Uniform fraudulent transfer law, adopted in most states, permits creditors to avoid transfers that unfairly place assets beyond reach.
Actual fraudulent transfer. Made with actual intent to hinder, delay or defraud a creditor. Intent is inferred from badges of fraud: transfer to an insider; retention of possession or control; concealment; the debtor being sued or threatened before the transfer; transfer of substantially all assets; absconding; removal or concealment of assets; inadequate consideration; insolvency around the time; and the timing relative to incurring a substantial debt.
Constructive fraudulent transfer. No intent required. The debtor received less than reasonably equivalent value and either was insolvent, was left with unreasonably small capital, or intended to incur debts beyond its ability to pay. This is the more commonly successful theory because it turns on valuation and balance sheets.
Reasonably equivalent value is assessed from the creditors’ perspective — what the estate gave up against what it received. Payment of another entity’s debt, upstream guarantees and dividend recapitalisations are the recurring problem areas.
Remedies. Avoidance, attachment, injunction, receivership, and money judgment against the transferee or the person for whose benefit the transfer was made. A good faith transferee for value has a defence to the extent of value given.
Limitations periods are specific and shorter than general contract periods.