- previously known as -
Caution state law variances!
What is an "Asset"?
§1(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.
Reporter's Comment: 2. The definition of “asset” is substantially to the same effect as the definition of “assets” in § 1 of the Uniform Fraudulent Conveyance Act. The definition in this Act, unlike that in the earlier Act, does not, however, require a determination that the property is liable for the debts of the debtor. Thus, for example, an unliquidated claim for damages resulting from personal injury or a contingent claim of a surety for reimbursement, subrogation, restitution, contribution, or the like may be counted as an asset for the purpose of determining whether the holder of the claim is solvent as a debtor under § 2 of this Act, even if applicable law does not allow such an asset to be levied on and sold by a creditor. Cf. Manufacturers & Traders Trust Co. v. Goldman (In re Ollag Construction Equipment Corp.), 578 F.2d 904, 907-09 (2d Cir. 1978).
Subparagraphs (i), (ii), and (iii) provide clarification by excluding from the term not only generally exempt property but also an interest in a tenancy by the entirety in many states and an interest that is generally beyond reach by unsecured creditors because subject to a valid lien. This Act, like the Uniform Fraudulent Conveyance Act and the Statute of 13 Elizabeth, declares rights and provides remedies for unsecured creditors against transfers that impede them in the collection of their claims. The laws protecting valid liens against impairment by levying creditors, exemption statutes, and the rules restricting levyability of interest in entireties property are limitations on the rights and remedies of unsecured creditors, and it is therefore appropriate to exclude property interests that are beyond the reach of unsecured creditors from the definition of “asset” for the purposes of this Act.
A creditor of a joint tenant or tenant in common may ordinarily collect a judgment by process against the tenant’s interest, and in some states a creditor of a tenant by the entirety may likewise collect a judgment by process against the tenant’s interest. See 2 American Law of Property 10, 22, 28-32 (1952); Craig, An Analysis of Estates by the Entirety in Bankruptcy, 48 Am.Bankr.L.J. 255, 258-59 (1974). The levyable interest of such a tenant is included as an asset under this Act.
The definition of “assets” in the Uniform Fraudulent Conveyance Act excluded property that is exempt from liability for debts. The definition did not, however, exclude all property that cannot be reached by a creditor through judicial proceedings to collect a debt. Thus, it included the interest of a tenant by the entirety although in nearly half the states such an interest cannot be subjected to liability for a debt unless it is an obligation owed jointly by the debtor with his or her cotenant by the entirety. See 2 American Law of Property 29 (1952); Craig, An Analysis of Estates by the Entirety in Bankruptcy, 48 Am.Bankr.L.J. 255, 258 (1974). The definition in this Act requires exclusion of interests in property held by tenants by the entirety that are not subject to collection process by a creditor without a right to proceed against both tenants by the entirety as joint debtors.
The reference to “generally exempt” property in § 1(2)(ii) recognizes that all exemptions are subject to exceptions. Creditors having special rights against generally exempt property typically include claimants for alimony, taxes, wages, the purchase price of the property, and labor or materials that improve the property. See Uniform Exemptions Act § 10 (1979) and the accompanying Comment. The fact that a particular creditor may reach generally exempt property by resorting to judicial process does not warrant its inclusion as an asset in determining whether the debtor is insolvent.
Because this Act is not an exclusive law on the subject of voidable transfers and obligations (see Comment 9 to § 4), it does not preclude the holder of a claim that may be collected by process against property generally exempt as to other creditors from obtaining relief from a transfer of such property that hinders, delays, or defrauds the holder of such a claim. Likewise the holder of an unsecured claim enforceable against tenants by the entirety is not precluded by the Act from pursuing a remedy against a transfer of property held by the entirety that hinders, delays, or defrauds the holder of such a claim.
Nonbankruptcy law is the law of a state or federal law that is not part of the Bankruptcy Code, Title 11 of the United States Code. The definition of an “asset” thus does not include property that would be subject to administration for the benefit of creditors under the Bankruptcy Code unless it is subject under other applicable law, state or federal, to process for the collection of a creditor’s claim against a single debtor.
JayNote: The definition of an "asset" is very expansive and encompasses literally any asset that could be defined as "property", under Section 1(12), with three exceptions:
(1) Property subject to a bona fide security interest;
(2) Exempt property; and
(3) TBE property, so long as both parties are not debtors.
What is "Property?"
§1(12) “Property” means anything that may be the subject of ownership.
Reporter's Comment: 12. The definition of “property” is derived from Uniform Probate Code § 1 201(33) (1969). Property includes both real and personal property, whether tangible or intangible, and any interest in property, whether legal or equitable.
JayNote: The definition of "property" is very expansive. Essentially, if it can be titled in the debtor, it is "property".
C O M M O N P A G E F O O T E R
UVTA AUDIO PRESENTATION
Need to become fluent in the UVTA quickly? This four-hour audio program by Jay Adkisson and Dave Slenn, ABA Advisors to the UVTA Drafting Committee, explains key features of the UVTA, how they operate, and why. Hosted by Leimberg Information Services. Click here for more
RECENT ARTICLES ON FRAUDULENT TRANSFERS
2019.05.30 ... Understanding The Elements Of The UVTA Tests For A Voidable Transaction
2019.05.20 ... Good Faith Not Enough For Transferee To Establish Fraudulent Transfer Defense In Hawk
2019.03.31 ... Voidability Of Sham Lawsuit And Judgment At Issue In Chen
2019.02.22 ... California Court Of Appeals Swings And Misses On Pre-Marital Fraudulent Transfer Agreement In Sturm
2019.02.12 ... Why The Mere Incorporation Or Formation Process For A New Entity Is Not A Fraudulent Transfer
2019.01.30 ... Resignation Of Corporate Officer Not A Fraudulent Transfer In Texas Opinion
Many more articles on voidable transactions law found here
UVTA - LOGICAL ORGANIZATION (Designed For Litigators)
Overview of UVTA -- The process and result
Learn The Vocabulary Of The Act (Main Page)
Has A Voidable Transaction Occurred? (Main Page)
Does The Transferee Have A Defense? (Main Page)
What Remedies Are Available? (Main Page)
Other Helpful Provisions (Main Page)
UVTA - NUMERICAL ORGANIZATION (Confusing & Difficult To Use)
The Uniform Law Commission's complete copy of the UVTA with comments in PDF format is available here. The webpage for the UVTA, showing states that have enacted and much other information regarding the Act is found here.
1 - Definitions
(1) Affiliate -- (2) Asset -- (3) Claim -- (4) Creditor -- (5) Debt -- (6) Debtor -- (7) Electronic -- (8) Insider -- (9) Lien -- (10) Organization -- (11) Person -- (12) Property -- (13) Record -- (14) Relative -- (15) Sign -- (16) Transfer -- (17) Valid Lien
2 - Insolvency
3 - Value
4 - Transfer Or Obligation Voidable As To Present Or Future Creditor
5 - Transfer or Obligation Voidable As To Present Creditor
8 - Defenses, Liability, And Protection Of Transferee Or Obligee
10 - Governing Law
15 - Short Title
OTHER SOURCES OF FRAUDULENT TRANSFER LAW
Fraudulent Transfers In Bankruptcy - Main Page
28 U.S.C. § 3301, et seq. - Where United States is the creditor
Common Law Fraudulent Transfer - Still exists in most states
Fraudulent Conveyances Act of 1571 a/k/a Statute of 13 Elizabeth - The medieval statute to which the modern American UVTA traces some of its roots.
TOPICAL COURT OPINIONS
OTHER INFORMATIONAL WEBSITES BY JAY ADKISSON
Available in 2019
Voidable Transactions: Fraudulent Transfers In Modern American Law, by Jay D. Adkisson
© 2018 Jay D. Adkisson. All rights reserved. No claim to government works or the works of the Uniform Law Commission. The information contained in this website is for general educational purposes only, does not constitute any legal advice or opinion, and should not be relied upon in relation to particular cases. Use this information at your own peril; it is no substitute for the legal advice or opinion of an attorney licensed to practice law in the appropriate jurisdiction. This site https://voidabletransactions.com Contact: jay [at] jayad.com or by phone to 702-953-9617 or by fax to 877-698-0678.