Arizona State ArizonaVoidableTransactionUVTAFraudulentTransferUFTA
Arizona Uniform Fraudulent Transfers Act
Arizona UFTA a/k/a AZUFTA or AUFTA
A.R.S. §§ 44-1001, et seq.
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§ 44-1001. Definitions
In this article, unless the context otherwise requires:
1. “Asset” means property of a debtor, but asset does not include any of the following:
(a) Property to the extent it is encumbered by a valid lien.
(b) Property to the extent it is generally exempt under nonbankruptcy law.
(c) An interest in property held in tenancy by the entireties to the extent it is not subject to process by a creditor holding a claim against only one tenant.
2. “Claim” means a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured.
3. “Creditor” means a person who has a claim.
4. “Debt” means liability on a claim.
5. “Debtor” means a person who is liable on a claim.
6. “Lien” means a charge against or an interest in property to secure payment of a debt or performance of an obligation and includes a security interest created by agreement, a judicial lien obtained by legal or equitable process or proceedings, a common law lien or a statutory lien.
7. “Person” means an individual, partnership, corporation, association, organization, government or governmental subdivision or agency, business trust, estate, trust or any other legal or commercial entity.
8. “Property” means anything that may be the subject of ownership.
9. “Transfer” means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset and includes payment of money, release, lease and creation of a lien or other encumbrance.
10. “Valid lien” means a lien that is effective against the holder of a judicial lien subsequently obtained by legal or equitable process or proceedings and that is not subject to avoidance under this article.
§ 44-1002. Insolvency
A. A debtor is insolvent if the sum of the debtor’s debts is greater than all of the debtor’s assets at a fair valuation.
B. A debtor who is generally not paying his debts as they become due is presumed to be insolvent.
C. A partnership is insolvent under subsection A if the sum of the partnership’s debts is greater than the aggregate, at a fair valuation, of all of the partnership’s assets and the sum of the excess of the value of each general partner’s nonpartnership assets over the partner’s nonpartnership debts.
D. Assets under this section do not include property that has been transferred, concealed or removed with intent to hinder, delay or defraud creditors or that has been transferred in a manner making the transfer voidable under this article.
E. Debts under this section do not include an obligation to the extent it is secured by a valid lien on property of the debtor not included as an asset.
F. Debts under this section include the full amount of the debtor’s potential liability under contracts of guarantee and surety. The assets of the debtor shall include a fair valuation of the rights of the debtor in connection with the contracts under indemnity or similar agreements and under equitable principles, including contribution and subrogation.
§ 44-1003. Value
A. Value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or an antecedent debt is secured or satisfied, but value does not include an unperformed promise to furnish support to the debtor or another person unless the promise is made in the ordinary course of the promisor’s business.
B. For the purposes of § 44-1004, subsection A, paragraph 2 and § 44-1005, a person gives a reasonably equivalent value if the person acquires an interest of the debtor in an asset pursuant to a regularly conducted, noncollusive foreclosure sale or execution of a power of sale for the acquisition or disposition of the interest of the debtor on default under a mortgage, deed of trust or security agreement.
C. A transfer is made for present value if the exchange between the debtor and the transferee is intended by them to be contemporaneous and is in fact substantially contemporaneous.
§ 44-1004. Transfers fraudulent as to present and future creditors
A. A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation under any of the following:
1. With actual intent to hinder, delay or defraud any creditor of the debtor.
2. Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor either:
(a) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction.
(b) Intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due.
B. In determining actual intent under subsection A, paragraph 1, consideration may be given, among other factors, to whether:
1. The transfer or obligation was to an insider.
2. The debtor retained possession or control of the property transferred after the transfer.
3. The transfer or obligation was disclosed or concealed.
4. Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit.
5. The transfer was of substantially all of the debtor’s assets.
7. The debtor removed or concealed assets.
8. The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred.
9. The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred.
10. The transfer occurred shortly before or shortly after a substantial debt was incurred.
11. The debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.
§ 44-1005. Transfers fraudulent as to present creditors
A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.
§ 44-1006. When transfer is made or obligation is incurred
For the purposes of this article:
(a) With respect to an asset that is real property other than a fixture, but including the interest of a seller or purchaser under a contract for the sale of the asset, when the transfer is so far perfected that a good faith purchaser of the asset from the debtor against whom applicable law permits the transfer to be perfected cannot acquire an interest in the asset that is superior to the interest of the transferee.
(b) With respect to an asset that is not real property or that is a fixture, when the transfer is so far perfected that a creditor on a simple contract cannot acquire a judicial lien through attachment, garnishment1 levy or other process otherwise than under this article that is superior to the interest of the transferee.
2. If applicable law permits the transfer to be perfected as provided in paragraph 1 and the transfer is not so perfected before the commencement of an action for relief under this article, the transfer is deemed made immediately before the commencement of the action.
3. If applicable law does not permit the transfer to be perfected as provided in paragraph 1, the transfer is made when it becomes effective between the debtor and the transferee.
4. A transfer is not made until the debtor has acquired rights in the asset transferred.
5. An obligation is incurred:
(a) If oral, when it becomes effective between the parties.
(b) If evidenced by a writing, when the writing executed by the obligor is delivered to or for the benefit of the obligee.
§ 44-1007. Remedies of creditors
A. In an action for relief against a transfer or obligation under this article, a creditor, subject to the limitations in §§ 44-1008 and 44-1009, may obtain one or more of the following remedies:
1. Garnishment against the fraudulent transferee or the recipient of the fraudulent obligation, in accordance with the procedure prescribed by law in obtaining such remedy.
2. Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor’s claim.
3. An attachment or other provisional remedy against the asset transferred or other property of the transferee in accordance with the procedure prescribed by law in obtaining such remedy.
4. Subject to applicable principles of equity and in accordance with applicable rules of civil procedure:
(a) An injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property.
(b) Appointment of a receiver to take charge of the asset transferred or of other property of the transferee.
(c) Any other relief the circumstances may require.
B. Subject to the limitations in §§ 44-1008 and 44-1009, if a creditor has obtained a judgment on a claim against the debtor, the creditor, if the court so orders, may levy execution on the asset transferred or its proceeds.
§ 44-1008. Defenses, liability and protection of transferee
A. A transfer or obligation is not voidable under § 44-1004, subsection A, paragraph 1 against a person who took in good faith and for a reasonably equivalent value or against any subsequent transferee or obligee.
B. Except as otherwise provided in this section, to the extent a transfer is voidable in an action by a creditor under § 44-1007, subsection A, paragraph 1,1 the creditor may recover judgment for the value of the asset transferred, as adjusted under subsection C of this section, or the amount necessary to satisfy the creditor’s claim, whichever is less. The judgment may be entered against either:
1. The first transferee of the asset or the person for whose benefit the transfer was made.
2. Any subsequent transferee other than a good faith transferee who took for value or from any subsequent transferee.
C. If the judgment under subsection B of this section is based on the value of the asset transferred, the judgment must be for an amount equal to the value of the asset at the time of the transfer, subject to adjustment as the equities may require.
D. Notwithstanding voidability of a transfer or an obligation under this article, a good faith transferee or obligee is entitled, to the extent of the value given the debtor for the transfer or obligation, to any of the following:
1. A lien on or a right to retain any interest in the asset transferred.
2. Enforcement of any obligation incurred.
3. A reduction in the amount of the liability on the judgment.
E. A transfer is not voidable under § 44-1004, subsection A, paragraph 2 or § 44-1005 if the transfer results from:
1. Termination of a lease on default by the debtor if the termination is pursuant to the lease and applicable law.
2. Enforcement of a security interest in compliance with title 47, chapter 9.
§ 44-1009. Extinguishment of claim for relief
A claim for relief with respect to a fraudulent transfer or obligation under this article is extinguished unless an action is brought:
1. Under § 44-1004, subsection A, paragraph 1 within four years after the transfer was made or the obligation was incurred or, if later, within one year after the fraudulent nature of the transfer or obligation was or through the exercise of reasonable diligence could have been discovered by the claimant.
2. Under § 44-1004, subsection A, paragraph 2 or § 44-1005, within four years after the transfer was made or the obligation was incurred.
§ 44-1010. Supplementary provisions
Unless displaced by the provisions of this article, the principles of law and equity, including the law merchant and the law relating to principal and agent, estoppel, laches, fraud, misrepresentation, duress, coercion, mistake, insolvency or other validating or invalidating cause, supplement its provisions.
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