If you’re in the business of what the original Statute of Elizabeth called “the avoiding of feigned, covinous and fraudulent feoffments,” and if you’re in one of the 25 states currently utlizing the Uniform Fraudulent Transfer Act, you’re likely to be doing so using the newly titled Uniform Voidable Transactions Act very soon. In mid-July, the National Conference of Commissioners on Uniform State Laws approved its final draft of the new statute, and a blackline comparing the new UVTA to the current UFTA is linked here.
The preface to the 2014 amendments indicates that the Commissioners did not intend this to be a comprehensive overhaul, but rather a revision targetting some very specific areas. Some of the key areas are:
- Changing the use of the word “fraudulent” to “voidable” in the title, and throughout the statute. It is pretty clear from the official comments (which are worth reading, and which can be found here) that one of the objectives is to clarify that a transfercan be fraudulent (er.. I mean voidable) even in the absence of fraud. Even under UFTA, the actual fraud theory is phrased disjunctively (“delay, hinder OR defraud”). The comments make clear that one of the goals of this amendment is to get away from the heightened pleading standard (i.e., the state equivalents of FRCP 9(b)) that some courts apply to these cases.
- The addition of a choice of law section. Even though this is supposed to be a uniform statute, there are state-by-state variations as the law is enacted locally. This section is designed to provide a ruleset to choose between conflicting laws, if applicable.
- An amendment to the good faith/value affirmative defense for subsequent transferees to bring it more closely in line with Section 550 of the Bankruptcy Code.
- Changes to the insolvency section, particularly as it applies to partnership insolvency, and clarification that the insolvency presumption which arises when a debtor is generally not paying debts as they become due does not apply if the non-payment is the result of a bona fide dispute.