Girard v. Unilife Insurance Co. (In Re Girard)

OPINION

RONALD B. KING, Bankruptcy Judge.

The basic issue presented in this adversary proceeding is whether a debtor may convey his homestead to a corporation, direct the corporation to use the property as collateral for a loan, and then invalidate the conveyance and lien as a sham transaction. The sole purpose of forming the corporation in this case was to avoid Texas constitutional and statutory prohibitions against encumbering a homestead with non-purchase money debt. Upon the filing of bankruptcy, the debtor claimed the realty as exempt property under state law pursuant to section 522(b) of…