HB 439: "An Act enacting the Uniform Fraudulent Transfer Act."
00HOUSE BILL NO. 439 01 "An Act enacting the Uniform Fraudulent Transfer Act." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. AS 34 is amended by adding a new chapter to read: 04 CHAPTER 41. 05 UNIFORM FRAUDULENT TRANSFER ACT. 06 Sec. 34.41.010. INSOLVENCY. (a) A debtor is insolvent if the sum of 07 the debtor's debts is greater than all of the debtor's assets at a fair valuation. 08 (b) A debtor who is generally not paying the debtor's debts as they become 09 due is presumed to be insolvent. 10 (c) A partnership is insolvent under (a) of this section if the sum of the 11 partnership's debts is greater than the aggregate, at a fair valuation, of all of the 12 partnership's assets and the sum of the excess of the value of each general partner's 13 nonpartnership assets over the partner's nonpartnership debts. 14 (d) Assets under this section do not include property that has been transferred,
01 concealed, or removed with intent to hinder, delay, or defraud creditors or that has 02 been transferred in a manner making the transfer voidable under this chapter. 03 (e) Debts under this section do not include an obligation to the extent it is 04 secured by a valid lien on property of the debtor not included as an asset. 05 Sec. 34.41.020. VALUE. (a) Value is given for a transfer or an obligation 06 if, in exchange for the transfer or obligation, property is transferred or an antecedent 07 debt is secured or satisfied, but value does not include an unperformed promise made 08 otherwise than in the ordinary course of the promisor's business to furnish support to 09 the debtor or another person. 10 (b) For the purposes of AS 34.41.030(a)(2) and 34.41.040, a person gives a 11 reasonably equivalent value if the person acquires an interest of the debtor in an asset 12 pursuant to a regularly conducted, noncollusive foreclosure sale or execution of a 13 power of sale for the acquisition or disposition of the interest of the debtor upon 14 default under a mortgage, deed of trust, or security agreement. 15 (c) A transfer is made for present value if the exchange between the debtor 16 and the transferee is intended by them to be contemporaneous and is in fact 17 substantially contemporaneous. 18 Sec. 34.41.030. TRANSFERS FRAUDULENT AS TO PRESENT AND 19 FUTURE CREDITORS. (a) A transfer made or obligation incurred by a debtor is 20 fraudulent as to a creditor, whether the creditor's claim arose before or after the 21 transfer was made or the obligation was incurred, if the debtor made the transfer or 22 incurred the obligation 23 (1) with actual intent to hinder, delay, or defraud a creditor of the 24 debtor; or 25 (2) without receiving a reasonably equivalent value in exchange for the 26 transfer or obligation, and the debtor 27 (A) was engaged or was about to engage in a business or a 28 transaction for which the remaining assets of the debtor were unreasonably 29 small in relation to the business or transaction; or 30 (B) intended to incur, or believed or reasonably should have 31 believed that the debtor would incur, debts beyond the debtor's ability to pay
01 as they became due. 02 (b) In determining actual intent under (a)(1) of this section, consideration may 03 be given, among other factors, to whether 04 (1) the transfer or obligation was to an insider; 05 (2) the debtor retained possession or control of the property transferred 06 after the transfer; 07 (3) the transfer or obligation was disclosed or concealed; 08 (4) before the transfer was made or obligation was incurred, the debtor 09 had been sued or threatened with suit; 10 (5) the transfer was of substantially all the debtor's assets; 11 (6) the debtor absconded; 12 (7) the debtor removed or concealed assets; 13 (8) the value of the consideration received by the debtor was reasonably 14 equivalent to the value of the asset transferred or the amount of the obligation 15 incurred; 16 (9) the debtor was insolvent or became insolvent shortly after the 17 transfer was made or the obligation was incurred; 18 (10) the transfer occurred shortly before or shortly after a substantial 19 debt was incurred; and 20 (11) the debtor transferred the essential assets of the business to a 21 lienor who transferred the assets to an insider of the debtor. 22 Sec. 34.41.040. TRANSFERS FRAUDULENT AS TO PRESENT 23 CREDITORS. (a) A transfer made or obligation incurred by a debtor is fraudulent 24 as to a creditor whose claim arose before the transfer was made or the obligation was 25 incurred if the debtor made the transfer or incurred the obligation without receiving 26 a reasonably equivalent value in exchange for the transfer or obligation and the debtor 27 was insolvent at that time or the debtor became insolvent as a result of the transfer or 28 obligation. 29 (b) A transfer made by a debtor is fraudulent as to a creditor whose claim 30 arose before the transfer was made if the transfer was made to an insider for an 31 antecedent debt, the debtor was insolvent at that time, and the insider had reasonable
01 cause to believe that the debtor was insolvent. 02 Sec. 34.41.050. WHEN TRANSFER IS MADE OR OBLIGATION IS 03 INCURRED. For the purposes of this chapter, 04 (1) a transfer is made with respect to an asset that is 05 (A) real property other than a fixture, but including the interest 06 of a seller or purchaser under a contract for the sale of the asset, when the 07 transfer is so far perfected that a good faith purchaser of the asset from the 08 debtor against whom applicable law permits the transfer to be perfected cannot 09 acquire an interest in the asset that is superior to the interest of the transferee; 10 and 11 (B) not real property or that is a fixture, when the transfer is so 12 far perfected that a creditor on a simple contract cannot acquire a judicial lien 13 otherwise than under this chapter that is superior to the interest of the 14 transferee; 15 (2) if applicable law permits the transfer to be perfected as provided 16 in (1) of this section and the transfer is not so perfected before the commencement of 17 an action for relief under this chapter, the transfer is deemed made immediately before 18 the commencement of the action; 19 (3) if applicable law does not permit the transfer to be perfected as 20 provided in (1) of this section, the transfer is made when it becomes effective between 21 the debtor and the transferee; 22 (4) a transfer is not made until the debtor has acquired rights in the 23 asset transferred; 24 (5) an obligation is incurred 25 (A) if oral, when it becomes effective between the parties; or 26 (B) if evidenced by a writing, when the writing executed by the 27 obligor is delivered to or for the benefit of the obligee. 28 Sec. 34.41.060. REMEDIES OF CREDITORS. (a) In an action for relief 29 against a transfer or obligation under this chapter, a creditor, subject to the limitations 30 in AS 34.41.070, may obtain 31 (1) avoidance of the transfer or obligation to the extent necessary to
01 satisfy the creditor's claim; 02 (2) an attachment or other provisional remedy against the asset 03 transferred or other property of the transferee in accordance with the procedures 04 prescribed by the Alaska Rules of Civil Procedure; 05 (3) subject to applicable principles of equity and in accordance with 06 applicable rules of civil procedure, 07 (A) an injunction against further disposition by the debtor or a 08 transferee, or both, of the asset transferred or of other property; 09 (B) appointment of a receiver to take charge of the asset 10 transferred or of other property of the transferee; or 11 (C) other relief the circumstances may require. 12 (b) If a creditor has obtained a judgment on a claim against the debtor, the 13 creditor, if the court so orders, may levy execution on the asset transferred or its 14 proceeds. 15 Sec. 34.41.070. DEFENSES, LIABILITY, AND PROTECTION OF 16 TRANSFEREE. (a) A transfer or obligation is not voidable under AS 34.41.030(a)(1) 17 against a person who took in good faith and for a reasonably equivalent value or 18 against a subsequent transferee or obligee. 19 (b) Except as otherwise provided in this section, to the extent a transfer is 20 voidable in an action by a creditor under AS 34.41.060(a)(1), the creditor may recover 21 judgment for the value of the asset transferred, as adjusted under (c) of this section, 22 or the amount necessary to satisfy the creditor's claim, whichever is less. The 23 judgment may be entered against 24 (1) the first transferee of the asset or the person for whose benefit the 25 transfer was made; or 26 (2) a subsequent transferee other than a good faith transferee who took 27 for value or from a subsequent transferee. 28 (c) If the judgment under (b) of this section is based upon the value of the 29 asset transferred, the judgment must be for an amount equal to the value of the asset 30 at the time of the transfer, subject to adjustment as the equities may require. 31 (d) Notwithstanding voidability of a transfer or an obligation under this
01 chapter, a good faith transferee or obligee is entitled, to the extent of the value given 02 the debtor for the transfer or obligation, to 03 (1) a lien on or a right to retain an interest in the asset transferred; 04 (2) enforcement of an obligation incurred; or 05 (3) a reduction in the amount of the liability on the judgment. 06 (e) A transfer is not voidable under AS 34.41.030(a)(2) or 34.41.040 if the 07 transfer results from 08 (1) termination of a lease upon default by the debtor when the 09 termination is pursuant to the lease and applicable law; or 10 (2) enforcement of a security interest in compliance with AS 45.09. 11 (f) A transfer is not voidable under AS 34.41.040(b) 12 (1) to the extent the insider gave new value to or for the benefit of the 13 debtor after the transfer was made unless the new value was secured by a valid lien; 14 (2) if made in the ordinary course of business or financial affairs of the 15 debtor and the insider; or 16 (3) if made pursuant to a good faith effort to rehabilitate the debtor and 17 the transfer secured present value given for that purpose as well as an antecedent debt 18 of the debtor. 19 Sec. 34.41.080. EXTINGUISHMENT OF CLAIM FOR RELIEF. A claim for 20 relief with respect to a fraudulent transfer or obligation under this chapter is 21 extinguished unless action is brought under 22 (1) AS 34.41.030(a)(1), within four years after the transfer was made 23 or the obligation was incurred or, if later, within one year after the transfer or 24 obligation was or could reasonably have been discovered by the claimant; 25 (2) AS 34.41.030(a)(2) or 34.41.040(a), within four years after the 26 transfer was made or the obligation was incurred; or 27 (3) AS 34.41.040(b), within one year after the transfer was made or the 28 obligation was incurred. 29 Sec. 34.41.090. SUPPLEMENTARY PROVISIONS. Unless displaced by the 30 provisions of this chapter, the principles of law and equity, including the law merchant 31 and the law relating to principal and agent, estoppel, laches, fraud, misrepresentation,
01 duress, coercion, mistake, insolvency, or other validating or invalidating cause, 02 supplement its provisions. 03 Sec. 34.41.100. UNIFORMITY OF APPLICATION AND CONSTRUCTION. 04 This chapter shall be applied and construed to effectuate its general purpose to make 05 uniform the law with respect to the subject of this chapter among states enacting it. 06 Sec. 34.41.110. DEFINITIONS. In this chapter, 07 (1) "affiliate" means a 08 (A) person who directly or indirectly owns, controls, or holds 09 with power to vote, 20 percent or more of the outstanding voting securities of 10 the debtor, other than a person who holds the securities, 11 (i) as a fiduciary or agent without sole discretionary 12 power to vote the securities; or 13 (ii) solely to secure a debt if the person has not 14 exercised the power to vote; 15 (B) corporation 20 percent or more of whose outstanding voting 16 securities are directly or indirectly owned, controlled, or held with power to 17 vote, by the debtor or a person who directly or indirectly owns, controls, or 18 holds, with power to vote, 20 percent or more of the outstanding voting 19 securities of the debtor, other than a person who holds the securities, 20 (i) as a fiduciary or agent without sole power to vote the 21 securities; or 22 (ii) solely to secure a debt if the person has not in fact 23 exercised the power to vote; 24 (C) person whose business is operated by the debtor under a 25 lease or other agreement, or a person substantially all of whose assets are 26 controlled by the debtor; or 27 (D) person who operates the debtor's business under a lease or 28 other agreement or controls substantially all of the debtor's assets; 29 (2) "asset" means property of a debtor, but does not include 30 (A) property to the extent it is encumbered by a valid lien; 31 (B) property to the extent it is generally exempt under
01 nonbankruptcy law; or 02 (C) an interest in property held in tenancy by the entireties to 03 the extent it is not subject to process by a creditor holding a claim against only 04 one tenant; 05 (3) "claim" means a right to payment, whether or not the right is 06 reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, 07 disputed, undisputed, legal, equitable, secured, or unsecured; 08 (4) "creditor" means a person who has a claim; 09 (5) "debt" means liability on a claim; 10 (6) "debtor" means a person who is liable on a claim; 11 (7) "insider" includes, 12 (A) if the debtor is an individual, a 13 (i) relative of the debtor or of a general partner of the 14 debtor; 15 (ii) partnership in which the debtor is a general partner; 16 (iii) general partner in a partnership described in (ii) of 17 this subparagraph; or 18 (iv) corporation of which the debtor is a director, officer, 19 or person in control; 20 (B) if the debtor is a corporation, 21 (i) a director of the debtor; 22 (ii) an officer of the debtor; 23 (iii) a person in control of the debtor; 24 (iv) a partnership in which the debtor is a general 25 partner; 26 (v) a general partner in a partnership described in (iv) 27 of this subparagraph; or 28 (vi) a relative of a general partner, director, officer, or 29 person in control of the debtor; 30 (C) if the debtor is a partnership, 31 (i) a general partner in the debtor;
01 (ii) a relative of a general partner in, a general partner 02 of, or a person in control of the debtor; 03 (iii) another partnership in which the debtor is a general 04 partner; 05 (iv) a general partner in a partnership described in (iii) 06 of this subparagraph; or 07 (v) a person in control of the debtor; 08 (D) an affiliate, or an insider of an affiliate as if the affiliate 09 were the debtor; and 10 (E) a managing agent of the debtor; 11 (8) "lien" means a charge against or an interest in property to secure 12 payment of a debt or performance of an obligation, and includes a security interest 13 created by agreement, a judicial lien obtained by legal or equitable process or 14 proceedings, a common law lien, or a statutory lien; 15 (9) "person" has the meaning given in AS 01.10.060 and includes an 16 estate, government or governmental subdivision or agency, trust, or another legal or 17 commercial entity; 18 (10) "property" means anything that may be the subject of ownership; 19 (11) "relative" means an individual related by consanguinity within the 20 third degree as determined under common law, a spouse, or an individual related to 21 a spouse within the third degree as determined under common law, and includes an 22 individual in an adoptive relationship within the third degree; 23 (12) "transfer" means every mode, direct or indirect, absolute or 24 conditional, voluntary or involuntary, of disposing of or parting with an asset or an 25 interest in an asset, and includes payment of money, release, lease, and creation of a 26 lien or other encumbrance; 27 (13) "valid lien" means a lien that is effective against the holder of a 28 judicial lien subsequently obtained by legal or equitable process or proceedings. 29 Sec. 34.41.120. SHORT TITLE. This chapter may be cited as the Uniform 30 Fraudulent Transfer Act. 31 * Sec. 2. AS 34.40 is repealed.