Rhode Island Voidable Transaction Statutes

Rhode_Island State RhodeIslandVoidableTransactionUVTAFraudulentTransferUFTA



Rhode Island Uniform Voidable Transactions Act

Rhode Island UVTA a/k/a RIUVTA or RUVTA

R.I.Gen.Laws 1956, § 6-16-1, et seq.

{ Check Currency - Current Only As Of January 1, 2020 }

§ 6-16-1. Definitions

As used in this chapter:
(1) “Affiliate” means:
(i) A person who directly or indirectly owns, controls, or holds with power to vote twenty percent (20%) or more of the outstanding voting securities of the debtor, other than a person who holds the securities:
(A) As a fiduciary or agent without sole discretionary power to vote the securities; or
(B) Solely to secure a debt, if the person has not exercised the power to vote;
(ii) A corporation, twenty percent (20%) or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote by the debtor or a person who directly or indirectly owns, controls, or holds, with power to vote, twenty percent (20%) or more of the outstanding voting securities of the debtor, other than a person who holds the securities:
(A) As a fiduciary or agent without sole power to vote the securities; or
(B) Solely to secure a debt, if the person has not in fact exercised the power to vote;
(iii) A person whose business is operated by the debtor under a lease or other agreement, or a person substantially all of whose assets are controlled by the debtor; or
(iv) A person who operates the debtor’s business under a lease or other agreement or controls substantially all of the debtor’s assets.
(2) “Asset” means property of a debtor, but the term does not include:
(i) Property to the extent it is encumbered by a valid lien;
(ii) Property to the extent it is generally exempt under nonbankruptcy law; or
(iii) 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.
(3) “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.
(4) “Creditor” means a person who has a claim.
(5) “Debt” means liability on a claim.
(6) “Debtor” means a person who is liable on a claim.
(7) “Electronic” means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
(8) “Insider” includes:
(i) If the debtor is an individual:
(A) A relative of the debtor or of a general partner of the debtor;
(B) A partnership in which the debtor is a general partner;
(C) A general partner in a partnership described in subsection (8)(i)(B); or
(D) A corporation of which the debtor is a director, officer, or person in control;
(ii) If the debtor is a corporation:
(A) A director of the debtor;
(B) An officer of the debtor;
(C) A person in control of the debtor;
(D) A partnership in which the debtor is a general partner;
(E) A general partner in a partnership described in subsection (8)(ii)(D); or
(F) A relative of a general partner, director, officer, or person in control of the debtor;
(iii) If the debtor is a partnership:
(A) A general partner in the debtor;
(B) A relative of a general partner in, a general partner of, or a person in control of the debtor;
(C) Another partnership in which the debtor is a general partner;
(D) A general partner in a partnership described in subsection (8)(iii)(C); or
(E) A person in control of the debtor;
(iv) An affiliate, or an insider of an affiliate as if the affiliate were the debtor; and
(v) A managing agent of the debtor.
(9) “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.
(10) “Organization” means a person other than an individual.
(11) “Person” means an individual, estate, partnership, association, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal or commercial entity.
(12) “Property” means anything that may be the subject of ownership.
(13) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium, and retrievable in perceivable form.
(14) “Relative” means an individual related by consanguinity within the third degree as determined by the common law, a spouse, or an individual related to a spouse within the third degree as so determined, and includes an individual in an adoptive relationship within the third degree.
(15) “Sign” means with present intent to authenticate or adopt a record:
(i) To execute or adopt a tangible symbol; or
(ii) To attach to or logically associate with the record an electronic symbol, sound, or process.
(16) “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, license, and creation of a lien or other encumbrance.
(17) “Valid lien” means a lien that is effective against the holder of a judicial lien subsequently obtained by legal or equitable process or proceedings.

§ 6-16-2. Insolvency

(a) A debtor is insolvent if, at a fair valuation, the sum of the debtor’s debts is greater than the sum of the debtor’s assets.
(b) A debtor who is generally not paying the debtor’s debts as they become due other than as a result of a bona fide dispute is presumed to be insolvent. The presumption imposes on the party against whom the presumption is directed the burden of proving that the nonexistence of insolvency is more probable than its existence.
(c) 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 have been transferred in a manner making the transfer voidable under this chapter.
(d) Debts under this section do not include obligations to the extent they are secured by a valid lien on property of the debtor not included as an asset.

§ 6-16-3. 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 made otherwise than in the ordinary course of the promisor’s business to furnish support to the debtor or another person.
(b) For the purposes of §§ 6-16-4(a)(2) and 6-16-5, 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 upon 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.

§ 6-16-4. Transfers voidable as to present and future creditors

(a) A transfer made or obligation incurred by a debtor is voidable 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:
(1) With actual intent to hinder, delay, or defraud any creditor of the debtor; or
(2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
(i) 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; or
(ii) Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor’s ability to pay as they became due.
(b) In determining actual intent under subsection (a)(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 the debtor’s assets;
(6) The debtor absconded;
(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; and
(11) The debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.
(c) A creditor making a claim for relief under subsection (a) has the burden of proving the elements of the claim for relief by a preponderance of the evidence.

§ 6-16-5. Transfers or obligations voidable as to present creditors

(a) A transfer made or obligation incurred by a debtor is voidable 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.
(b) A transfer made by a debtor is voidable as to a creditor whose claim arose before the transfer was made if the transfer was made to an insider for an antecedent debt; the debtor was insolvent at that time; and the insider had reasonable cause to believe that the debtor was insolvent.
(c) Subject to § 6-16-2(b), a creditor making a claim for relief under subsection (a) or (b) of this section has the burden of proving the elements of the claim for relief by a preponderance of the evidence.

§ 6-16-5.1. Transfers voidable as to depository creditors of financial institutions closed by proclamation of the governor dated January 1, 1991--Remedies

(a) A transfer made or obligation incurred by any financial institution closed by proclamation of the governor dated January 1, 1991, is voidable as to any depository creditor of record of any such financial institution as of January 1, 1991, if the transfer or obligation involved either:
(1) The withdrawal of deposits from the financial institution by any officer, director, or employee of the financial institution or of the Rhode Island share and deposit indemnity corporation, with knowledge of the actual or impending insolvency or the impending closing of the financial institution or of the actual or impending insolvency of or the actual or impending cessation of business by the Rhode Island share and deposit indemnity corporation, and for the purpose of avoiding the loss of funds or access to funds in any depository account in the financial institution;
(2) The encumbrance of any assets of the financial institution to or for the benefit of any officer, director, or employee of the financial institution or of the Rhode Island share and deposit indemnity corporation, with knowledge of the actual or impending insolvency or the impending closing of the financial institution or of the actual or impending insolvency of or the actual or impending cessation of business by the Rhode Island share and deposit indemnity corporation, and for the purpose of avoiding the loss of funds or access to funds in any depository account in the financial institution; or
(3) A transfer or obligation defined as voidable under § 6-16-4 or § 6-16-5.
(b) In addition to any remedies provided by § 6-16-7, (1) any financial institution closed by proclamation of the governor dated January 1, 1991; (2) any assignees of and successors in interest to any such financial institution; and (3) any depository creditor of record of any such financial institution as of January 1, 1991, who suffers monetary loss as a result of a transfer or conveyance defined as voidable under this section or who is otherwise aggrieved by the transfer or conveyance, shall have a private cause of action at law and in equity against any officer, director, or employee of the financial institution or of the Rhode Island share and deposit indemnity corporation to whom the subject transfer was made or to whom or for whose benefit any assets of the financial institution were encumbered.

§ 6-16-6. When transfer is made or obligation is incurred

For the purposes of this chapter:
(1) A transfer is made:
(i) 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; and
(ii) 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 otherwise than under this chapter that is superior to the interest of the transferee;
(2) If applicable law permits the transfer to be perfected as provided in subsection (1) and the transfer is not so perfected before the commencement of an action for relief under this chapter, 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 subsection (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:
(i) If oral, when it becomes effective between the parties; or
(ii) If evidenced by a record, when the record signed by the obligor is delivered to or for the benefit of the obligee.

§ 6-16-7. Remedies of creditor

(a) In an action for relief against a transfer or obligation under this chapter, a creditor, subject to the limitations in § 6-16-8, may obtain:
(1) Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor’s claim;
(2) An attachment or other provisional remedy against the asset transferred or other property of the transferee available under applicable law; and
(3) Subject to applicable principles of equity and in accordance with applicable rules of civil procedure:
(i) An injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property;
(ii) Appointment of a receiver to take charge of the asset transferred or of other property of the transferee; or
(iii) Any other relief the circumstances may require.
(b) 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.

§ 6-16-8. Defenses, liability, and protection of transferee or obligee

(a) A transfer or obligation is not voidable under § 6-16-4(a)(1) against a person who took in good faith and for a reasonably equivalent value given the debtor or against any subsequent transferee or obligee.
(b) To the extent a transfer is voidable in an action by a creditor under § 6-16-7(a)(1), the following rules apply:
(1) Except as otherwise provided in this section, 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:
(i) The first transferee of the asset or the person for whose benefit the transfer was made; or
(ii) An immediate or mediate transferee of the first transferee, other than:
(A) A good-faith transferee that took for value; or
(B) An immediate or mediate good-faith transferee of a person described in subsection (b)(1)(ii)(A) of this section.
(2) Recovery pursuant to § 6-16-7(a)(1) or (b) or from the asset transferred or its proceeds, by levy or otherwise, is available only against a person described in subsection (b)(1)(i) or (ii) of this section.
(c) If the judgment under subsection (b) is based upon 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 chapter, a good-faith transferee or obligee, to the extent of the value given the debtor for the transfer or obligation, is entitled to:
(1) A lien on or a right to retain an interest in the asset transferred;
(2) Enforcement of an obligation incurred; or
(3) A reduction in the amount of the liability on the judgment.
(e) A transfer is not voidable under § 6-16-4(a)(2) or § 6-16-5 if the transfer results from:
(1) Termination of a lease upon default by the debtor when the termination is pursuant to the lease and applicable law; or
(2) Enforcement of a security interest in compliance with Article 9 of the Uniform Commercial Code, other than acceptance of collateral in full or partial satisfaction of the obligation it secures.
(f) A transfer is not voidable under § 6-16-5(b):
(1) To the extent the insider gave new value to or for the benefit of the debtor after the transfer was made except to the extent the new value was secured by a valid lien;
(2) If made in the ordinary course of business or financial affairs of the debtor and the insider; or
(3) If made pursuant to a good-faith effort to rehabilitate the debtor and the transfer secured present value given for that purpose as well as an antecedent debt of the debtor.
(g) The following rules determine the burden of proving matters referred to in this section:
(1) A party that seeks to invoke subsection (a), (d), (e), or (f) has the burden of proving the applicability of that subsection.
(2) Except as otherwise provided in subsections (g)(3) and (g)(4), the creditor has the burden of proving each applicable element of subsection (b) or (c) of this section.
(3) The transferee has the burden of proving the applicability to the transferee of subsection (b)(1)(ii)(A) or (B) of this section.
(4) A party that seeks adjustment under subsection (c) of this section has the burden of proving the adjustment.
(h) Proof of matters referred to in this section is sufficient if established by a preponderance of the evidence.

§ 6-16-8.1. Intentional concealment of support

(a) Whoever receives or conceals an asset of another knowing that the asset is being transferred for the purpose of concealing it to avoid payment of an order or judgment for support issued pursuant to chapters 5, 9, 10, 11.1, and 13 of title 15, or pursuant to any similar laws of other states, shall be punished by a fine of not more than five thousand dollars ($5,000) or by imprisonment for not more than two (2) years, or by both that fine and imprisonment.
(b) Whoever shall transfer an asset for the purpose of concealing it to avoid payment of an order or judgment for support issued pursuant to chapters 5, 9, 10, 11.1, and 13 of title 15, or pursuant to any similar laws of other states, shall be punished by a fine of not more than five thousand dollars ($5,000) or by imprisonment for not more than two (2) years, or both by that fine or imprisonment.

§ 6-16-8.2. Fraudulent conveyance by transferor of child support--Civil action

(a) A person who has been adjudged to be in contempt of an order or judgment for child support entered pursuant to chapters 9, 10, 11.1, and 13 of title 15 who knowingly makes a conveyance without fair consideration to an individual for a fraudulent purpose relating to avoiding payment of the order or judgment shall be liable in a civil action to the obligee under the order or judgment in an amount equal to the value of the conveyance made.
(b) A person shall not be liable under this section if the conveyance made does not exceed one hundred dollars ($100) in value in any calendar year.
(c) For the purpose of this section, “conveyance” means any payment of money, gift, assignment, transfer, or lease of tangible or intangible property.
(d) A conveyance shall be deemed to be made without fair consideration unless the conveyance was made in exchange for property or goods of equal value or to satisfy an existing debt created in good faith.

§ 6-16-9. Extinguishment of claim for relief

A claim for relief with respect to a transfer or obligation under this chapter is extinguished unless action is brought:
(1) Under § 6-16-4(a)(1), not later than four (4) years after the transfer was made or the obligation was incurred or, if later, not later than one year after the transfer or obligation was or could reasonably have been discovered by the claimant;
(2) Under § 6-16-4(a)(2) or § 6-16-5(a), not later than four (4) years after the transfer was made or the obligation was incurred; or
(3) Under § 6-16-5(b), not later than one year after the transfer was made or the obligation was incurred.

§ 6-16-10. Supplementary provisions

Unless displaced by the provisions of this chapter, 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 this chapter’s provisions.

§ 6-16-11. Uniformity of application and construction

This chapter shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this chapter among states enacting it.

§ 6-16-12. Short title

This chapter may be cited as the “Uniform Voidable Transactions Act”.

§ 6-16-13. Governing law

(a) As used in this section, the following rules determine a debtor’s location:
(1) A debtor who is an individual is located at the individual’s principal residence.
(2) A debtor that is an organization and has only one place of business is located at its place of business.
(3) A debtor that is an organization and has more than one place of business is located at its chief executive office.
(b) A claim for relief in the nature of a claim for relief under this chapter is governed by the local law of the jurisdiction in which the debtor is located when the transfer is made or the obligation is incurred.

§ 6-16-14. Application to series organization

(a) As used in this section:
(1) “Protected series” means an arrangement, however denominated, created by a series organization that, pursuant to the law under which the series organization is organized, has the characteristics set forth in subsection (a)(2).
(2) “Series organization” means an organization that, pursuant to the law under which it is organized, has the following characteristics:
(i) The organic record of the organization provides for creation by the organization of one or more protected series, however denominated, with respect to specified property of the organization, and for records to be maintained for each protected series that identify the property of or associated with the protected series.
(ii) Debt incurred or existing with respect to the activities of, or property of or associated with, a particular protected series is enforceable against the property of or associated with the protected series only, and not against the property of or associated with the organization or other protected series of the organization.
(iii) Debt incurred or existing with respect to the activities or property of the organization is enforceable against the property of the organization only, and not against the property of or associated with a protected series of the organization.
(b) A series organization and each protected series of the organization is a separate person for purposes of this chapter, even if for other purposes a protected series is not a person separate from the organization or other protected series of the organization.

§ 6-16-15. Supplementary provisions

Unless displaced by the provisions of this chapter, 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.

§ 6-16-16. Uniformity of application and construction

This chapter shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this chapter among the states enacting it.

§ 6-16-17. Relation to electronic signatures in global and national commerce act

This chapter modifies, limits, or supersedes the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq., but does not modify, limit, or supersede § 101(c) of that act, 15 U.S.C. § 7001(c), or authorize electronic delivery of any of the notices described in § 103(b) of that act, 15 U.S.C. § 7003(b).





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