00 HOUSE BILL NO. 72 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 01 transferred, concealed, or removed with intent to hinder, delay, or defraud creditors 02 or that has been transferred in a manner making the transfer voidable under this 03 chapter. 04  (e) Debts under this section do not include an obligation to the extent it is 05 secured by a valid lien on property of the debtor not included as an asset. 06  Sec. 34.41.020. VALUE. (a) Value is given for a transfer or an obligation 07 if, in exchange for the transfer or obligation, property is transferred or an 08 antecedent debt is secured or satisfied, but value does not include an unperformed 09 promise made otherwise than in the ordinary course of the promisor's business to 10 furnish support to the debtor or another person. 11  (b) For the purposes of AS 34.41.030(a)(2) and 34.41.040, a person gives a 12 reasonably equivalent value if the person acquires an interest of the debtor in an 13 asset pursuant to a regularly conducted, noncollusive foreclosure sale or execution 14 of a power of sale for the acquisition or disposition of the interest of the debtor 15 upon default under a mortgage, deed of trust, or security agreement. 16  (c) A transfer is made for present value if the exchange between the debtor 17 and the transferee is intended by them to be contemporaneous and is in fact 18 substantially contemporaneous. 19  Sec. 34.41.030. TRANSFERS FRAUDULENT AS TO PRESENT AND 20 FUTURE CREDITORS. (a) A transfer made or obligation incurred by a debtor is 21 fraudulent as to a creditor, whether the creditor's claim arose before or after the 22 transfer was made or the obligation was incurred, if the debtor made the transfer or 23 incurred the obligation 24  (1) with actual intent to hinder, delay, or defraud a creditor of the 25 debtor; or 26  (2) without receiving a reasonably equivalent value in exchange for 27 the transfer or obligation, and the debtor 28  (A) was engaged or was about to engage in a business or a 29 transaction for which the remaining assets of the debtor were unreasonably 30 small in relation to the business or transaction; or 31  (B) intended to incur, or believed or reasonably should have 01 believed that the debtor would incur, debts beyond the debtor's ability to 02 pay as they became due. 03  (b) In determining actual intent under (a)(1) of this section, consideration 04 may be given, among other factors, to whether 05  (1) the transfer or obligation was to an insider; 06  (2) the debtor retained possession or control of the property 07 transferred after the transfer; 08  (3) the transfer or obligation was disclosed or concealed; 09  (4) before the transfer was made or obligation was incurred, the 10 debtor had been sued or threatened with suit; 11  (5) the transfer was of substantially all the debtor's assets; 12  (6) the debtor absconded; 13  (7) the debtor removed or concealed assets; 14  (8) the value of the consideration received by the debtor was 15 reasonably equivalent to the value of the asset transferred or the amount of the 16 obligation incurred; 17  (9) the debtor was insolvent or became insolvent shortly after the 18 transfer was made or the obligation was incurred; 19  (10) the transfer occurred shortly before or shortly after a substantial 20 debt was incurred; and 21  (11) the debtor transferred the essential assets of the business to a 22 lienor who transferred the assets to an insider of the debtor. 23  Sec. 34.41.040. TRANSFERS FRAUDULENT AS TO PRESENT 24 CREDITORS. (a) A transfer made or obligation incurred by a debtor is fraudulent 25 as to a creditor whose claim arose before the transfer was made or the obligation 26 was incurred if the debtor made the transfer or incurred the obligation without 27 receiving a reasonably equivalent value in exchange for the transfer or obligation 28 and the debtor was insolvent at that time or the debtor became insolvent as a result 29 of the transfer or obligation. 30  (b) A transfer made by a debtor is fraudulent as to a creditor whose claim 31 arose before the transfer was made if the transfer was made to an insider for an 01 antecedent debt, the debtor was insolvent at that time, and the insider had 02 reasonable cause to believe that the debtor was insolvent. 03  Sec. 34.41.050. WHEN TRANSFER IS MADE OR OBLIGATION IS 04 INCURRED. For the purposes of this chapter, 05  (1) a transfer is made with respect to an asset that is 06  (A) real property other than a fixture, but including the 07 interest of a seller or purchaser under a contract for the sale of the asset, 08 when the transfer is so far perfected that a good faith purchaser of the asset 09 from the debtor against whom applicable law permits the transfer to be 10 perfected cannot acquire an interest in the asset that is superior to the 11 interest of the transferee; and 12  (B) not real property or that is a fixture, when the transfer is 13 so far perfected that a creditor on a simple contract cannot acquire a judicial 14 lien otherwise than under this chapter that is superior to the interest of the 15 transferee; 16  (2) if applicable law permits the transfer to be perfected as provided 17 in (1) of this section and the transfer is not so perfected before the commencement 18 of an action for relief under this chapter, the transfer is deemed made immediately 19 before the commencement of the action; 20  (3) if applicable law does not permit the transfer to be perfected as 21 provided in (1) of this section, the transfer is made when it becomes effective 22 between the debtor and the transferee; 23  (4) a transfer is not made until the debtor has acquired rights in the 24 asset transferred; 25  (5) an obligation is incurred 26  (A) if oral, when it becomes effective between the parties; or 27  (B) if evidenced by a writing, when the writing executed by 28 the obligor is delivered to or for the benefit of the obligee. 29  Sec. 34.41.060. REMEDIES OF CREDITORS. (a) In an action for relief 30 against a transfer or obligation under this chapter, a creditor, subject to the 31 limitations in AS 34.41.070, may obtain 01  (1) avoidance of the transfer or obligation to the extent necessary to 02 satisfy the creditor's claim; 03  (2) an attachment or other provisional remedy against the asset 04 transferred or other property of the transferee in accordance with the procedures 05 prescribed by the Alaska Rules of Civil Procedure; 06  (3) subject to applicable principles of equity and in accordance with 07 applicable rules of civil procedure, 08  (A) an injunction against further disposition by the debtor or 09 a transferee, or both, of the asset transferred or of other property; 10  (B) appointment of a receiver to take charge of the asset 11 transferred or of other property of the transferee; or 12  (C) other relief the circumstances may require. 13  (b) If a creditor has obtained a judgment on a claim against the debtor, the 14 creditor, if the court so orders, may levy execution on the asset transferred or its 15 proceeds. 16  Sec. 34.41.070. DEFENSES, LIABILITY, AND PROTECTION OF 17 TRANSFEREE. (a) A transfer or obligation is not voidable under AS 18 34.41.030(a)(1) against a person who took in good faith and for a reasonably 19 equivalent value or against a subsequent transferee or obligee. 20  (b) Except as otherwise provided in this section, to the extent a transfer is 21 voidable in an action by a creditor under AS 34.41.060(a)(1), the creditor may 22 recover judgment for the value of the asset transferred, as adjusted under (c) of this 23 section, or the amount necessary to satisfy the creditor's claim, whichever is less. 24 The judgment may be entered against 25  (1) the first transferee of the asset or the person for whose benefit 26 the transfer was made; or 27  (2) a subsequent transferee other than a good faith transferee who 28 took for value or from a subsequent transferee. 29  (c) If the judgment under (b) of this section is based upon the value of the 30 asset transferred, the judgment must be for an amount equal to the value of the 31 asset at the time of the transfer, subject to adjustment as the equities may require. 01  (d) Notwithstanding voidability of a transfer or an obligation under this 02 chapter, a good faith transferee or obligee is entitled, to the extent of the value 03 given the debtor for the transfer or obligation, to 04  (1) a lien on or a right to retain an interest in the asset transferred; 05  (2) enforcement of an obligation incurred; or 06  (3) a reduction in the amount of the liability on the judgment. 07  (e) A transfer is not voidable under AS 34.41.030(a)(2) or 34.41.040 if the 08 transfer results from 09  (1) termination of a lease upon default by the debtor when the 10 termination is pursuant to the lease and applicable law; or 11  (2) enforcement of a security interest in compliance with AS 45.09. 12  (f) A transfer is not voidable under AS 34.41.040(b) 13  (1) to the extent the insider gave new value to or for the benefit of 14 the debtor after the transfer was made unless the new value was secured by a valid 15 lien; 16  (2) if made in the ordinary course of business or financial affairs of 17 the debtor and the insider; or 18  (3) if made pursuant to a good faith effort to rehabilitate the debtor 19 and the transfer secured present value given for that purpose as well as an 20 antecedent debt of the debtor. 21  Sec. 34.41.080. EXTINGUISHMENT OF CLAIM FOR RELIEF. A claim 22 for relief with respect to a fraudulent transfer or obligation under this chapter is 23 extinguished unless action is brought under 24  (1) AS 34.41.030(a)(1), within four years after the transfer was 25 made or the obligation was incurred or, if later, within one year after the transfer or 26 obligation was or could reasonably have been discovered by the claimant; 27  (2) AS 34.41.030(a)(2) or 34.41.040(a), within four years after the 28 transfer was made or the obligation was incurred; or 29  (3) AS 34.41.040(b), within one year after the transfer was made or 30 the obligation was incurred. 31  Sec. 34.41.090. SUPPLEMENTARY PROVISIONS. Unless displaced by 01 the provisions of this chapter, the principles of law and equity, including the law 02 merchant and the law relating to principal and agent, estoppel, laches, fraud, 03 misrepresentation, duress, coercion, mistake, insolvency, or other validating or 04 invalidating cause, supplement its provisions. 05  Sec. 34.41.100. UNIFORMITY OF APPLICATION AND 06 CONSTRUCTION. This chapter shall be applied and construed to effectuate its 07 general purpose to make uniform the law with respect to the subject of this chapter 08 among states enacting it. 09  Sec. 34.41.110. DEFINITIONS. In this chapter, 10  (1) "affiliate" means a 11  (A) person who directly or indirectly owns, controls, or holds 12 with power to vote, 20 percent or more of the outstanding voting securities 13 of the debtor, other than a person who holds the securities, 14  (i) as a fiduciary or agent without sole discretionary 15 power to vote the securities; or 16  (ii) solely to secure a debt if the person has not 17 exercised the power to vote; 18  (B) corporation 20 percent or more of whose outstanding 19 voting securities are directly or indirectly owned, controlled, or held with 20 power to vote, by the debtor or a person who directly or indirectly owns, 21 controls, or holds, with power to vote, 20 percent or more of the outstanding 22 voting securities of the debtor, other than a person who holds the securities, 23  (i) as a fiduciary or agent without sole power to vote 24 the securities; or 25  (ii) solely to secure a debt if the person has not in 26 fact exercised the power to vote; 27  (C) person whose business is operated by the debtor under a 28 lease or other agreement, or a person substantially all of whose assets are 29 controlled by the debtor; or 30  (D) person who operates the debtor's business under a lease 31 or other agreement or controls substantially all of the debtor's assets; 01  (2) "asset" means property of a debtor, but does not include 02  (A) property to the extent it is encumbered by a valid lien; 03  (B) property to the extent it is generally exempt under 04 nonbankruptcy law; or 05  (C) an interest in property held in tenancy by the entireties to 06 the extent it is not subject to process by a creditor holding a claim against 07 only one tenant; 08  (3) "claim" means a right to payment, whether or not the right is 09 reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, 10 unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; 11  (4) "creditor" means a person who has a claim; 12  (5) "debt" means liability on a claim; 13  (6) "debtor" means a person who is liable on a claim; 14  (7) "insider" includes, 15  (A) if the debtor is an individual, a 16  (i) relative of the debtor or of a general partner of the 17 debtor; 18  (ii) partnership in which the debtor is a general 19 partner; 20  (iii) general partner in a partnership described in (ii) 21 of this subparagraph; or 22  (iv) corporation of which the debtor is a director, 23 officer, or person in control; 24  (B) if the debtor is a corporation, 25  (i) a director of the debtor; 26  (ii) an officer of the debtor; 27  (iii) a person in control of the debtor; 28  (iv) a partnership in which the debtor is a general 29 partner; 30  (v) a general partner in a partnership described in (iv) 31 of this subparagraph; or 01  (vi) a relative of a general partner, director, officer, or 02 person in control of the debtor; 03  (C) if the debtor is a partnership, 04  (i) a general partner in the debtor; 05  (ii) a relative of a general partner in, a general partner 06 of, or a person in control of the debtor; 07  (iii) another partnership in which the debtor is a 08 general partner; 09  (iv) a general partner in a partnership described in 10 (iii) of this subparagraph; or 11  (v) a person in control of the debtor; 12  (D) an affiliate, or an insider of an affiliate as if the affiliate 13 were the debtor; and 14  (E) a managing agent of the debtor; 15  (8) "lien" means a charge against or an interest in property to secure 16 payment of a debt or performance of an obligation, and includes a security interest 17 created by agreement, a judicial lien obtained by legal or equitable process or 18 proceedings, a common law lien, or a statutory lien; 19  (9) "person" has the meaning given in AS 01.10.060 and includes an 20 estate, government or governmental subdivision or agency, trust, or another legal or 21 commercial entity; 22  (10) "property" means anything that may be the subject of 23 ownership; 24  (11) "relative" means an individual related by consanguinity within 25 the third degree as determined under common law, a spouse, or an individual 26 related to a spouse within the third degree as determined under common law, and 27 includes an individual in an adoptive relationship within the third degree; 28  (12) "transfer" means every mode, direct or indirect, absolute or 29 conditional, voluntary or involuntary, of disposing of or parting with an asset or an 30 interest in an asset, and includes payment of money, release, lease, and creation of 31 a lien or other encumbrance; 01  (13) "valid lien" means a lien that is effective against the holder of a 02 judicial lien subsequently obtained by legal or equitable process or proceedings. 03  Sec. 34.41.120. SHORT TITLE. This chapter may be cited as the Uniform 04 Fraudulent Transfer Act. 05 * Sec. 2. AS 34.40 is repealed.