Adkisson's

Voidable Transactions

 - previously known as -

Fraudulent Transfers

 

Caution state law variances!

Does The Transferee Have A Defense?

If an avoidable transaction is found, then the next question is whether the Transferee has a defense. The UVTA provides for only two defenses:

 

  • Statute of Extinguishment -- Because of the passage of time, the transfer is no longer actionable (often confused as a Statute of Limitation, which is not quite the same).

 

 

Assuming the Creditor's action is timely, the Transferee is left with showing that the Transferee was in "good faith" and gave at least something of value to the Debtor in exchange — this latter clause will decide whether a good faith Transferee has a complete defense (if the Transferee gave "reasonably equivalent value" to the Debtor, or a possible partial defense (if the Transferee did not, but did give some lesser value). By inference, if a Transferee is not in good faith, then the Transferee is neither entitled to a full or partial defense, except as provided in §8(e) and (f).

 

The term "good faith" is not defined by the UVTA, so we must look to decisional law for guidance on its meaning.

 

Here we find yet another significant mis-organization of the UVTA. The Uniform Fraudulent Conveyances Act of 1918 did not separately provide for a good faith defense. Instead, that the Transferee was in good faith was part and parcel of the definition of "fair consideration" under §3 of the UFCA. When the UFCA became the UFTA in 1984, and the term "fair consideration" was discarded, a new §9(a) and (d) was created to provide for the defense of a Transferee in good faith. This made sense.

 

What didn't make sense was that in the new §9 of the UFTA, the drafters also included a new §9(b) and (c) which for the first time provided that a creditor could elect a money judgment to be paid by the Transferee instead of mere avoidance. These provisions should logically have been put in the also-new creditor's remedies section, which became §7 of the UFTA, but apparently because they also tested the Transferee's good faith, they were instead installed in §8.

 

What of the debtor's good faith? Other than being evidence to prove that the debtor did not have an intent to defraud his creditors, which of course is only and exclusively relevant to the Intent Test of § 4(a)(1), that the debtor may have acted in good faith in making the transfer is irrelevant.

 

 

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)

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

(a)(1) {Intent Test} -- (a)(2)(i) {Capitalization Test} -- (a)(2)(ii) {Equity-Sense Insolvency Test}

(b) {Badges of Fraud}

5 - Transfer or Obligation Voidable As To Present Creditor

(a) {Insolvency Test} -- (b) {Insider Preference Test}

6 - When Transfer Is Made Or Obligation Is Incurred

7 - Remedies Of Creditor

8 - Defenses, Liability, And Protection Of Transferee Or Obligee

{Main Provisions} -- (b) and (c) {Money Judgment}

9 - Extinguishment Of Claim For Relief

10 - Governing Law

11 - Application To Series Organization

12 - Supplementary Provisions

13 - Uniformity Of Application And Construction

14 - Relation To Electronic Signatures In Global And National Commerce

15 - Short Title

16 - Repeals; Conforming Amendment

 

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 RESOURCES

OTHER INFORMATIONAL WEBSITES BY JAY ADKISSON

 

  • About Jay Adkisson - More about Jay D. Adkisson, background, books, articles, speaking appearances - https://jayadkisson.com/

 

  • Captive Insurance Companies - Licensed insurance companies formed by the parent organization to handle the insurance and risk management needs of the business, by the author of the best-selling book on the topic: Adkisson's Captive Insurance Companies - https://captiveinsurancecompanies.com/

 

 

  • Collecting On A Judgment - An explanation of common creditor remedies, strategies and tactics to enforce a judgment, including a discussion of common debtor asset protection strategies - https://collectingonajudgment.com/

 

  • Private Retirement Plans - An exploration of a unique creditor exemption allowed under California law which can be very beneficial but is often misused - https://privateretirementplans.com/

 

  • Charging Orders - The confusing remedy against a debtor's interest in an LLC or partnership is explained in reference to the Uniform Partnership Act, the Uniform Limited Partnership Act, and the Uniform Limited Liability Company Act - https://chargingorder.com/

 

  • Protected Series LLCs - An examination of the single most complex statutory legal structure yet created, with particular reference to the Uniform Protected Series Act of 2017 - https://protectedseriesact.com/

 

  • California Enforcement of Judgments Law - Considers the topic of judgment enforcement in California, including the California Enforcement of Judgments Law and other laws related to California creditor-debtor issues - https://calejl.com/

 

  • Anti-SLAPP Laws - A collection of and commentary about Anti-SLAPP laws and significant court decisions on the subject within the United States - https://antislapplaws.com/

 

Available in 2019

 

Voidable Transactions: Fraudulent Transfers In Modern American Law, by Jay D. Adkisson

 

Click here for purchase information

© 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.