When the Debtor Owns the LLC but not its Cash: In re Samy and the Property Interest Requirement of Section 544(b) of the Bankruptcy Code

Three Key Takeaways

• A transfer of funds from an LLC’s account, even a single-member LLC controlled by the individual debtor, is not a transfer of “an interest of the debtor in property” pursuant to section 544(b) of the Bankruptcy Code because the member owns only the membership interest, not the LLC’s specific assets.
• Alleging that the payment reduced the value of the debtor’s membership interest is insufficient. The trustee must still prove the debtor held an interest in the particular property that was transferred.
• Trustees evaluating avoidance claims originating from an LLC account, and individuals holding LLC membership interests, must carefully map the property-interest analysis under the governing state LLC statute before assuming the funds are reachable by the estate.

Parties investigating the prepetition transfers of a debtor frequently look at a payment that left a company controlled by the individual debtor and assume the money was the debtor’s and can be clawed back for the benefit of the estate. Some parties assume that all of the elements may be met, because: (a) the debtor was the sole member; (b) the debtor sent the wire; and (c) the transfer reduced the value of the membership interest. A recent decision from the United States Bankruptcy Court for the District of Oregon shows why that assumption fails. In In re Shahram Shane Samy, Adv. No. 25-06015-dwh, 2026 WL 1967180 (Bankr. D. Or. July 7, 2026), the bankruptcy court held that a $280,000 wire from a single‑member LLC’s account was not a transfer of an interest of the debtor in property and therefore could not be avoided pursuant to section 544(b) of the Bankruptcy Code. The case is a good reminder of a basic principle with wide application in bankruptcy cases: an LLC member owns a membership interest, not the LLC’s assets.

The Facts in In re Samy

Shane Samy and his uncle, “Moe” Sadeghi, were the only members of Asan Investments, LLC (“Asan”). In 2012 Moe agreed to relinquish his interest in Asan. The parties disputed both the price of such interests and whether Asan or Shane personally owed the money. Shortly after Moe died in 2022, $280,000 was wired from Asan to Marjan Golchin (“Golchin”), Moe’s widow.

Shane filed chapter 7 bankruptcy in 2024 and the trustee sued Golchin pursuant to section 544(b) of the Bankruptcy Code and Oregon’s fraudulent transfer statutes. The trustee’s theory was: (a) Shane was Asan’s sole member; (b) he caused the transfer either to pay a personal debt or as a gift; and (c) the payment reduced the value of Shane’s membership interest, so the transfer was effectively of Shane’s property. Golchin’s sole defense was that the funds came directly from Asan (and not Shane). The bankruptcy court agreed and did not need to analyze the cause of action any further.

The Property-Interest Requirement Pursuant to Section 544(b) of the Bankruptcy Code

Section 544(b) permits the trustee to avoid “any transfer of an interest of the debtor in property” that is voidable under applicable nonbankruptcy law by an unsecured creditor. This means that, as a preliminary matter, the transferred property must belong to the debtor. Another fundamental principle of bankruptcy law is that property interests are determined by state law and Oregon Revised Statutes § 63.239 provides that an LLC member “is not a co-owner of and has no interest in specific limited liability company property.” This rule applies even when the LLC in question is a single-member LLC.

Shane owned his membership interest in Asan, which is property of the estate. However, pursuant to Oregon law, Shane did not own any of Asan’s specific assets (including any cash). When Golchin received $280,000, she did not receive Shane’s membership interest, but received only Asan’s cash. Even if the payment were to reduce the value of Shane’s membership interest in Asan, the transfer itself remained a transfer of Asan’s property, not Shane’s. Because the trustee could not prove that the transfer constituted an “interest of the debtor in property,” the court entered judgment for Golchin without reaching the remaining elements of the fraudulent transfer claim.

Implications for Trustees and Avoidance Plaintiffs

For trustees and counsel representing potential plaintiffs, Samy is instructive. When the funds originate from an LLC account, even a single-member LLC controlled by the debtor, control and the supposed economic reality of the situation are not enough to plead a fraudulent transfer. The trustee must still establish that the debtor held an interest in the specific property transferred. Simply alleging that the transfer diminished the value of the membership interest does not have the consequence of turning LLC assets into debtor assets. While there are other potential theories that may be available (alter-ego, reverse veil-piercing, etc.), those each require factual development beyond the transfer itself. Without adding those theories to the complaint, any fraudulent transfer cause of action fails at the pleading stage.

Implications for LLC Members and Their Advisors

For individuals who hold membership interests in LLCs, this decision reinforces the separateness that is the entire point of the limited-liability company. A membership interest is personal property of the member (and thus, property of the bankruptcy estate), while the LLC’s cash, real estate, and other assets are not. A personal bankruptcy filing does not automatically bring those assets into the member’s estate, and a payment from the LLC’s account is not automatically a transfer of the member’s property. That distinction protects the LLC’s assets from the member’s personal creditors and, at the same time, limits the trustee’s ability to recover those assets if the member later files bankruptcy.

Whether you are evaluating a potential avoidance action against a transfer that left an LLC controlled by the individual debtor, or counseling a client whose membership interest sits inside a personal bankruptcy, the attorneys at FactorLaw can help you determine the property-interest analysis under the governing state LLC statute and the Bankruptcy Code before the complaint is filed or answered.

By: Sean P. Williams