Arkansas Modifies Regulations Regarding Fraudulent Transfers and Voidable Transactions
Arkansas modified its regulations regarding fraudulent transfers and voidable transactions. These provisions are effective on August 1, 2017 or 91 days after adjournment of the current legislative session.
House Bill 2139: Fraudulent Transfers and Voidable Transactions
Arkansas Code Title 4, Chapter 59, Subchapter 2, previously known as “Fraudulent Transfers” was amended to read “Uniform Voidable Transactions Act.”
The definitions section 4-59-201 was updated to include a definition for electronic, meaning “relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities. 4-59-201(7).
Under the regulation, value is given if the property is transferred, but the value does not include an underperformed promise made otherwise than in the ordinary course of the promisor’s business to furnish support to the debtor. 4-59-203(a).The regulation states that reasonably equivalent value will be found if a person acquires an interest of the debtor in an asset from a regularly conducted foreclosure sale or an execution of a power of sale for the acquisition of interest of the debtor upon default. The regulation has expanded default of the debtor from not only a mortgage, but now also includes a deed of trust or a security agreement. 4-59-203(b).
Section 4-59-204 was changed from fraudulent transfers to voidable transfers or obligations regarding present or future creditors. Under the updated regulation, a transfer incurred by a debtor is voidable to the creditor if the debtor made the transfer or incurred the obligation. 4-59-204(a). Additionally, a new provision was added, stating that a creditor who makes a claim for relief under this regulation has the burden of proving the elements of the claim for relief by a preponderance of the evidence standard. 4-59-204(c).
Remedies of the creditor previously stated that the creditor may obtain an attachment or remedy against the asset transferred in accordance with the procedures specifically described by sections 16-110-201;211. Now, the creditor is allowed to attach property if the remedy is available under applicable law. 4-59-207(a)(2). The regulation more generally allows the attachment subject to principles of equity and applicable rules of civil procedure. 4-59-207(a)(3).
A claim for relief with respect to a transfer or obligation will be extinguished unless an action is brought no later than four years after the transfer was made or the obligation was incurred. 4-59-209(a). The regulation has increased the length of time, whereby previously only three years was allowed. Moreover, if it has been longer than four years, it may not be later than one year after the transfer or obligation was or could reasonably have been discovered by the claimant. 4-59-209(a).
View Full Text:
http://www.arkleg.state.ar.us/assembly/2017/2017R/Bills/HB2139.pdf
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