![]() ![]() 5th 116 (June 24, 2020, modified July 21, 2020), the 1st District Court of Appeal held that, “he ‘badges of fraud’ do not matter when value is given, such as satisfaction of antecedent debt.” As such, the court found the transfer was allowed under Civil Code Section 3432, which permits a debtor to “pay one creditor in preference to another.” In Universal Home Improvement, Inc., et al. more likely than not).Until a recent appellate ruling, it appeared that, under California law, if a debtor made a transfer without receiving “reasonably equivalent value” in exchange, that transfer, by itself, could be - but need not be - a basis for finding there was “actual fraud” rendering the transfer voidable under the California Uniform Voidable Transfer Act (“UVTA”). The defense that the transfer was made “in good faith and for a reasonably equivalent value,” found at § 3439.08, is clarified to state that the reasonably equivalent value must have been “given the debtor.” Finally, the burden of proof, on proving a claim or a defense, has been clarified to require proof by a “preponderance of the evidence.” (i.e. A new choice of law provision is added at the new § 3439.10, which uses the location of the debtor, as defined in the section, at the time of the transfers to determine which state’s law applies. While a comment to the Uniform Law Commission’s report states many of the changes are stylistic and that no change in meaning is intended by substituting “voidable” for “fraudulent”, who knows if that is what courts will find. used and the evident purpose for which the statute was adopted.” “If there is no ambiguity in the language of the statute, then the Legislature is presumed to have meant what it said, and the plain meaning of the language governs.” “he objective of statutory interpretation is to ascertain and effectuate legislative intent.” To determine legislative intent, we first examine the words of the statute, applying “their usual, ordinary, and common sense meaning based upon the language. § 3439.04(a), states that, “A transfer made or obligation incurred by a debtor is voidable as to a creditor….” The rules of statutory interpretation say that where there is no ambiguity, words are to be given their plain meaning. Will courts now take the position that because the name of the statute has been changed to the “Uniform Voidable Transactions Act” such transfers are only “voidable” and not “void”? The new law, C.C.P. 233, 235-236 (1893) (“he law is well settled, that a conveyance made with intent to defraud creditors is void…”). For example, California law provides that a fraudulent transfer is void from inception, not merely voidable. One unintended consequence of making the statute more “politically correct” is that the change might be construed to be a change by the legislature of existing California fraudulent transfer law. Because uniformity across state boundaries is sought, conflicts with individual state’s laws or practices can occur. For example, 43 states adopted the Uniform Fraudulent Transfer Act after it was proposed in 1984 New York and Maryland being the major exceptions. The Uniform Law Commission’s purpose is to make laws consistent from state to state. The major change is there will no longer be fraudulent transfers! The legislature changed the name of the statute to the “Uniform Voidable Transactions Act.” The word “fraudulent” has been excised from the statute and replaced with the word “voidable.” As of the first of the year, you will sue to set aside a “voidable transfer” rather than a “fraudulent transfer.” While most of the changes are not significant, they will take getting used to. seq.) which take effect on January 1, 2016. How will the changes affect my ability to pursue fraudulent transfers as a receiver?ĪNSWER: Earlier this year the California legislature, based on a proposal made by the National Conference of Commissioners on Uniform State Laws (“Uniform Law Commission”), adopted amendments to California’s Uniform Fraudulent Transfer Act (Civil Code §3439 et. ![]() QUESTION: I heard California’s fraudulent transfer law is being changed.
0 Comments
Leave a Reply. |