On January 1, 2016, the Uniform Voidable Transactions Act (UVTA), that supersedes the Uniform Fraudulent Transfer Act (UFTA), went into effect in California and makes it easier for creditors to recover assets transferred to third parties when a
debtor becomes insolvent, regardless of the debtor’s intent.

The new law applies only to transactions made, or obligations incurred, on or after January 1, 2016. To dispute a debtor third party transfer after that date a creditor need only establish a claim by a “preponderance of the evidence” rather
than by the higher standard of “clear and convincing evidence” while the party defending the claim must successfully rebut a presumption that the debtor was insolvent at the time of the transfer and show that the debt was transferred for a
reasonably equivalent value and in good faith.

One of the other remedies available to creditors under the UVTA is to permit a creditor to obtain a pre-judgment attachment of a transferee’s assets in general, rather than being limited to the transferred asset or its proceeds.

The law applicable to UVTA claims is based on the state where the debtor is located at the time a transfer is made or an obligation incurred. For individuals, it is their place of personal residence. For an entity or organization, it is the primary place of business of the entity or organization or, in the case of multiple offices, where the CEO’s office is located.

Laws vary from state to state as to what items may be subject to attachment and seizure and provide a procedural and substantive overlay to California-filed UVTA actions.

If you are a creditor and the debtor is in default, and disposing of assets that could otherwise be available to pay the debt, it is imperative to immediately seek legal counsel so that, under the UTVA, those assets may be recaptured from third
parties so you can get paid. If you are a debtor facing insolvency, the new Act provides a framework to start strategizing how best to proceed with regard to disposition of your assets.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.