Substitute House Bill No. 6813
Substitute House Bill No. 6813
PUBLIC ACT NO. 91-297
AN ACT ADOPTING THE UNIFORM FRAUDULENT TRANSFER
ACT.
Section 1. (NEW) Sections 1 to 12, inclusive,
of this act may be cited as the Uniform Fraudulent
Transfer Act.
Sec. 2. (NEW) As used in sections 1 to 12,
inclusive, of this act:
(1) "Affiliate" means: (A) A person who
directly or indirectly owns, controls or holds
with power to vote, twenty per cent or more of the
outstanding voting securities of the debtor, other
than a person who holds the securities (i) as a
fiduciary or agent without sole discretionary
power to vote the securities, or (ii) solely to
secure a debt, if the person has not exercised the
power to vote; (B) a corporation twenty per cent
or more of whose outstanding voting securities are
directly or indirectly owned, controlled or held
with power to vote, by the debtor or a person who
directly or indirectly owns, controls or holds,
with power to vote, twenty per cent or more of the
outstanding voting securities of the debtor, other
than a person who holds the securities (i) as a
fiduciary or agent without sole power to vote the
securities; or (ii) solely to secure a debt, if
the person has not in fact exercised the power to
vote; (C) a person whose business is operated by
the debtor under a lease or other agreement or a
person substantially all of whose assets are
controlled by the debtor; or (D) a person who
operates the debtor's business under a lease or
other agreement or controls substantially all of
the debtor's assets.
(2) "Asset" means property of a debtor, but
the term does not include: (A) Property to the
extent it is encumbered by a valid lien, (B)
property to the extent it is generally exempt
under nonbankruptcy law, or (C) an interest in
property held in tenancy by the entireties to the
extent it is not subject to process by a creditor
holding a claim against only one tenant.
(3) "Claim" means a right to payment, whether
or not the right is reduced to judgment,
liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal,
equitable, secured or unsecured.
(4) "Creditor" means a person who has a
claim.
(5) "Debt" means liability on a claim.
(6) "Debtor" means a person who is liable on
a claim.
(7) "Insider" includes: (A) If the debtor is
an individual, (i) a relative of the debtor or of
a general partner of the debtor, (ii) a
partnership in which the debtor is a general
partner, (iii) a general partner in a partnership
described in subparagraph (ii), or (iv) a
corporation of which the debtor is a director,
officer or person in control; (B) if the debtor is
a corporation, (i) a director of the debtor, (ii)
an officer of the debtor, (iii) a person in
control of the debtor, (iv) a partnership in which
the debtor is a general partner, (v) a general
partner in a partnership described in subparagraph
(iv), or (vi) a relative of a general partner,
director, officer or person in control of the
debtor; (C) if the debtor is a partnership, (i) a
general partner in the debtor, (ii) a relative of
a general partner in, a general partner of, or a
person in control of the debtor, (iii) another
partnership in which the debtor is a general
partner, (iv) a general partner in a partnership
described in subparagraph (iii), or (v) a person
in control of the debtor; (D) an affiliate, or an
insider of an affiliate as if the affiliate were
the debtor; and (E) a managing agent of the
debtor.
(8) "Lien" means a charge against or an
interest in property to secure payment of a debt
or performance of an obligation, and includes a
security interest created by agreement, a judicial
lien obtained by legal or equitable process or
proceedings, a common law lien or a statutory
lien.
(9) "Person" means an individual,
partnership, corporation, association,
organization, government or governmental
subdivision or agency, business trust, estate,
trust or any other legal or commercial entity.
(10) "Property" means anything that may be
the subject of ownership.
(11) "Relative" means an individual related
by consanguinity within the third degree as
determined by the common law, a spouse or an
individual related to a spouse within the third
degree as so determined, and includes an
individual in an adoptive relationship within the
third degree.
(12) "Transfer" means every mode, direct or
indirect, absolute or conditional, voluntary or
involuntary, of disposing of or parting with an
asset or an interest in an asset, and includes
payment of money, release, lease and creation of a
lien or other encumbrance.
(13) "Valid lien" means a lien that is
effective against the holder of a judicial lien
subsequently obtained by legal or equitable
process or proceedings.
Sec. 3. (NEW) (a) A debtor is insolvent if
the sum of the debtor's debts is greater than all
of the debtor's assets at a fair valuation.
(b) A debtor who is generally not paying his
debts as they become due is presumed to be
insolvent.
(c) A partnership is insolvent under
subsection (a) of this section if the sum of the
partnership's debts is greater than the aggregate,
at a fair valuation, of all of the partnership's
assets and the sum of the excess of the value of
each general partner's nonpartnership assets over
the partner's nonpartnership debts.
(d) Assets under this section do not include
property that has been transferred, concealed or
removed with intent to hinder, delay or defraud
creditors or that has been transferred in a manner
making the transfer voidable under sections 1 to
12, inclusive, of this act.
(e) Debts under this section do not include
an obligation to the extent it is secured by a
valid lien on property of the debtor not included
as an asset.
Sec. 4. (NEW) (a) Value is given for a
transfer or an obligation if, in exchange for the
transfer or obligation, property is transferred or
an antecedent debt is secured or satisfied, but
value does not include an unperformed promise made
otherwise than in the ordinary course of the
promisor's business to furnish support to the
debtor or another person.
(b) For the purposes of subdivision (2) of
subsection (a) of section 5 and section 6 of this
act, a person gives a reasonably equivalent value
if the person acquires an interest of the debtor
in an asset pursuant to a regularly conducted,
noncollusive foreclosure sale or execution of a
power of sale for the acquisition or disposition
of the interest of the debtor upon default under a
mortgage, deed of trust or security agreement.
(c) A transfer is made for present value if
the exchange between the debtor and the transferee
is intended by them to be contemporaneous and is
in fact substantially contemporaneous.
Sec. 5. (NEW) (a) A transfer made or
obligation incurred by a debtor is fraudulent as
to a creditor, if the creditor's claim arose
before the transfer was made or the obligation was
incurred and if the debtor made the transfer or
incurred the obligation: (1) With actual intent
to hinder, delay or defraud any creditor of the
debtor; or (2) without receiving a reasonably
equivalent value in exchange for the transfer or
obligation, and the debtor (A) was engaged or was
about to engage in a business or a transaction for
which the remaining assets of the debtor were
unreasonably small in relation to the business or
transaction, or (B) intended to incur, or believed
or reasonably should have believed that he would
incur, debts beyond his ability to pay as they
became due.
(b) In determining actual intent under
subdivision (1) of subsection (a) of this section,
consideration may be given, among other factors,
to whether: (1) The transfer or obligation was to
an insider, (2) the debtor retained possession or
control of the property transferred after the
transfer, (3) the transfer or obligation was
disclosed or concealed, (4) before the transfer
was made or obligation was incurred, the debtor
had been sued or threatened with suit, (5) the
transfer was of substantially all the debtor's
assets, (6) the debtor absconded, (7) the debtor
removed or concealed assets, (8) the value of the
consideration received by the debtor was
reasonably equivalent to the value of the asset
transferred or the amount of the obligation
incurred, (9) the debtor was insolvent or became
insolvent shortly after the transfer was made or
the obligation was incurred, (10) the transfer
occurred shortly before or shortly after a
substantial debt was incurred, and (11) the debtor
transferred the essential assets of the business
to a lienor who transferred the assets to an
insider of the debtor.
Sec. 6. (NEW) (a) A transfer made or
obligation incurred by a debtor is fraudulent as
to a creditor whose claim arose before the
transfer was made or the obligation was incurred
if the debtor made the transfer or incurred the
obligation without receiving a reasonably
equivalent value in exchange for the transfer or
obligation and the debtor was insolvent at that
time or the debtor became insolvent as a result of
the transfer or obligation.
(b) A transfer made by a debtor is fraudulent
as to a creditor whose claim arose before the
transfer was made if the transfer was made to an
insider for an antecedent debt, the debtor was
insolvent at that time and the insider had
reasonable cause to believe that the debtor was
insolvent.
Sec. 7. (NEW) For the purposes of sections 1
to 12, inclusive, of this act:
(1) A transfer is made: (A) With respect to
an asset that is real property other than a
fixture, but including the interest of a seller or
purchaser under a contract for the sale of the
asset, when the transfer is so far perfected that
a good-faith purchaser of the asset from the
debtor against whom applicable law permits the
transfer to be perfected cannot acquire an
interest in the asset that is superior to the
interest of the transferee; and (B) with respect
to an asset that is not real property or that is a
fixture, when the transfer is so far perfected
that a creditor on a simple contract cannot
acquire a judicial lien otherwise than under
sections 1 to 12, inclusive, of this act that is
superior to the interest of the transferee;
(2) If applicable law permits the transfer to
be perfected as provided in subsection (1) of this
section and the transfer is not so perfected
before the commencement of an action for relief
under sections 1 to 12, inclusive, of this act,
the transfer is deemed made immediately before the
commencement of the action;
(3) If applicable law does not permit the
transfer to be perfected as provided in subsection
(1) of this section, the transfer is made when it
becomes effective between the debtor and the
transferee;
(4) A transfer is not made until the debtor
has acquired rights in the asset transferred;
(5) An obligation is incurred: (A) If oral,
when it becomes effective between the parties, or
(B) if evidenced by a writing, when the writing
executed by the obligor is delivered to or for the
benefit of the obligee.
Sec. 8. (NEW) (a) In an action for relief
against a transfer or obligation under sections 1
to 12, inclusive, of this act, a creditor, subject
to the limitations in section 9 of this act, may
obtain: (1) Avoidance of the transfer or
obligation to the extent necessary to satisfy the
creditor's claim; (2) an attachment or other
provisional remedy against the asset transferred
or other property of the transferee in accordance
with the procedure prescribed by chapter 903a of
the general statutes; (3) subject to applicable
principles of equity and in accordance with
applicable rules of civil procedure (A) an
injunction against further disposition by the
debtor or a transferee, or both, of the asset
transferred or of other property, (B) appointment
of a receiver to take charge of the asset
transferred or of other property of the
transferee, or (C) any other relief the
circumstances may require.
(b) If a creditor has obtained a judgment on
a claim against the debtor, the creditor, if the
court so orders, may levy execution on the asset
transferred or its proceeds.
Sec. 9. (NEW) (a) A transfer or obligation is
not voidable under subdivision (1) of subsection
(a) of section 5 of this act against a person who
took in good faith and for a reasonably equivalent
value.
(b) Except as otherwise provided in this
section, to the extent a transfer is voidable in
an action by a creditor under subdivision (1) of
subsection (a) of section 8 of this act, the
creditor may recover judgment for the value of the
asset transferred, as adjusted under subsection
(d) of this section, or the amount necessary to
satisfy the creditor's claim, whichever is less.
The judgment may be entered against: (1) The first
transferee of the asset or the person for whose
benefit the transfer was made, or (2) any
subsequent transferee other than a good-faith
transferee who took for value or from any
subsequent transferee.
(c) If the judgment under subsection (b) of
this section is based upon the value of the asset
transferred, the judgment must be for an amount
equal to the value of the asset at the time of the
transfer, subject to adjustment as the equities
may require.
(d) Notwithstanding voidability of a transfer
or an obligation under sections 1 to 12,
inclusive, of this act, a good-faith transferee or
obligee is entitled, to the extent of the value
given the debtor for the transfer or obligation,
to (1) a lien on or a right to retain any interest
in the asset transferred; (2) enforcement of any
obligation incurred; or (3) a reduction in the
amount of the liability on the judgment.
(e) A transfer is not voidable under
subdivision (2) of subsection (a) of section 5 or
section 6 of this act if the transfer results from
termination of a lease upon default by the debtor
when the termination is pursuant to the lease and
applicable law.
(f) A transfer is not voidable under
subsection (b) of section 6 of this act: (1) To
the extent the insider gave new value to or for
the benefit of the debtor after the transfer was
made unless the new value was secured by a valid
lien, (2) if made in the ordinary course of
business or financial affairs of the debtor and
the insider, or (3) if made pursuant to a
good-faith effort to rehabilitate the debtor and
the transfer secured present value given for that
purpose as well as an antecedent debt of the
debtor.
Sec. 10. (NEW) A cause of action with respect
to a fraudulent transfer or obligation under
sections 1 to 12, inclusive, of this act is
extinguished unless action is brought: (1) Under
subdivision (1) of subsection (a) of section 5 of
this act, within four years after the transfer was
made or the obligation was incurred or, if later,
within one year after the transfer or obligation
was or could reasonably have been discovered by
the claimant; (2) under subdivision (2) of
subsection (a) of section 5 or subsection (a) of
section 6 of this act, within four years after the
transfer was made or the obligation was incurred;
or (3) under subsection (b) of section 6 of this
act, within one year after the transfer was made
or the obligation was incurred.
Sec. 11. (NEW) Unless displaced by the
provisions of sections 1 to 12, inclusive, of this
act, the principles of law and equity, including
the law merchant and the law relating to principal
and agent, estoppel, laches, fraud,
misrepresentation, duress, coercion, mistake,
insolvency or other validating or invalidating
cause, supplement the provisions of said sections.
Sec. 12. (NEW) Sections 1 to 11, inclusive,
of this act shall be applied and construed to
effectuate their general purpose to make uniform
the law with respect to the subject of said
sections among states enacting them.
Sec. 13. Section 52-552 of the general
statutes is repealed.