Real Estate Title Acquisition By Tax-Foreclosing Municipality Where No Public Sale Or Other Competitive Bidding Is Legally Required May Be Vulnerable To Attack & Set Aside In Chapter 13 Bankruptcy Proceedings

From Bankruptcy-RealEstate-Insights.com:

• City of Milwaukee v. Gillespie, 47 B.R. 916 (E.D. Wis. 2013) –
  
  Under Wisconsin’s strict tax foreclosure procedure, a tax authority can obtain property in satisfaction of a delinquent property tax bill without any public sale or other competitive bidding. Gillespie was one of several cases in which a bankruptcy court held that the tax foreclosures were fraudulent transfers. On appeal, the district court agreed that the tax sales could be fraudulent conveyances, but remanded the cases for further consideration.
  
  As discussed in a prior blog on the bankruptcy court decision (Delinquent Property Tax Collection: Foreclosure May Be Vulnerable), grounds for finding that a transfer is a fraudulent conveyance include that the debtor (1) was insolvent and (2) did not receive “reasonably equivalent value” in connection with the transfer. All of the parties agreed that the only issue was whether the debtors received reasonably equivalent value.
  
  The City contended that a regularly conducted tax foreclosure sale should be deemed to be reasonably equivalent value under the Supreme Court decision in BFP Resolution Trust Corp., 511 U.S. 531, 114 Sup. Ct. 1757, 128 L. Ed. 2d 556 (1994).
  
  However, the district court agreed with the bankruptcy court that it should not be presumed that reasonably equivalent value was received as a matter of law unless there was some form of sale or competitive bidding.

For more, see Delinquent Property Tax Foreclosure- Is There “Reasonably Equivalent Value” or Not.