Adkisson's

Voidable Transactions

 - previously known as -

Fraudulent Transfers

Caution state law variances!

THE LANGUAGE OF THE ACT

Post-judgment enforcement practice is often as alien to many attorneys as the maritime courts or native tribal courts. Judgment enforcement has its own procedures, concepts and vocabulary, that has very little relationship to pre-trial litigation. Just as judgment enforcement is a subset of civil procedure generally, within the judgment enforcement lies its own subset of fraudulent transfer law.

A fraudulent transfer lawsuit is similar in many respects to what is known as a "creditor's suit", i.e., a lawsuit brought by a creditor to compel a third-party to disgorge some asset of the Debtor. The difference is that a creditor's suit seeks the recovery of a debtor's asset that is still titled in the name of the debtor but possessed by the third-party, whereas a fraudulent transfer lawsuit seeks the recovery of a debtor's asset that has been titled into the name of the third-party (regardless of who possesses it). In other words, mere possession of the debtor's asset is remedied by a creditor's suit, but a change of title is remedy by a fraudulent transfer action.

Over the centuries, fraudulent transfer law has developed its own unique terms and concepts, and these are further supplemented by certain terms that are meant to harmonize the fraudulent transfer laws with sections 548 and 550 of the Bankruptcy Code, and to a lesser extent Article IX of the Uniform Commercial Code.

It is important at the outset to understand the vernacular of the UVTA, and why each term is given its peculiar meaning, which sometimes is at odds with the way some terms are ordinarily understood. For instance, an "asset" for purposes of the UVTA does not include property that is subject to a statutory creditor exemption, although in ordinary usage such property would certainly be thought of as an asset.

Sections 1, 2, 3 and 6 define the terms that are used in the UVTA. Why the definitions in Sections 2, 3 and 6 were not originally combined into a single definitional Section 1, can be traced in part to the definitions of "insolvency" and "fair consideration" which were, for reasons now known only to the souls of drafters now long deceased, given their own sections 2 and 3 in the Uniform Fraudulent Conveyances Act of 1918. This same error was compounded in 1984 with the adoption of the UFTA, which replaced the definition of "Fair Consideration" (which had proven to be an unsuitable and problematic term) with the definition of "value" in section 3, and then added to the definition of "transfer" in section 6. This mis-organization of course contributes strongly to the difficulty of reading the UVTA in a logical fashion, but the 2012-14 Drafting Committee was constrained by the scope of their authority not to engage in a wholesale redrafting of the Act, presumably to promote the easy enactment of the UVTA by the states. Thus, this blatant mis-organization persists in the UVTA as well.

Terms defined in UVTA §1:

(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

Terms defined in other sections:

§ 2 Insolvency

§ 3 Value

§ 6 When Transfer Is Made Or Obligation Is Incurred

See also Parties To A Voidable Transaction Lawsuit

 

 

C O M M O N      P A G E      F O O T E R

RECENT ARTICLES ON FRAUDULENT TRANSFERS

 

2018.04.22 ... State And Federal Fraudulent Transfer Law Diverge Over Exempt Property In Vorhes

2017.12.18 ... Revocation Of A Company's S-Election By Shareholders Not Deemed A Voidable Transaction In Arrowsmith

2017.12.07 ... 'I Only Gave It To My Spouse In Case I Got Sued' Defense Flops Once Again In Soley Case

2017.08.20 ... One Year Discovery Rule For Fraudulent Transfers Tested In PNC Bank Case

2017.05.30 ... The Good Faith Transferee Defined In Nautilus

Many more articles by Jay Adkisson found here

 

UVTA - LOGICAL ORGANIZATION (Designed For Litigators)

Click here to go to the Voidable Transactions Decision Chart

Overview of UVTA -- The process and result

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

 

FRAUDULENT TRANSFERS IN BANKRUPTCY

 

 

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/

 

© 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] jayadkisson.com or by phone to 949-200-7773 or by fax to 877-698-0678.