Fraudulent Conveyances

Question 1

Fraudulent Transfer

Answer 1

Debtor transfer property in attempt to evade claims of creditor

Question 2

Creditor Claim That Arose Before OR After Transfer was Made: Actual Intent

Answer 2

Transfer is fraudulent if debtor transfers the property with an ACTUAL INTENT TO HINDER, DELAY, OR DEFRAUD any creditor

Question 3

Creditor Claim That Arose Before OR After Transfer was Made: Reasonably Equivalent Value

Answer 3

Transfer is fraudulent if debtor transfers the property without receiving REASONABLY EQUIVALENT VALUE and:

(1) Transfer brings debtor close to insolvency; or
(2) Debtor intended to incur debts beyond its ability to pay as debts become due

Question 4

Creditor Claim That Arose ONLY Before Transfer was Made

Answer 4

Transfer is fraudulent if:

(1) Debtor receives less than REASONABLY EQUIVALENT VALUE; and
(2) Debtor was INSOLVENT AT THAT TIME OR BECAME INSOLVENT as a result of the transfer

Question 5

Badges of Fraud: Definition

Answer 5

Circumstances that show the debtor intended to transfer property in order to harm creditor

Question 6

Badges of Fraud: Examples

Answer 6

(1) Transfer while lawsuit pending
(2) Transfer makes debtor insolvent
(3) Series of transfers by that strip debtor of all property available to collect
(4) Transaction not in debtor’s usual course of business
(5) Transaction in which the debtor no longer owns the property, but still has control of it
(6) Little or no consideration in return for the transfer
(7) Transfer of property to family members

Question 7

Remedies for Fraudulent Transfer

Answer 7

(1) AVOIDANCE OF THE TRANSFER
(2) Attachment of transferred property
(3) Injunction against future disposition by third party or debtor of transferred property
(4) Appointment of a receiver
(5) Any other relief required by circumstances

Question 8

Statute of Limitations: Actual Fraud

Answer 8

Later of:

(1) 4 YEARS after transfer made; or
(2) Within 1 YEAR after transfer was discovered or could reasonably have been discovered

Question 9

Statute of Limitations: Constructive Fraud

Answer 9

4 YEARS after transfer

Question 10

Transferee Defenses

Answer 10

(1) Bona Fide Purchaser

(2) Good Faith Purchaser

Question 11

Transferee Defense: Bona Fide Purchaser

Answer 11

Third party:

(1) Takes property in good faith; and
(2) Pays reasonably equivalent value

Transfer NOT VOIDABLE and transferee keeps property

Question 12

Transferee Defense: Good Faith Purchaser

Answer 12

Third party:

(1) Takes property in good faith; and
(2) Pays less than reasonably equivalent value

Transfer is VOIDABLE and transferee entitled to lien on property in amount transferee paid for the property