Fraudulent Transfer

By statute, creditors are afforded special rights to recover assets transferred by debtors under circumstances where the conveyance was either: 1) intended to hinder, delay or defraud creditors; or 2) was for less than fair value and left the debtor insolvent. Most states allow recovery of assets transferred to “insiders” while the debtor was insolvent even if supported by a valuable exchange.

These laws are among the most valuable tools available to creditors faced with discouraging prospects for recovery against a debtor without the apparent ability to pay. They establish viable grounds for recovery against third party transferees who would not otherwise be liable to pay the debt. Conversely, where a creditor must satisfy each of the technical requirements of the law to successfully secure recovery, those wishing to structure their holdings in order to avoid liability may rely upon the statutory framework to provide guidelines for the measure of legitimate asset protection strategies.