In Re Charmar Investment Co‪.‬

On May 3, 1971, a creditors' petition for the involuntary bankruptcy of Charmar Investment Company, a small closely-held corporation, was filed in the District Court. It was contended that appellant conveyed its major asset*fn1 to two shareholders and officers of appellant for insufficient consideration, thereby constituting a preference to the grantees. On June 25, 1971, the Referee granted a motion to dismiss the petition for failure to sufficiently allege an act of bankruptcy. On July 6, 1971, the Referee ordered the dismissal set aside and permitted the filing of an amended petition. At the same time, the Referee denied a motion to dismiss the amended petition on the grounds that it merely paraphrased Section 60 of the Bankruptcy Act (11 U.S.C. § 96), which defines a preferential transfer. Jurisdictional questions subsequently developed and, in April 1972, the District Court conducted a jurisdictional hearing and found the appellees qualified as creditors. This appeal followed.