Adkisson's

Voidable Transactions

 - previously known as -

Fraudulent Transfers

Caution state law variances!

What Are The Creditor's Remedies?

 

The last consideration in an UVTA analysis is the remedy to be employed by the Creditor to either avoid the transfer and enforce the judgment directly against the asset under §7, or to obtain a money judgment against the Transferee under §8(b) and (c).

 

Historically, avoidance of the transaction has long been the primary remedy available to creditors bringing fraudulent transfer actions, although the Uniform Fraudulent Conveyances Act of 1918 also allowed the Creditor to restrain the Transferee from further transferring the property away, and for the appointment of a Receiver to take charge of the property. The UFCA did not, however, specifically allow a court to award money damages against a Transferee for the value of the asset.

 

When the Uniform Fraudulent Transfers Act was adopted by the ULC in 1986, provisions were included in §§ 8(a) and (b) to expressly allow the Creditor to collect a money judgment against the Transferee for the value of the asset that had been transferred. These provisions tracked somewhat the 1978 and 1986 amendments to the Bankruptcy Code which authorized the Trustee to obtain the value of the property from the Transferee. But whereas Bankruptcy Code § 550 leaves to the discretion of the court whether value is awardable in lieu of avoidance of the transfer, UVTA §§ 8(a) and (b) effectively allows the Creditor to elect which remedy is sought.

 

But avoidance, and not a money judgment, is still the most popular relief sought by creditors. The basic idea is that title to the asset is returned to the Debtor, so that the Creditor may then enforce the judgment through ordinary means against the asset. In post-judgment litigation, these two steps are apt to occur simultaneously, i.e., the Court rules that the transfer has been avoided, and then requires the asset to be turned over either to the Creditor directly, or to the "levying officer" (read: Sheriff) to hold a judicial sale.

 

Creditors will sometimes seek to have a Receiver appointed by the Court to take charge of the asset. This is usually a strategic play, with the idea being that the Creditor can have the Receiver appointed for this limited purpose ("get his foot in the door"), and then the Receiver's powers can thereafter be expanded to encompass the totality of the Debtor's estate.

 

UVTA § 7. REMEDIES OF CREDITOR.

Reporter's Comment: 1. This section is derived from §§ 9 and 10 of the Uniform Fraudulent Conveyance Act. Section 9 of that Act specified the remedies of creditors whose claims have matured, and § 10 enumerated the remedies available to creditors whose claims have not matured. A creditor holding an unmatured claim may be denied the right to receive payment from the proceeds of a sale on execution until the claim has matured, but the proceeds may be deposited in court or in an interest-bearing account pending the maturity of the creditor’s claim. The remedies specified in this section are not exclusive.

 

6. The remedies specified in § 7, like those enumerated in §§ 9 and 10 of the Uniform Fraudulent Conveyance Act, are cumulative. Lind v. O. N. Johnson Co., 204 Minn. 30, 40, 282 N.W. 661, 667, 119 A.L.R. 940 (1939) (Uniform Fraudulent Conveyance Act held not to impair or limit availability of the “old practice” of obtaining judgment and execution returned unsatisfied before proceeding in equity to set aside a transfer); Conemaugh Iron Works Co. v. Delano Coal Co., Inc., 298 Pa. 182, 186, 148 A. 94, 95 (1929) (Uniform Fraudulent Conveyance Act held to give an “additional optional remedy” and not to “deprive a creditor of the right, as formerly, to work out his remedy at law”); 1 G. Glenn, Fraudulent Conveyances and Preferences 120, 130, 150 (Rev. ed. 1940).

 

Prefatory Note (UFTA 1984): An important reform effected by the Uniform Fraudulent Conveyance Act was the elimination of any requirement that a creditor have obtained a judgment or execution returned unsatisfied before bringing an action to avoid a transfer as fraudulent. See American Surety Co. v. Conner, 251 N.Y. 1, 166 N.E. 783, 67 A.L.R. 244 (1929) (per C.J. Cardozo).

 

Prefatory Note (UFTA 1984): Section 7 lists the remedies available to creditors under the new Act. It eliminates as unnecessary and confusing a differentiation made in the Uniform Fraudulent Conveyance Act between the remedies available to holders of matured claims and those holding unmatured claims. Since promulgation of the Uniform Fraudulent Conveyance Act the Supreme Court has imposed restrictions on the availability and use of prejudgment remedies. As a result many states have amended their statutes and rules applicable to such remedies, and it is frequently unclear whether a state’s procedures include a prejudgment remedy against a fraudulent transfer or obligation. Section 7 accommodates prejudgment remedies if available under applicable law.

 

  • Non-Money Remedies {§ 7} -- Avoidance of the transfer, attachment, receiver, levy, etc.

 

 

 

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.