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The Uniform Fraudulent Transfers Act (UFTA, phonetic "oof-ta") was approved by the Uniform Law Commission (ULC) in 1984. After a 2011 article by Prof. Ken Kettering appeared suggesting that the UFTA poorly addressed certain conflict-of-laws issues, the ULC in 2012 formed a Drafting Committee (of which Jay Adkisson, the author of this website, was an ABA Adviser), to consider revising the UFTA so as to address the conflict-of-laws and other, minor, technical issues. The Committee was Chaired by noted Boston bankruptcy attorney and ULC Commissioner Ed Smith, and Prof. Kettering served as the Reporter.
Rather quickly, the Drafting Committee expanded its scope to consider other issues that the courts had found problematic with the UFTA, such as with as burden of proof issues. Numerous live meetings were held where persons representing various interests presented their own issues with the UFTA, such as charitable organizations that received as donations the proceeds of Ponzi schemes and were required under the UFTA to turn over those proceeds to creditors.
As the Drafting Committee neared the completion of its work in 2014, a suggestion was made, and adopted, that the UFTA be renamed to make clear that classic, misrepresentational fraud -- a concept which has always been largely alien to fraudulent transfer law -- had little if any application to the Act, and that courts should quit attempting to apply various misrepresentational fraud rules (such as heightened pleading standards, to just give one of many examples) to fraudulent transfer cases.
The ULC at its annual meeting in 2014 unanimously adopted what had previously been known as the "2014 revisions to the Uniform Fraudulent Transfers Act", as instead the Uniform Voidable Transactions Act (UVTA, phonetic "you-veet-uh").
Other than the name change, the UVTA differs only slightly than the UFTA in these substantive aspects:
The bulk of the remaining changes incorporated into the UVTA were largely technical and non-substantive.
The bottom line is that the UVTA is, substantively, well upwards of 95% the same as the UFTA, and even most of the substantive changes simply reflect the majority opinions of the courts that had considered these issues, and so whether a particular state has or has not adopted the UVTA will probably make little difference to the bulk of the analysis and notes given below, unless otherwise indicated. However, what the UVTA added to the the UFTA was not insignificant, and should be of substantial positive value to the courts and litigants alike.
Like the UFTA, of which the UVTA is simply a revision and not really a "new" Act, the UVTA is a complicated Act to read in the abstract, largely because it follows a prescribed order that is commonplace with all Uniform Acts, i.e., definitions at the beginning, the "working" provisions in the middle, and minor and sundry technical issues at the end. Analysis is also complicated by the fact that the UVTA in significant part reduces into statutory form over 2,000 years of fraudulent transfer law, with certain baggage.
The baggage consists largely of two types: (1) Provisions that seem out of place to the common law of fraudulent transfers, but which were added over the years by those with special interest in particular issues, i.e., provisions that are aimed at mergers and acquisitions, or rehabilitating a debtor; and (2) Provisions that attempt to harmonize fraudulent transfer law with other significant areas of law, most predominantly Bankruptcy Code sections 548 and 550, and the Uniform Commercial Code.
Nonetheless, an analysis of the vast majority of potential claims arising under the UVTA can be answered by a simple three-step process:
Following these three steps in this order, i.e., the Decision Path will normally allow practitioners to discern relatively quickly whether an avoidable transaction action is viable for not.
As important as what is in the UVTA is what is not in it. The UVTA does not address certain important questions, which are thus dependent in some part upon other law in a given jurisdiction. These questions include:
The answers to such questions will often be determined by other law of the applicable jurisdiction.
Prefatory Note to the UVTA
Prefatory Note (UFTA 1984)
Prefatory Note (UFTA 1984)
Prefatory Note (UFTA 1984)