What can happen to Corp. 1 in this real estate deal?

Question: The Exec. Dir. of a Corp., we'll call Corp. 1, is also the Exec. Dir. of another corp. (Corp. 2) which is under the umbrella of Corp. 1. These are both non-profit entities. In January, there was an amendment to the bylaws of Corp. 1, which was to not allow any real estate transaction of over $200,000 to happen without Board approval and especially without the knowledge of the Real Estate Committee. So, fast forward to April and the Exec. Director of Corp. 1 decided to sell Corp.1's office building to Corp. 2. This deal was done without a real estate attorney, was done without board approval (since the sale of the building was near $1 million and Corp 1 put up $130,000 for Corp 2 to buy the building), was done without real estate committee approval, and there were no promissory note or any other agreements made between Corp.1 and Corp. 2. They closed on the deal but now Corp. 2 might go bankrupt. What could happen with Corp. 1 in this deal?

Answer: They are related entities. The bankruptcy trustee will take a close look at, and can void, any transactions among or between the two. In this case, it looks like Corp. 2 actually benefitted from the transaction. If corp.1 now tries to void the transaction, that may be looked at very closely.

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