Yale University is being sued by the court-appointed official in charge of winding down the bankruptcy case of BearingPoint Inc. The lawsuit seeks to recover $6 million the consulting firm paid to Yale University to endow a chair in management and name facilities at the university.
The donations were part of a $30 million, seven-year deal between BearingPoint and Yale's School of Management.
The consulting firm made three payments of $2 million each to the school in the two years before the firm sought bankruptcy-court protection in February 2009.
U.S. bankruptcy law gives creditors the right to go after some of the money companies pay out in the two years prior to a bankruptcy filing. Such lawsuits give unsecured creditors another shot at recovering at least a portion of what they are owed.
The court appointed official is also seeking the return of $2.1 million BearingPoint paid to Yale three months before it filed Chapter 11 bankruptcy. For its part, Yale University School of Management has said that while it is small it does have a $444 million endowment, so returning the money should not be that much of a big hit to the university. However, the lawsuit is another example of how transferring assets before a bankruptcy filing can cause troubles for the person or entity who is receiving the assets. And while Yale University may be able to absorb the shock of returning this money to the bankruptcy court, most individuals cannot absorb returning much smaller amounts of money. That's why it is important that bankruptcy debtors avoid attempting to transfer assets to family and friends because they could cause long term problems for those they care most about.