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Forthcoming, Business Lawyer, vol. 70, 2015 Draft of February 14, 2015




Kenneth C. Kettering**

In 2014, the National Conference of Commissioners on Uniform State Laws

approved a set of amendments to the Uniform Fraudulent Transfer Act. Among other changes, the amendments renamed the act the Uniform Voidable Transactions Act. In this paper, the reporter for the committee that drafted the amendments describes the amendment project and discusses the changes that were made to the act.




A. The Process

B. Selected Changes Not Made by the 2014 Amendments

1. Charitable Contributions

2. Conformity to Other Features of Bankruptcy Code § 548

3. Attorney’s Fees and Punitive Damages

4. Insider Preferences and the Definition of “Insider”


A. Choice of Law

1. Current Law and the Motivation for Change

2. The New Choice of Law Rule

3. The New Rule and the Extraterritorial Reach of the Act

4. Jurisdictions Whose Avoidance Law is Substantially Debased................. 24

5. Avoidance for Reasons Other than Depletion of Assets

B. The New Name and Related Matters

C. Burden of Proof and Standard of Proof

D. Definition of “Insolvency”

E. Good-Faith Transferees and the Section 8(a) Defense

F. Safe Harbor for Article 9 Remedies: Exclusion of Strict Foreclosure.............. 47 G. Technical Corrections Relating to Defenses and Remedies

H. Series Organizations

I. Drafting Observations

1. Stylistic Changes

2. The 1984 Technical Corrections

3. Transition


* Copyright © 2015 by Kenneth C. Kettering. All rights reserved. This paper speaks as of November 27, 2014. References in this paper to the Bankruptcy Code are to title 11, United States Code. References to the Uniform Commercial Code sometimes use its acronym, UCC.

** The author served as the Reporter for the Drafting Committee on Amendments to the Uniform Voidable Transactions Act (formerly the Uniform Fraudulent Transfer Act) (referred to in this paper as the “Drafting Committee”). This paper benefited from comments by Edwin E. Smith, who served as Chair of the Drafting Committee, and by Stephen Sepinuck. It also benefited from comments by Steven Harris and Steven Weise on part III.F and by Daniel Kleinberger on part III.H. The views expressed in this paper are not necessarily those of the Drafting Committee, the Study Committee that preceded it, the National Conference of Commissioners on Uniform State Laws, or the aforementioned individuals. The author’s email address is kck@post.harvard.edu.



The fundamental things apply, as time goes by. Few legal doctrines are more fundamental than that traditionally referred to as “fraudulent conveyance” — the doctrine which, by any name, defines the limits of a debtor’s right to deal with its property vis-à-vis its creditors. The doctrine was elaborately developed in Roman law, and English common law borrowed from that source.1 Similar antiquity could be claimed for many legal doctrines, but fraudulent conveyance may be unique in its statutory continuity. Its primordial rule, set forth in its modern American codifications in the Uniform Fraudulent Transfer Act (“UFTA”) and the Bankruptcy Code, renders voidable any transfer of property by a debtor made with “intent to hinder, delay, or defraud” creditors.2 Those are the very same words, inconsequentially reordered, that were used to express the rule in 1571 in the English Statute of 13 Elizabeth, which is traditionally referred to as the fountainhead of American law on the subject.3 Statutory continuity implies continuity of precedent. The primordial rule set forth in the Statute of 13 Elizabeth was famously restated in 1601 in Twyne’s Case.4 That case remains living law in America, a staple of law school casebooks and regularly cited in current cases.5 Judges are steeped in this history. Modern cases involving this doctrine, however pedestrian, commonly begin with a bow to the Statute of 13 Elizabeth.

Notwithstanding the unusual continuity of this doctrine, it has not been immune to the modern itch to codify. In this country, each generation during the last century has produced at least one major codification. The first of general importance was the Uniform Fraudulent Conveyance Act (“UFCA”), promulgated by the National Conference of Commissioners on Uniform State Laws (“NCCUSL”) in 1918.6 In its time the UFCA was widely enacted, and as of this writing it remains the law in two states.7 Twenty years later, the fraudulent conveyance rule integral to federal bankruptcy law was conformed to the UFCA as section 67d of the then-Bankruptcy Act.8 Forty years after that the See Max Radin, Fraudulent Conveyances at Roman Law, 18 VA. L. REV. 109 (1931);



The quoted language appears in both UFTA § 4(a)(1) (1984) (not altered by the 2014 amendments) and Bankruptcy Code § 548(a)(1)(A) (2014).

An Acte agaynst fraudulent Deedes Gyftes Alienations, &c., 1571, 13 Eliz., c. 5, § 1 (Eng.) (“Intent to delaye hynder or defraude Creditors”), reprinted in 4 STATUTES OF THE REALM 537 (1819).

(1601) 76 Eng. Rep. 809 (Star Chamber).

Twyne’s Case was cited by 26 cases in Westlaw’s omnibus database of state and federal cases during the decade 2004-2013.

In 2007 NCCUSL adopted “Uniform Law Commission” (“ULC”) as an alternative name, but its older name also remains official. This paper generally uses the older name and its acronym.

In 1984, when the UFCA was superseded by the UFTA, the UFCA was in force in 24 states and the U.S. Virgin Islands. As of 2014 the UFCA remains in force in Maryland and New York.

Act of June 22, 1938, ch. 575, § 67d, 52 Stat. 840, 877-78 (1938) (commonly known as the Chandler Act; repealed 1978). See also Nat’l Bankr. Conf., Analysis of H.R. 12889, 74th Cong., 2d Sess. 214 (1936) (“We have condensed the provisions of the Uniform Fraudulent Conveyance 2015 UNIFORM VOIDABLE TRANSACTIONS ACT 3 Bankruptcy Code was adopted, and with it the federal bankruptcy law’s integral fraudulent conveyance rule was updated to its current form, subject to modest subsequent amendments. That rule resides in section 548, with remedies addressed in section 550.9 Inspired by this, NCCUSL promptly undertook to modernize state law as well. As a result, the UFTA was promulgated in 1984 as the new uniform state law of fraudulent conveyance. Although the UFTA superseded the UFCA, the UFTA is more akin to an update of the UFCA than to a new creation, as the UFTA retained the structure of the older statute as well as key language (notably that of the primordial rule quoted above).10 The UFTA has been quite successful as a uniform act, having been enacted by 45 jurisdictions as of 2014.11 The historical rhythm continues. Another generation has passed since 1984, and NCCUSL has again made significant changes to the uniform act on the subject. Those changes consist of amendments to the UFTA approved by NCCUSL in 2014. Among other things, those amendments rename the UFTA the Uniform Voidable Transactions Act (“UVTA”).

The name of the act was changed for good reasons, discussed later in this paper.12 But the renaming should not be taken to imply that the UVTA is a new and different act, or that the amendments make major changes to the substance of the UFTA. Nothing could be further from the truth. The UVTA is not a new act;

it is the UFTA, renamed and lightly amended. The substantive changes made by the amendments, though significant enough to warrant attention, are, as just stated, light. They are less extensive than the changes made by any of the earlier post-1918 codification projects enumerated above.

The purpose of this paper is to summarize the main features of the 2014 amendments, and to memorialize the some of the reasons why the amendments came to be as they are. As is usual with uniform laws, the act as amended in 2014 was issued with interpretative aids. Those consist of amended comments to each section of the act, plus a new Prefatory Note that summarizes the changes wrought by the 2014 amendments, supplementing the original Prefatory Note issued with the act in 1984. This paper might be thought of as an unofficial supplement to those official interpretative aids by one participant in the drafting process. As this paper is written, many states are studying the 2014 amendments Act, retaining its substance and, as far as possible, its language.”). When the Bankruptcy Act was first enacted in 1898, its integral fraudulent conveyance provision was section 67e. That provision simply codified the primordial rule, by invalidating a transfer “within four months prior to the filing of the petition, with the intent and purpose on [the debtor’s] part to hinder, delay, or defraud his creditors.” Act of July 1, 1898, ch. 541, § 67e, 30 Stat. 544, 564 (1898) (repealed 1938).

Bankruptcy Reform Act of 1978, Pub. L. No. 95-598, §§ 548, 550, 92 Stat. 2549, 2600-01, 2601-02 (1978) (codified in title 11, United States Code, the Bankruptcy Code).

In the UFCA the primordial rule is codified at UFCA § 7 (1918).

As of 2014 the UFTA is in force in 43 states, the District of Columbia, and the U.S. Virgin Islands. The seven states that have not enacted the UFTA are the two that retain the UFCA (Maryland and New York) and five with idiosyncratic laws (Alaska, Kentucky, Louisiana, South Carolina, and Virginia).

See infra part III.B.

2015 UNIFORM VOIDABLE TRANSACTIONS ACT 4 with a view to enactment, so this paper is also mindful of the needs of study committees and legislative drafters in the states.

In this paper, “UFTA” refers to the act as originally promulgated in 1984, “UVTA” refers to the act as amended in 2014, and “act” refers to both.13 A transfer of property for which the act provides a remedy is generally referred to in this paper as a “voidable transfer,” rather than as a “fraudulent conveyance” or “fraudulent transfer.” The UFTA jettisoned the traditional word “conveyance” in favor of “transfer,” but it referred to such a transfer sometimes as “voidable” and sometimes as “fraudulent.”14 The amendments rectify that inconsistency by consistently using “voidable.”15 The core provisions of the act provide for avoidance of obligations incurred by a debtor, as well as avoidance of transfers of property by a debtor.16 For conciseness, the discussion herein usually refers only to avoidance of property transfers, and leaves the act’s application to obligations as understood.


A. The Process The 2014 amendments originated in a desire to codify a choice of law rule for voidable transfers. In an article published in 2011, the author of this paper analyzed the often-unhappy history of NCCUSL’s engagement with choice of law in the uniform acts that it has issued, noting the absence of a choice of law rule in the UFTA.17 Soon afterward the author submitted to NCCUSL a long memorandum, later published as an article, that proposed adding a choice of law rule to the UFTA and made tentative suggestions about the content of such a rule.18 Others were of like mind. As a result, in the summer of 2011 NCCUSL formed a Study Committee, the original charge of which was confined to evaluating the desirability and feasibility of codifying a choice of law rule.19 The official texts of the UVTA and the UFTA are available for download from NCCUSL at http://www.uniformlaws.org.

Compare UFTA §§ 2(d), 8(a), 8(d), 8(e), 8(f) (1984) (“voidable”) with id. §§ 4(a), 5(a), 5(b), 9 (“fraudulent”).

See UVTA § 14 cmt. 4 (2014). See also infra part III.B.

The core provisions of the UFTA are (i) the primordial rule relating to transfers made and obligations incurred with intent to hinder, delay, or defraud creditors, codified at section 4(a)(1), and (ii) the so-called “constructive fraud” rules, codified at sections 4(a)(2) and 5(a). The core provisions apply to both transfers of property and incurrence of obligations. The other operative provision of the UFTA is the insider preference rule, codified at section 5(b). Section 5(b) applies only to transfers of property, and does not apply to incurrence of obligations.

Kenneth C. Kettering, Harmonizing Choice of Law in Article 9 with Emerging International Norms, 46 GONZ. L. REV. 235, 242-50 (2011).

Kenneth C. Kettering, Codifying a Choice of Law Rule for Fraudulent Transfer: A Memorandum to the Uniform Law Commission, 19 AM. BANKR. INST. L. REV. 319 (2011).

The Study Committee was chaired by Edwin E. Smith, and its members were Vincent P.

Cardi, William C. Hillman, Lyle W. Hillyard, Gerald L. Jackson, Neal Ossen, Gail Russell, and Steven N. Leitess. As in other NCCUSL projects, any interested person could join as observer, and many did.

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