New York has adopted a new Uniform Voidable Transactions Act (“NYUVTA”), to replace New York State’s existing fraudulent conveyance law, which was over 100 years old.
NYUVTA is effective as of April 4, 2020. Transfers that occurred prior to April 4, 2020 are governed by NYS former fraudulent conveyance law.
NYUVTA can be found at N.Y. Debt. & Cred. Law §§ 270-281
NYUVTA provides for a 4 year statute of limitation, unlike NYS’s former fraudulent conveyance law, which provided for a 6 year statute of limitations.
NYUVTA also provides for a period of one year after the transfer in question to avoid a transfer to an insider—similar to the Bankruptcy Code’s insider preference reach back period of one year prior to the petition date, under 11 U.S.C. § 547(b)(4)(B)
NYUVTA eliminates the “good faith” element of a fraudulent transfer and adopts the “reasonably equivalent value” requirement of the Bankruptcy Code. 11 U.S.C. 548
NYUVTA provides for a cause of action to avoid transfers to an insider if the insider had reasonable cause to believe that the debtor was insolvent. N.Y. Debt. & Cred. Law §274(b).
Insolvency. Plaintiffs pursuing fraudulent transfer claims to collect unsatisfied judgments will now be required to prove insolvency in connection with a fraudulent transfer claim.
Burden of Proof. NYUVTA provides that a creditor challenging a transfer bears the burden of establishing the elements of its claim by a preponderance of the evidence, rather than the higher "clear and convincing evidence" standard under the former fraudulent conveyance law.
Presumption of Insolvency. NYUVTA provides that consistent with section 303(h)(1) of the Bankruptcy Code, any nonpayment of debts subject to "bona fide dispute" is not presumptive of insolvency; and (ii) expressly provided that the burden to rebut this presumption falls on the "party against whom the presumption is directed.
Conflict of Law. NYUVTA provides that the law of a debtor's place of business or if the business is conducted in more than one state, the place in which the business had its chief executive office, at the time that a transfer was made, applies to claims under NYUVTA.
Attorneys Fees. Section 276(a) of NYUVTA allows for the award of reasonable attorney fees as an additional amount required to satisfy the creditors’ claim.
Foreclosure Sale and Reasonably Equivalent Value. Section 272(b) of NYUVTA provides that reasonably equivalent value is given “if the person acquires an interest of the debtor in an asset pursuant to a regularly conducted, non-collusive foreclosure sale
For questions regarding NYS new Voidable Transaction law please contact Jim Shenwick 212 541 6224 jshenwick@gmail.com
