00 HOUSE BILL NO. 295 01 "An Act adopting the Uniform Fraudulent Transfer Act and relating to fraudulent 02 transfers of property." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 34.40.050 is amended to read: 05 Sec. 34.40.050. Conveyance in exercise of power to revoke and reconvey. 06 Unless the conveyance is a fraudulent transfer subject to AS 34.40.220 - 07 34.40.390, where [WHERE] a power to revoke a conveyance of land, or the rents and 08 profits from it, and to reconvey the land or the rents and profits is given to a person 09 other than the grantor in the conveyance, and the person subsequently conveys the 10 land, rents, or profits to a purchaser for a valuable consideration, the subsequent 11 conveyance is valid in the same manner and to the same extent as if the power of 12 revocation were recited in it and the intent to revoke the former conveyance expressly 13 declared. 14 * Sec. 2. AS 34.40.060 is amended to read: 01 Sec. 34.40.060. Conveyance before accrual of right to execute power of 02 revocation. Unless the conveyance is a fraudulent transfer subject to 03 AS 34.40.220 - 34.40.390, if [IF] a conveyance to a purchaser under either 04 AS 34.40.040 or 34.40.050 is made before the person making the conveyance is 05 entitled to execute the power of revocation, it nevertheless is valid from the time the 06 power of revocation actually vests in the person, in the same manner and to the same 07 extent as if then made. 08 * Sec. 3. AS 34.40.080 is amended to read: 09 Sec. 34.40.080. Invalidity against heirs, successors, representatives, or 10 assigns. Notwithstanding AS 34.40.220 - 34.40.390, a [A] conveyance, charge, 11 instrument, or proceeding declared by law to be void as against the creditors, 12 purchasers, or mortgagees is equally void as against the heirs, successors, personal 13 representatives, or assigns of the creditors, purchasers, or mortgagees. 14 * Sec. 4. AS 34.40.110(e) is amended to read: 15 (e) If a trust contains a transfer restriction allowed under (a) of this section, the 16 transfer restriction prevents a creditor existing when the trust is created, a person who 17 subsequently becomes a creditor, or another person from asserting any cause of action 18 or claim for relief against a trustee of the trust or against others involved in the 19 preparation or funding of the trust for conspiracy to commit a fraudulent conveyance, 20 a fraudulent transfer under AS 34.40.220 - 34.40.390, aiding and abetting a 21 fraudulent conveyance or a fraudulent transfer under AS 34.40.220 - 34.40.390, or 22 participation in the trust transaction. Preparation or funding of the trust includes the 23 preparation and funding of a limited partnership or a limited liability company if 24 interests in the limited partnership or limited liability company are subsequently 25 transferred to the trust. The creditor and other person prevented from asserting a cause 26 of action or claim for relief are limited to recourse against the trust assets and the 27 settlor to the extent allowed under AS 34.40.220 - 34.40.390 [AS 34.40.010]. 28 * Sec. 5. AS 34.40 is amended by adding new sections to read: 29 Article 2. Uniform Fraudulent Transfer Act. 30 Sec. 34.40.220. Insolvency. (a) A debtor is insolvent if the sum of the 31 debtor's debts is greater, at a fair valuation, than all of the debtor's assets. 01 (b) A debtor who is generally not paying the debtor's debts as they become due 02 is presumed to be insolvent. 03 (c) A partnership is insolvent under (a) of this section if the sum of the 04 partnership's debts is greater than the aggregate of all of the partnership's assets, at a 05 fair valuation, and the sum of the excess of the value of each general partner's 06 nonpartnership assets over the partner's nonpartnership debts. 07 (d) Assets under this section do not include property that has been transferred, 08 concealed, or removed with intent to hinder, delay, or defraud creditors or that has 09 been transferred in a manner making the transfer voidable under AS 34.40.220 - 10 34.40.390. 11 (e) Debts under this section do not include an obligation to the extent the 12 obligation is secured by a valid lien on property of the debtor not included as an asset. 13 Sec. 34.40.230. Value. (a) Value is given for a transfer or an obligation if, in 14 exchange for the transfer or obligation, property is transferred or an antecedent debt is 15 secured or satisfied, but value does not include an unperformed promise that is not 16 made in the ordinary course of the promisor's business and that is a promise to furnish 17 support to the debtor or another person. 18 (b) For the purposes of AS 34.40.240(a)(2) and 34.40.250, a person gives a 19 reasonably equivalent value if the person acquires an interest of the debtor in an asset 20 under a regularly conducted, noncollusive foreclosure sale or execution of a power of 21 sale for the acquisition or disposition of the interest of the debtor on default under a 22 mortgage, deed of trust, or security agreement. 23 (c) A transfer is made for present value if the exchange between the debtor and 24 the transferee is intended by them to be contemporaneous and is, in fact, substantially 25 contemporaneous. 26 Sec. 34.40.240. Transfers fraudulent as to present and future creditors. 27 (a) A transfer made or an obligation incurred by a debtor is fraudulent as to a creditor, 28 whether the creditor's claim arose before or after the transfer was made or the 29 obligation was incurred, if the debtor made the transfer or incurred the obligation 30 (1) with the actual intent to hinder, delay, or defraud a creditor of the 31 debtor; or 01 (2) without receiving a reasonably equivalent value in exchange for the 02 transfer or obligation, and the debtor 03 (A) was engaged or was about to engage in a business or a 04 transaction for which the remaining assets of the debtor were unreasonably 05 small in relation to the business or transaction; or 06 (B) intended to incur, or believed or reasonably should have 07 believed that the debtor would incur, debts beyond the debtor's ability to pay as 08 they became due. 09 (b) In determining actual intent under (a)(1) of this section, consideration may 10 be given, among other factors, to whether 11 (1) the transfer or obligation was to an insider; 12 (2) the debtor retained, after the transfer, possession or control of the 13 property transferred; 14 (3) the transfer or obligation was disclosed or concealed; 15 (4) before the transfer was made or the obligation was incurred, the 16 debtor had been sued or threatened with suit; 17 (5) the transfer was of substantially all the debtor's assets; 18 (6) the debtor absconded; 19 (7) the debtor removed or concealed assets; 20 (8) the value of the consideration received by the debtor was 21 reasonably equivalent to the value of the asset transferred or the amount of the 22 obligation incurred; 23 (9) the debtor was insolvent or became insolvent shortly after the 24 transfer was made or the obligation was incurred; 25 (10) the transfer occurred shortly before or shortly after a substantial 26 debt was incurred; and 27 (11) the debtor transferred the essential assets of the business to a 28 lienor who transferred the assets to an insider of the debtor. 29 Sec. 34.40.250. Transfers fraudulent as to present creditors. (a) A transfer 30 made or an obligation incurred by a debtor is fraudulent as to a creditor whose claim 31 arose before the transfer was made or the obligation was incurred if the debtor made 01 the transfer or incurred the obligation without receiving a reasonably equivalent value 02 in exchange for the transfer or obligation and the debtor was insolvent at that time or 03 became insolvent as a result of the transfer or obligation. 04 (b) In addition to the situation when a transfer is fraudulent under (a) of this 05 section, a transfer made by a debtor is fraudulent as to a creditor whose claim arose 06 before the transfer was made if the transfer was made to an insider for an antecedent 07 debt, the debtor was insolvent at that time, and the insider had reasonable cause to 08 believe that the debtor was insolvent. 09 Sec. 34.40.260. When transfer is made or obligation is incurred. For the 10 purposes of AS 34.40.220 - 34.40.390, 11 (1) a transfer is made 12 (A) with respect to an asset that is real property other than a 13 fixture, but including the interest of a seller or purchaser under a contract for 14 the sale of the asset, when the transfer is so far perfected that a good faith 15 purchaser of the asset from the debtor against whom applicable law permits the 16 transfer to be perfected cannot acquire an interest in the asset that is superior to 17 the interest of the transferee; and 18 (B) with respect to an asset that is not real property or that is a 19 fixture, when the transfer is so far perfected that a creditor on a simple contract 20 cannot acquire a judicial lien other than under AS 34.40.220 - 34.40.390 that is 21 superior to the interest of the transferee; 22 (2) if applicable law permits the transfer to be perfected as provided in 23 (1) of this section and the transfer is not perfected as provided in (1) of this section 24 before the commencement of an action for relief under AS 34.40.220 - 34.40.390, the 25 transfer is considered made immediately before the commencement of the action; 26 (3) if applicable law does not permit the transfer to be perfected as 27 provided in (1) of this section, the transfer is made when it becomes effective between 28 the debtor and the transferee; 29 (4) a transfer is not made until the debtor has acquired rights in the 30 asset transferred; 31 (5) an obligation is incurred when 01 (A) the obligation, if oral, becomes effective between the 02 parties; or 03 (B) the writing executed by the obligor, if the obligation is 04 evidenced by a writing, is delivered to or for the benefit of the obligee. 05 Sec. 34.40.270. Remedies of creditors. (a) In an action for relief against a 06 transfer or an obligation under AS 34.40.220 - 34.40.390, a creditor, subject to the 07 limitations in AS 34.40.280, may obtain 08 (1) an avoidance of the transfer or obligation to the extent necessary to 09 satisfy the creditor's claim; 10 (2) an attachment or other provisional remedy against the asset 11 transferred or other property of the transferee as allowed under AS 09.40 or other laws 12 of this state; 13 (3) subject to applicable principles of equity and under applicable court 14 rules, 15 (A) an injunction against further disposition by the debtor or a 16 transferee, or both, of the asset transferred or of other property; 17 (B) appointment of a receiver to take charge of the asset 18 transferred or of other property of the transferee; or 19 (C) other relief the circumstances may require. 20 (b) If a creditor has obtained a judgment on a claim against the debtor, the 21 creditor, if ordered by the court, may levy execution on the asset transferred or its 22 proceeds. 23 Sec. 34.40.280. Defenses, liability, and protection of transferee. (a) A 24 transfer or an obligation is not voidable under AS 34.40.240(a)(1) against a person 25 who took in good faith and for a reasonably equivalent value or against a subsequent 26 transferee or obligee. 27 (b) Except as otherwise provided in this section, to the extent a transfer is 28 voidable in an action by a creditor under AS 34.40.270(a)(1), the creditor may recover 29 judgment for the value of the asset transferred, as adjusted under (c) of this section, or 30 the amount necessary to satisfy the creditor's claim, whichever is less. The judgment 31 may be entered against 01 (1) the first transferee of the asset or the person for whose benefit the 02 transfer was made; or 03 (2) a subsequent transferee other than a good faith transferee or obligee 04 who took for value or from a subsequent transferee or obligee. 05 (c) If the judgment under (b) of this section is based on the value of the asset 06 transferred, the judgment must be for an amount equal to the value of the asset at the 07 time of the transfer, subject to adjustment as the equities may require. 08 (d) Notwithstanding voidability of a transfer or an obligation under 09 AS 34.40.220 - 34.40.390, a good faith transferee or obligee is entitled, to the extent of 10 the value given the debtor for the transfer or obligation, to 11 (1) a lien on or a right to retain an interest in the asset transferred; 12 (2) enforcement of any obligation incurred; or 13 (3) a reduction in the amount of the liability on the judgment. 14 (e) A transfer is not voidable under AS 34.40.240(a)(2) or 34.40.250 if the 15 transfer results from 16 (1) termination of a lease on default by the debtor when the 17 termination is made under the lease and applicable law; or 18 (2) enforcement of a security interest under AS 45.29. 19 (f) A transfer is not voidable under AS 34.40.250(b) 20 (1) to the extent the insider gave new value to or for the benefit of the 21 debtor after the transfer was made, unless the new value was secured by a valid lien; 22 (2) if made in the ordinary course of business or financial affairs of the 23 debtor and the insider; or 24 (3) if made under a good faith effort to rehabilitate the debtor and the 25 transfer secured present value given for that purpose as well as an antecedent debt of 26 the debtor. 27 Sec. 34.40.290. Supplementary provisions. Unless displaced by the 28 provisions of AS 34.40.220 - 34.40.390, principles of law and equity, including 29 commercial law and the law relating to principal and agent, estoppel, laches, fraud, 30 misrepresentation, duress, coercion, mistake, insolvency, or other validating or 31 invalidating cause, supplement its provisions. 01 Sec. 34.40.300. Uniformity of application and construction. AS 34.40.220 02 - 34.40.390 shall be applied and construed to carry out its general purpose to make 03 uniform the law with respect to the subject of AS 34.40.220 - 34.40.390 among states 04 enacting it. 05 Sec. 34.40.390. Definitions. In this chapter, 06 (1) "affiliate" means 07 (A) a person who directly or indirectly owns, controls, or holds 08 with power to vote, 20 percent or more of the outstanding voting securities of 09 the debtor, other than a person who holds the securities, 10 (i) as a fiduciary or agent without sole discretionary 11 power to vote the securities; or 12 (ii) solely to secure a debt, if the person has not 13 exercised the power to vote; 14 (B) a corporation if 20 percent or more of the corporation's 15 outstanding voting securities are directly or indirectly owned, controlled, or 16 held with power to vote, by the debtor or a person who directly or indirectly 17 owns, controls, or holds with power to vote, 20 percent or more of the 18 outstanding voting securities of the debtor, other than a person who holds the 19 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) a 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) a person who operates the debtor's business under a lease 28 or other agreement or controls substantially all of the debtor's assets; 29 (2) "asset" means property of a debtor; in this paragraph, "property" 30 does not include 31 (A) property to the extent it is encumbered by a valid lien; 01 (B) property to the extent it is generally exempt under 02 nonbankruptcy law; or 03 (C) an interest in property held in tenancy by the entireties to 04 the extent it is not subject to process by a creditor holding a claim against only 05 one tenant; 06 (3) "claim" means a right to payment, whether or not the right is 07 reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, 08 disputed, undisputed, legal, equitable, secured, or unsecured; 09 (4) "creditor" means a person who has a claim; 10 (5) "debt" means liability on a claim; 11 (6) "debtor" means a person who is liable on a claim; 12 (7) "insider" includes 13 (A) if the debtor is an individual, 14 (i) a relative of the debtor or of a general partner of the 15 debtor; 16 (ii) a partnership in which the debtor is a general 17 partner; 18 (iii) a general partner in a partnership described in (ii) 19 of this subparagraph; or 20 (iv) a corporation of which the debtor is a director, 21 officer, or person in control; 22 (B) if the debtor is a corporation, 23 (i) a director of the debtor; 24 (ii) an officer of the debtor; 25 (iii) a person in control of the debtor; 26 (iv) a partnership in which the debtor is a general 27 partner; 28 (v) a general partner in a partnership described in (iv) of 29 this subparagraph; or 30 (vi) a relative of a general partner, director, officer, or 31 person in control of the debtor; 01 (C) if the debtor is a partnership, 02 (i) a general partner in the debtor; 03 (ii) a relative of a general partner in, or a general partner 04 of, or a person in control of the debtor; 05 (iii) another partnership in which the debtor is a general 06 partner; 07 (iv) a general partner in a partnership described in (iii) 08 of this subparagraph; or 09 (v) a person in control of the debtor; 10 (D) an affiliate, or an insider of an affiliate as if the affiliate 11 were the debtor; or 12 (E) a managing agent of the debtor; 13 (8) "lien" means a charge against or an interest in property to secure 14 payment of a debt or performance of an obligation; in this paragraph, "charge against 15 or interest in" includes a security interest created by agreement, a judicial lien obtained 16 by legal or equitable process or proceedings, a common-law lien, or a statutory lien; 17 (9) "person" has the meaning given in AS 01.10.060, and also includes 18 a government or governmental subdivision or agency; 19 (10) "property" means anything that may be the subject of ownership; 20 (11) "relative" means 21 (A) an individual related by consanguinity within the third 22 degree as determined by the common law; 23 (B) a spouse, or an individual related to a spouse within the 24 third degree as determined by the common law; and 25 (C) an individual in an adoptive relationship within the third 26 degree; 27 (12) "transfer" means every mode, direct or indirect, absolute or 28 conditional, voluntary or involuntary, of disposing of or parting with an asset or an 29 interest in an asset; in this paragraph, "mode" includes payment of money, and release, 30 lease, or creation of a lien or other encumbrance; 31 (13) "valid lien" means a lien that is effective against the holder of a 01 judicial lien subsequently obtained by legal or equitable process or proceedings. 02 Sec. 34.40.395. Short title. AS 34.40.220 - 34.40.390 may be cited as the 03 Uniform Fraudulent Transfer Act. 04 * Sec. 6. AS 34.40.010, 34.40.020, 34.40.030, and 34.40.100 are repealed. 05 * Sec. 7. The uncodified law of the State of Alaska is amended by adding a new section to 06 read: 07 TRANSITION PROVISION. This Act does not apply to a cause of action that arises 08 under AS 34.40.010, 34.40.020, 34.40.030, or 34.40.100, repealed by sec. 6 of this Act, or 09 AS 34.40.050, 34.40.060, 34.40.080, or 34.40.110(e), as amended by secs. 1 - 4 of this Act, 10 before the effective date of this Act.