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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.
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.