(7th Cir. Mar. 10, 2015)
The Seventh Circuit holds that the Religious Freedom Restoration Act and the First Amendment do not bar application of the bankruptcy code’s fraudulent transfer and preferential transfer provisions to the archdiocese’s prepetition transfer of $55 million to a trust for maintaining cemeteries. Because the creditor’s committee does not act under “color of law” and does not constitute the “government” for purposes of the Act, the committee may proceed with its avoidance action against the debtor archdiocese. The Free Exercise Clause also does not bar application of those provisions because they are generally and neutrally applicable, further a compelling governmental interest, and are narrowly tailored. Opinion below.
Author: Matt Lindblom