homes.       She also testified that in early 2006, Mark
    23   had instructed all sales staff, park management staff,
    24
            6
              Although Douglass stated that he reviewed various
    25 documents, he did not offer an analysis as to how he reached his
    26 conclusion that Debtor was solvent as of June 30, 2009.
             7
    27        In 2008, after litigation initiated by Lawson, Debtor
       obtained a judgment against her for $986.69. As a result, the
    28 bankruptcy court did not find her testimony credible.
    
                                             -11-
     1   construction management, and construction employees to stay away
     2   from Donald Harris and others because they were threatening to
     3   sue him.    Finally, Lawson declared that in January or February
     4   2007, she reported to Mark that some of the residents had met
     5   with an attorney with respect to the construction defect issues
     6   related to the manufactured homes and that they were planning to
     7   sue.
     8          3.   The Trial
     9          On April 27, 2015, the bankruptcy court held a trial.
    10   There was extensive cross examination of Douglass and Mark.     At
    11   the close of trial, based upon its review of the evidence and
    12   testimony, the bankruptcy court made several findings of fact on
    13   the insolvency issue.    First, the bankruptcy court stated that
    14   in its mind, the June 30, 2009, balance sheet prepared by Mark
    15   “wasn’t a balance sheet,” but looked like a trial balance that
    16   “somebody had worked up.”8   Next, the court said that it had
    17   heard from the accountant (Burt Douglass) that Debtor was
    18   solvent and that it believed the accountant’s testimony.    Third,
    19
    20
            8
              The balance sheet contained three columns. The first
    21 column showed book value of the assets and liabilities and
       capital. The second column purported to show market value for
    22
       the transfers and the third column showed market value as of
    23 July 1, 2009, the day after the transfers. The middle column
       shows that total assets were $11,268,641.65 (although only the
    24 transferred assets were at market value, the others remaining at
       book value) and total liabilities were $11,320,490.90 as of
    25 June 30, 2009. Accordingly, the liabilities appeared to exceed
    26 the assets by approximately $51,000. The balance sheet also
       shows that immediately after the transfer on July 1, 2009, the
    27 total assets were $6,616,652.87 and total liabilities were
       $5,992,148.78 and thus the net capital available after the
    28 transfer was $624,504.09.
    
                                         -12-
     1   the court noted that the 2009 calendar year tax return showed
     2   that Debtor was solvent on Schedule L:      “It shows that the
     3   corporation is solvent.     Sure, they had sustained losses but the
     4   assets exceeded the liabilities.”9      Finally, the court observed
     5   that although Debtor did not make money between 2009 and 2012,
     6   the Debtor was still solvent:     “They stayed in business.   They
     7   paid their bills for three years after the 2009 transfer.”       In
     8   the end, the bankruptcy court concluded that Debtor was solvent
     9   both before and after the transfer.
    10           Disagreeing with Trustee, the court also implicitly found
    11   that Debtor received value in exchange for the transfer.      The
    12   court found that “[t]here was tremendous value.      There was
    13   substantial reduction of debt.”     The court also found that
    14   although there was no written agreement for the assumption of
    15   debt, there could be an oral agreement:      “[A]nd oral agreements
    16   are just as enforceable as written agreements and if the parties
    17   agreed that the debt was resolved, it’s resolved.”
    18           In considering Debtor’s actual fraudulent intent, the
    19   bankruptcy court acknowledged that the transaction was between
    20   insiders and that they retained control of the assets both
    21   before and after the transfers.     But the court stated that it
    22   was not convinced that Debtor’s knowledge of the construction
    23   defect litigation showed actual fraud as to the transfer.        The
    24
             9
              Schedule L “Balance Sheets per Books” showed that at the
    25 end of the 2009 calendar tax year, Debtor’s total assets and
    26 liabilities were $4,757,072. Douglass testified at trial that
       after adding up the numbers and backing out the value of the
    27 capital stock and retained earnings, the liabilities would
       actually be $4,924,574. Therefore, at the end of 2009, Debtor’s
    28 liabilities would be greater than its assets at book value.
    
                                          -13-
     1   court opined that these types of suits were part of doing
     2   business:    “If you do business and you sell mobile homes, you
     3   will have people complain about the type of mobile homes you
     4   had.”    According to the court, if you are in business “you’re
     5   always going to be threatened with lawsuits.       That doesn’t mean
     6   very much.”    The court also believed Mark’s testimony that he
     7   did not know about Haney’s demand letter and the threatened
     8   lawsuit, noting too that there was no lawsuit actually filed and
     9   “it was only a threat.”
    10        Finally, the bankruptcy court said that it believed Mark’s
    11   testimony as set forth in his declaration; i.e., that the
    12   transfer was made to accomplish a tax spinoff.       Mark testified
    13   that he contacted his attorney to make the transfer in early
    14   2008, long before any threats by Haney were made, and that he
    15   was following up on a family plan.        According to the court, the
    16   transaction did not take place until 2009 because it was a
    17   complicated transaction to get done.       In the court’s view, that
    18   Haney’s letter said they had to settle by June 30, 2009, the
    19   same date the transfer took place, “was just a coincidence.”
    20   In the end, the bankruptcy court concluded that Trustee failed
    21   to show actual fraudulent intent just because of the threatened
    22   litigation.
    23        The bankruptcy court entered the judgment against Trustee
    24   on May 26, 2015.    Trustee filed a timely notice of appeal.
    25                             II.    JURISDICTION
    26        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
    27   §§ 1334 and 157(b)(2)(H).       We have jurisdiction under 28 U.S.C.
    28   § 158.
    
                                            -14-
     1                                III.    ISSUES
     2        Did the bankruptcy court err in finding that Trustee did
     3   not meet his burden of proof on the issue of insolvency?
     4        Did the bankruptcy court err in finding that Debtor did not
     5   make the transfers with actual fraudulent intent under a “badges
     6   of fraud” analysis?
     7                         IV.   STANDARDS OF REVIEW
     8        We review findings of fact for clear error and conclusions
     9   of law and mixed questions of law and fact de novo.         Oney v.
    10   Weinberg (In re Weinberg), 
    410 B.R. 19
    , 28 (9th Cir. BAP 2009).
    11        The bankruptcy court’s determinations about insolvency
    12   resolve questions of fact which are reviewed for clear error.
    13   In re Weinberg, 410 B.R. at 27-28.
    14        Whether there is actual intent to hinder, delay, or defraud
    15   creditors is also a question of fact.         Wolkowitz v. Beverly
    16   (In re Beverly), 
    374 B.R. 221
    , 235 (9th Cir. BAP 2007) (citing
    17   Bulmash v. Davis, 
    24 Cal. 3d 691
     (1979); Filip v. Bucurenciu,
    18   
    129 Cal. App. 4th 825
     (2005); Annod Corp. v. Hamilton & Samuels,
    19   
    100 Cal. App. 4th 1286
     (2002)).
    20        A bankruptcy court’s factual determination is clearly
    21   erroneous if it is illogical, implausible, or lacks support in
    22   inferences that may be drawn from facts in the record.         United
    23   States v. Hinkson, 
    585 F.3d 1247
    , 1261-62 & n.21 (9th Cir. 2009)
    24   (en banc) (quoting Anderson v. City of Bessemer City, N.C.,
    25   470 U.S. at 564, 577 (1985)) (explaining that the clearly
    26   erroneous standard of review is an element of the clarified
    27   abuse of discretion standard).
    28        Where there is admitted evidence in the record to support
    
                                             -15-
     1   the bankruptcy court’s fact findings, an appellate court cannot
     2   substitute its views of the facts for those of the bankruptcy
     3   court.   Anderson, 470 U.S. at 573.     “Where there are two
     4   permissible views of the evidence, the factfinder’s choice
     5   between them cannot be clearly erroneous.”      Id. at 574.
     6   Moreover, findings based on determinations about the credibility
     7   of witnesses “demand[] even greater deference to the trial
     8   court's findings; for only the trial judge can be aware of the
     9   variations in demeanor and tone of voice that bear so heavily on
    10   the listener’s understanding of and belief in what is said.”
    11   Id. at 575.
    12                             V.    DISCUSSION
    13        Section 544(b) confers on bankruptcy trustees the power to
    14   avoid any transfer of an interest of the debtor in property that
    15   is voidable under nonbankruptcy law by a creditor holding an
    16   allowable unsecured claim.     Here, the “nonbankruptcy law” is
    17   California’s Uniform Fraudulent Transfer Act (CUFTA).      “Whether
    18   a transfer is avoidable under the [CUFTA] is a question purely
    19   of California law as to which the California Supreme Court is
    20   the final authority.   Thus, a federal court construing the CUFTA
    21   is merely predicting what the state supreme court would rule if
    22   presented with the question.”     In re Beverly, 374 B.R. at 232.
    23   A.   Constructive Fraudulent Transfer: The Trustee did not meet
              his burden of proof regarding insolvency.
    24
    25        Under Cal. Civil Code § 3439.05, a transfer is
    26   constructively fraudulent if the debtor made the transfer
    27   without receiving reasonably equivalent value in exchange and
    28   the debtor was insolvent at that time or rendered insolvent as a
    
                                          -16-
     1   result of the transfer.    Trustee must prove both reasonably
     2   equivalent value and insolvency by a preponderance of evidence.10
     3   In re GSM Wireless, Inc., 
    2013 WL 4017123
    , at *17 (Bankr. C.D.
     4   Cal. April 5, 2013) (citing Whitehouse v. Six Corp., 
    40 Cal. 5
       App. 4th 527, 533–34 (1995)).
     6         1.   Insolvency
     7         Cal. Civil Code § 3439.02(a) provides that “[a] debtor is
     8   insolvent if, at fair valuations, the sum of the debtor’s debts
     9   is greater than all of the debtor’s assets.”     This is the
    10   balance sheet test for insolvency.     Bay Plastics, Inc. v. BT
    11   Comm. Corp. (In re Bay Plastics, Inc.), 
    187 B.R. 315
    , 328 n.22
    12   (Bankr. C.D. Cal. 1995).    Under Cal. Civil Code § 3439.02(c),
    13   “[a] debtor who is generally not paying his or her debts as they
    14   become due is presumed to be insolvent.”     This is the cash flow
    15   test for insolvency.    In re Bay Plastics, 187 B.R. at 328 n.22.
    16         As a general rule, solvency and not insolvency is presumed.
    17   Neumeyer v. Crown Funding Corp., 
    56 Cal. App. 3d 178
    , 186
    18   (1976).    “To overcome the presumption of solvency, there must be
    19   some basis in evidence for determining that the amount of the
    20   debtor’s obligations exceeded the then present fair salable
    21   value of his nonexempt assets.”    Id.   Here, because a statutory
    22
              10
    23          “The burden of showing something by a ‘preponderance of
         the evidence,’ . . . ‘simply requires the trier of fact to
    24   believe that the existence of a fact is more probable than its
         nonexistence before [he] may find in favor of the party who has
    25   the burden to persuade the [judge] of the fact’s existence.’”
    26   Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension
         Trust for So. Cal., 
    508 U.S. 602
    , 622 (1993). The preponderance
    27   of the evidence standard “‘allows both parties to share the risk
         of error in roughly equal fashion.’” Herman & MacLean v.
    28   Huddleston, 
    459 U.S. 375
    , 390 (1983).
    
                                         -17-
     1   presumption of insolvency did not apply, Trustee was required to
     2   introduce evidence which by a preponderance proved Debtor’s
     3   insolvency at the time of the transfer.   He did not.
     4        At the outset, we disagree with Trustee’s contention on
     5   appeal that the bankruptcy court applied the “wrong” test for
     6   insolvency under California law.   As noted above, there are two
     7   alternative tests to establish a debtor’s insolvency under Cal.
     8   Civil Code 3439.02 - the balance sheet test and the cash flow
     9   test.   The bankruptcy court found that Trustee had not proved
    10   insolvency under either test.
    11        As to the cash flow test, the court found:   “And certainly,
    12   the corporation satisfied the second [test], didn’t it?   They
    13   continued in business and they paid their bills.”   In addressing
    14   the balance sheet test, the court stated:   “I looked at the
    15   statements that were provided, I have heard the testimony of the
    16   parties, as far as I am concerned, the corporation was also
    17   solvent, if you look at the liabilities and assets.”    Since the
    18   bankruptcy court considered both the balance sheet and cash flow
    19   test, we review its factual findings on insolvency under the
    20   clearly erroneous standard.
    21              a.   The June 30, 2009 Balance Sheet
    22        To determine whether Debtor was solvent or insolvent on
    23   June 30, 2009, the bankruptcy court considers the “fair
    24   valuations” of the assets owned by Debtor and the amount of debt
    25   that it owed.   Cal. Civil Code § 3439.02(a).   “This differs from
    26   a balance sheet, where most assets apart from publicly traded
    27   stocks and bonds are carried at historic cost, rather than
    28   current market value.”   In re Bay Plastics, 187 B.R. at 330.
    
                                         -18-
     1   The resolution of the insolvency issue called for some relevant
     2   and reliable information concerning the “fair valuation” of the
     3   assets and outstanding liabilities on the critical date.     Here,
     4   there was none.
     5        Trustee argues that the June 30, 2009 balance sheet
     6   prepared by Mark conclusively proves that Debtor was insolvent
     7   at the time of the transfer.    In other words, Trustee relies on
     8   the values set forth in the balance sheet to establish Debtor’s
     9   insolvency at the time of the transfer.     Trustee accurately
    10   points out that the balance sheet shows liabilities of
    11   $11,320,490.90 and assets of $11,268,641.65.     Thus, according to
    12   these figures, Debtor was insolvent by at least $51,849.25 on
    13   the date of the transfer.   Trustee also asserts that at his
    14   deposition, Mark testified that Debtor was insolvent on the date
    15   of the transfer.   Mark testified:     “The assets were - before the
    16   transfer was $11,268,641, and the total liabilities was
    17   $11,320,000, so they were upside-down roughly $52,000.”
    18   Trustee’s counsel then asked:   “So on the date of the transfer,
    19   its liabilities exceeded its assets by about $52,000?”     Mark
    20   answered:   “Yes, but because of the transfer, their assets
    21   increased to $524,000 and that doesn’t include consideration for
    22   the assumption of the lawsuit, the assumption of the built-in
    23   gain risk.”   Essentially then, according to Trustee, Mark
    24   admitted that Debtor was insolvent on the date of the transfer.
    25   On these bases, Trustee asserts that he met his burden of
    26   proving insolvency.   We disagree.
    27        As discussed below, the bankruptcy court correctly
    28   concluded that the balance sheet was not sufficient to establish
    
                                         -19-
     1   Debtor’s insolvency on June 30, 2009.     First, Mark prepared the
     2   balance sheet and he is not a financial expert.     There is
     3   nothing in the record that shows Mark was qualified to proffer
     4   an opinion as to the true value of Debtor’s assets or
     5   liabilities on June 30, 2009.     Even if he was, Mark did not
     6   testify as to what valuation method was used in calculating the
     7   “fair” value of the assets and liabilities placed on the balance
     8   sheet.    Nor did Douglass.   Moreover, the only market values
     9   shown on the balance sheet were those of the transferred assets.
    10   The document is clear that only book value is used for any other
    11   asset.
    12         In addition, the bankruptcy court expressly did not find
    13   the balance sheet reliable because, in the court’s view, it was
    14   more of a trial balance than a balance sheet.11    Without the aid
    15
              11
    16          Generally, a trial balance is an internal report that
         will remain in the accounting department. It is a listing of all
    17   of the accounts in the general ledger and their balances.
         However, the debit balances are entered in one column and the
    18   credit balances are entered in another column. Each column is
    19   then summed to prove that the total of the debit balances is
         equal to the total of the credit balances. In contrast, a
    20   balance sheet is one of the financial statements that will be
         distributed outside of the accounting department and is often
    21   distributed outside of the company. The balance sheet is
         organized into sections or classifications such as current
    22
         assets, long-term investments, property, plant and equipment,
    23   other assets, current liabilities, long-term liabilities, and
         stockholders’ equity. Only the asset, liability, and
    24   stockholders’ equity account balances from the general ledger or
         from the trial balance are then presented in the appropriate
    25   section of the balance sheet. Totals are also provided for each
    26   section to assist the reader of the balance sheet. The balance
         sheet is also referred to as the statement of financial position
    27   or the statement of financial condition. Harold Averkamp, What
         is the difference between a trial balance and a balance sheet?,
    28                                                      (continued...)
    
                                          -20-
     1   of Trustee’s own expert as to what the proper assumptions were
     2   underlying the numbers, the bankruptcy court had no persuasive
     3   evidence before it as to the fair market values of Debtor’s
     4   assets and liabilities.
     5        Second, Douglass’ trial testimony raised doubts about the
     6   accuracy of the balance sheet.    He testified that Debtor’s
     7   assets would exceed its liabilities on June 30, 2009, if the
     8   shareholder loans were removed from the liabilities portion of
     9   the balance sheet.   Although Douglass acknowledged that
    10   shareholder loans were a liability that should be included in
    11   the balance sheet, that statement was qualified:    “If there is a
    12   promissory note, then it should be included in the liability
    13   section of the balance sheet.”    Douglass also testified that he
    14   did not know if there were any promissory notes associated with
    15   the shareholder loans.    Accordingly, Douglass did not know
    16   whether they should be included in the liabilities or not.12
    17   Trustee offered no evidence to refute any of this testimony.
    18        Third, Mark’s trial testimony also raised questions about
    19   the accuracy of the balance sheet that he had prepared.    Mark
    20   testified at trial that Debtor was “not insolvent.”
    21        Q. So different than what your deposition testimony
              was?
    
    22 A. I
     don’t believe I used the word insolvent. I said
    23        the balance sheet showed a minus $52,000 on that
              middle column, but there is a bunch of things that
    24
    25        11
              (...continued)
    26 Accounting Coach, www.accountingcoach.com.
             12
    27        Douglass’ testimony implied that if there was no evidence
       of debt - i.e., a promissory note - shareholder “loans” would
    28 instead be capital contributions.
    
                                          -21-
     1        weren’t included in that.
     2        Finally, Trustee complains that notably absent from the
     3   balance sheet was any accounting for the potential liabilities
     4   related to the construction defect claims against Debtor.
     5   According to Trustee, this was error because disputed or
     6   contingent liabilities must be included in calculating total
     7   indebtedness for purposes of determining insolvency, citing
     8   Sierra Steel, Inc. v. Totten Tubes, Inc. (In re Sierra Steel,
     9   Inc.), 
    96 B.R. 275
    , 279 (9th Cir. BAP 1989).    There, the Panel
    10   indicated that disputed or contingent liabilities must be
    11   included in determining total indebtedness for purposes of an
    12   insolvency analysis under § 547.    The Panel also noted that
    13   contingent debts must be reduced to reflect their present or
    14   expected amount.
    15        Although contingent liabilities are included in determining
    16   total indebtedness for purposes of deciding insolvency, the
    17   bankruptcy court’s failure to include them here was not clearly
    18   erroneous.   The evidence shows that Debtor had no contingent
    19   liabilities as of June 30, 2009, or if it did, they were
    20   indefinite, speculative, and not material.    Mark testified that
    21   he did not receive Haney’s demand letter and, as the bankruptcy
    22   court noted, even if he had received the letter, it simply
    23   threatened a lawsuit.   Mark also testified that he thought the
    24   matter with Harris was settled and that he was unaware of any
    25   further litigation.   Finally, Mark testified that as of June 29,
    26   2009, he was not aware of any construction defect claims that
    27   would pose a financial hardship to Debtor.    In other words, even
    28   if the construction defect litigation claims were pursued,
    
                                          -22-
     1   according to Mark, the anticipated magnitude of those claims was
     2   not great.13     The bankruptcy court found Mark’s testimony
     3   credible.
     4        When factual findings are based on determinations
              regarding the credibility of witnesses, we give great
     5        deference to the bankruptcy court’s findings, because
              the bankruptcy court, as the trier of fact, had the
     6        opportunity to note ‘variations in demeanor and tone
              of voice that bear so heavily on the listener’s
     7        understanding of and belief in what is said.’
     8   Anderson, 470 U.S. at 575.     We thus defer to the bankruptcy
     9   court’s reasonable assessment of Mark’s credibility.
    10        In addition, even assuming such contingent liabilities
    11   existed, Trustee provided no evidence that attempted to quantify
    12   the amount of Debtor’s likely liability on the construction
    13   defect claims.     Therefore, the bankruptcy court had no evidence
    14   from Trustee showing that the construction defect litigation
    15   would have rendered Debtor insolvent.     For all these reasons,
    16   the bankruptcy court did not clearly err by failing to include
    17   contingent liabilities in its insolvency analysis.
    18        In the end, given the uncertainties upon which the values
    19   in the balance sheet were based, the bankruptcy court could
    20   reasonably infer that it did not show by a preponderance of the
    21   evidence that Debtor was insolvent on June 30, 2009.     Trustee’s
    22   reliance on the balance sheet as conclusive evidence of
    23   insolvency was misplaced.
    24               b.    The 2009 Calendar Year Tax Return
    25        Next, Trustee points to Debtor’s 2009 calendar year tax
    26
             13
    27        For example, if fifteen others had claims similar to
       Harris’ claims, each being worth $2,000 in settlement, Debtor’s
    28 exposure would be no more than $30,000.
    
                                          -23-
     1   return as conclusive evidence of Debtor’s insolvency.    Trustee
     2   argues that Douglas testified at trial that the liabilities
     3   shown on Schedule L of the return were reported incorrectly as
     4   $4,757,072, and that they should have been reported as
     5   $4,924,572, which exceeds Debtor’s reported assets by $167,502.
     6   Trustee also contends that based on Debtor’s consistent and
     7   substantial losses from 2008 through 2010, the accompanying
     8   negative retained earnings, and the reported liabilities in
     9   excess of assets on the 2009 tax return, “it is implausible that
    10   Debtor was solvent on June 30, 2009.”   Finally, Trustee
    11   maintains that the court clearly erred in first believing that
    12   the 2009 tax return reported assets in excess of liabilities and
    13   then dismissing the mistake and focusing on the Debtor’s
    14   continuing business operations after the transfer.   We are not
    15   persuaded.
    16        Although Douglass did testify that the liabilities on
    17   Schedule L were added up incorrectly, Schedule L on the tax
    18   return is irrelevant to the question of whether Debtor was
    19   insolvent at the time it made the transfer for several reasons.
    20   Douglass testified that in preparing Schedule L, his intent was
    21   not to show insolvency but to report income and expenses.
    22   Douglass also testified that the value assigned to the assets in
    23   Schedule L did not reflect fair market values because the tax
    24   return “typically reflects cost basis from the financial
    25   statements.   So whatever you see here was what the taxpayer
    26   originally paid for the asset.”   Clearly then, Douglass’
    27   preparation of the tax return had different goals than that of
    28   an insolvency analysis.   On this basis, the bankruptcy court
    
                                        -24-
     1   could reasonably conclude that Schedule L was not probative to
     2   the question of whether Debtor was insolvent on the date of the
     3   transfer.
     4         Debtor’s history of operating losses is also cited by
     5   Trustee as evidence of insolvency.     However, the bankruptcy
     6   court correctly concluded that no useful inferences could be
     7   drawn from those losses.   The fact that Debtor operated at a
     8   loss for a period of time is not an indication of the potential
     9   value of the company.
    10               c.   Presumption of Solvency
    11         Mark testified that after the June 30, 2009 transfer,
    12   Debtor continued its operations and paid its debts.     Because
    13   Debtor continued to operate and pay its bills for almost three
    14   years after the transfer, an inference of insolvency under Cal.
    15   Civil Code § 3439.02(c) was not warranted.     Therefore, it was
    16   Trustee’s burden, not the defendants’, to prove insolvency by a
    17   preponderance of the evidence.14
    18
              14
    19          At trial, the bankruptcy court designated Douglass as an
         expert witness. Generally, Fed. R. Evid. 702 “requires that
    20   expert testimony relate to scientific, technical, or other
         specialized knowledge, which does not include unsupported
    21   speculation and subjective beliefs.” Guidroz–Brault v. Missouri
         Pac. R. Co., 
    254 F.3d 825
    , 829 (9th Cir. 2001). In applying Fed.
    22
         R. Evid. 702, the trial judge must act as a gatekeeper to ensure
    23   that the expert’s testimony “rests on a reliable foundation and
         is relevant to the task at hand.” Daubert v. Merrell Dow Pharm.,
    24   Inc., 
    509 U.S. 579
    , 597 (1993).
              Here, Douglass opined in his declaration in lieu of direct
    25   testimony that Debtor was solvent and generally paying its debts
    26   as they became due. The bankruptcy court found Douglass’
         testimony credible. However, the record does not show whether
    27   Douglass’ conclusion of solvency was based on tested assumptions
         about the accuracy of values that had been placed internally on
    28                                                      (continued...)
    
                                         -25-
     1        The record shows that Trustee failed to satisfy that burden
     2   or overcome the presumption of solvency as there was no reliable
     3   evidence from which the court could reasonably infer that the
     4   amount of Debtor’s obligations exceeded the then present fair
     5   salable value of its assets.   Trustee did not offer evidence to
     6   refute any of the testimony given by Douglass or Mark on the
     7   issue of insolvency.   Accordingly, based upon the preponderance
     8   of the evidence presented, the bankruptcy court’s ruling against
     9   Trustee on the insolvency issue was not clearly erroneous.
    10        2.   Reasonably Equivalent Value
    11        To make out a successful fraudulent transfer claim under
    12   Cal. Civil Code § 3439.05, Trustee must show not only that
    13   Debtor was insolvent at the time of the transfer, but also that
    14   it failed to receive “a reasonably equivalent value in exchange
    15   for the transfer.”   The Trustee having failed to prove
    16   insolvency, a necessary element for a constructive fraudulent
    17   transfer, it is unnecessary for us to reach this issue.
    18   B.   Actual Fraudulent Transfer: The Trustee did not meet his
              burden of proof regarding actual intent.
    19
    20        Under the CUFTA, a transfer is intentionally fraudulent if
    21   it is made with the intent to defeat, hinder or delay creditors.
    22   Cal. Civil Code § 3439.04(a)(1) provides that transfers made
    23   with actual intent to delay, hinder, or defraud creditors are
    24   fraudulent and therefore voidable.    Since direct evidence of
    25
              14
    26        (...continued)
       Debtor’s assets or liabilities. Nonetheless, to the extent the
    27 bankruptcy court erred in relying on Douglass’ testimony, the
       error was harmless because the record shows that Trustee did not
    28 meet his burden of proof on insolvency.
    
                                        -26-
     1   intent to hinder, delay or defraud is seldom available, the
     2   determination typically is made inferentially from circumstances
     3   consistent with the requisite intent.   In re Beverly, 
    374 B.R. 4
       at 235 (citing Filip, 28 Cal. Rptr. 3d at 890).
     5        The use of the “badges of fraud” to find intent is well-
     6   established.   Cal. Civil Code § 3439.04(b) sets out eleven non-
     7   exclusive examples of events, acts, or statuses that may help
     8   determine whether such actual fraud exists:   (1) whether the
     9   transfer or obligation was to an insider; (2) whether the debtor
    10   retained possession or control of the property transferred after
    11   the transfer; (3) whether the transfer or obligation was
    12   disclosed or concealed; (4) whether before the transfer was made
    13   or the obligation was incurred, the debtor had been sued or
    14   threatened with suit; (5) whether the transfer was of
    15   substantially all the debtor’s assets; (6) whether the debtor
    16   absconded; (7) whether the debtor removed or concealed assets;
    17   (8) whether the value of the consideration received by the
    18   debtor was reasonably equivalent to the value of the asset
    19   transferred or the amount of the obligation incurred;
    20   (9) whether the debtor was insolvent or became insolvent shortly
    21   after the transfer was made or the obligation was incurred;15
    22   (10) whether the transfer occurred shortly before or shortly
    23   after a substantial debt was incurred; and (11) whether the
    24   debtor transferred the essential assets of the business to a
    25
             15
    26        “Insolvency is but one of numerous factors a court has
       discretion to consider in determining whether a party acted with
    27 actual intent to defraud.” Garcia v. Palmer, 
    2013 WL 6147111
    , at
       *4 (Cal. Ct. App. Nov. 22, 2013). Proving insolvency is not a
    28 requirement.
    
                                        -27-
     1   lienholder who transferred the assets to an insider of the
     2   debtor.
     3        Here, the bankruptcy court agreed with Trustee that some
     4   badges of fraud were present:    the transfers were made by
     5   insiders and those insiders maintained control both before and
     6   after the transfers.    On appeal, Trustee argues that other
     7   badges of fraud were present and, therefore, actual fraud was
     8   proven.
     9        Trustee’s main focus is that Debtor had been sued and
    10   threatened with suit prior to the transfer.    According to
    11   Trustee, while Mark testified that he did not receive Haney’s
    12   demand letter, both Mark and Nancy acknowledged at trial that
    13   the letter was addressed to a location used by Debtor to store
    14   its property and records and the transfer agreement identifies
    15   the location as the place for closing the transfer.    Trustee
    16   maintains that the mailbox rule creates a rebuttable presumption
    17   that documents duly served by mail have been received by the
    18   addressee at the address stated in the proof of service under
    19   Faden v. Segal (In re Segal), 
    2015 WL 400643
    , at *7 (9th Cir.
    20   BAP Jan. 29, 2015).    Trustee also argues that to overcome the
    21   mailbox rule presumption, the party served ordinarily must
    22   present something more than a bald denial of receipt and here
    23   defendants did not produce anything other than a denial of
    24   receipt.   Finally, Trustee points out that he offered rebuttal
    25   witness testimony from Adam Weiner that showed he was the
    26   attorney of record for Debtor and spoke to Haney about the
    27   demand letter.
    28        In essence, Trustee attempts to reweigh the evidence in his
    
                                         -28-
     1   favor to suggest another outcome for this badge of fraud.
     2   However, our role in this appeal is not to reweigh the evidence
     3   presented to the bankruptcy court.     Anderson, 470 U.S. at 575.
     4   Putting the receipt of the letter aside, the bankruptcy court
     5   stated that it was not convinced that the construction defect
     6   litigation showed actual fraud for another reason.    The court
     7   opined that these types of suits were part of doing business:
     8   “If you do business and you sell mobile homes, you will have
     9   people complain about the type of mobile homes you had.”
    10   According to the court, if you are in business “you’re always
    11   going to be threatened with lawsuits.    That doesn’t mean very
    12   much.”    Accordingly, in the court’s view, Mark’s receipt of the
    13   demand letter was not dispositive evidence of actual fraud.
    14        Trustee also argues that the transfer involved
    15   substantially all of Debtor’s assets.    However, at trial, Mark
    16   testified that Debtor did not lose all or substantially all of
    17   its assets in the transfer.   After the transfer, there were
    18   assets remaining:   “All the inventory items which consisted of
    19   mobile homes and RV’s and equipment, a lot of construction
    20   equipment, and substantial notes receivable.”    This testimony
    21   was not rebutted by Trustee at trial.    Moreover, the balance
    22   sheet identified many assets which were not transferred
    23   representing more than half of the total book value of the
    24   assets.
    25        Finally, as noted above, although Trustee had not proved
    26   Debtor was insolvent on the date of the transfer, proof of
    27   actual fraud does not require proof of insolvency.    Likewise,
    28   even if Trustee had proved Debtor did not receive reasonably
    
                                         -29-
     1   equivalent value in exchange for the transfer, an issue which we
     2   need not reach, this still would not necessarily add up to
     3   actual fraud.   As we previously observed:
     4        The [C]UFTA list of ‘badges of fraud’ provides neither
              a counting rule, nor a mathematical formula. No
     5        minimum number of factors tips the scales toward
              actual intent. A trier of fact is entitled to find
     6        actual intent based on the evidence in the case, even
              if no ‘badges of fraud’ are present. Conversely,
     7        specific evidence may negate an inference of fraud
              notwithstanding the presence of a number of ‘badges of
     8        fraud.’
     9   In re Beverly, 374 B.R. at 236 (citing Filip, 
    28 Cal. Rptr. 3d 10
       at 890); Annod Corp., 123 Cal. Rptr. 2d at 932–33 (court “should
    11   evaluate all of the relevant circumstances involving a
    12   challenged transfer” and “may appropriately take into account
    13   all indicia negativing as well as those suggesting
    14   fraud. . . .”); see also Acequia, Inc. v. Clinton
    15   (In re Acequia, Inc.), 
    34 F.3d 800
    , 806 (9th Cir. 1994)
    16   (discussing actual fraud under § 548(a)(1): “The presence of a
    17   single badge of fraud may spur mere suspicion; the confluence of
    18   several can constitute conclusive evidence of actual intent to
    19   defraud, absent ‘significantly clear’ evidence of a legitimate
    20   supervening purpose.”).
    21        In short, many of the typical elements associated with an
    22   actual fraudulent transfer are not present in this case.   The
    23   bankruptcy court considered Mark’s explanation for the transfer
    24   as a tax spinoff credible.   This was sufficient, in the
    25   bankruptcy court’s mind, to rebut the circumstantial inference
    26   of actual intent arising from the few badges of fraud that were
    27   present.   Accordingly, the bankruptcy court’s factual finding
    28   that Debtor had not made the transfer with actual fraudulent
    
                                        -30-
     1   intent was not clearly erroneous.
     2                           VI.   CONCLUSION
     3        Having found no error, we AFFIRM.
     4
     5
     6
     7
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    10
    11
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                                       -31-