SB 22-122

Abstract

Colorado Commission on Uniform State Laws. In 2014, the Uniform Law Commission approved a set of amendments to the "Colorado Uniform Fraudulent Transfer Act". The bill enacts those amendments. The principal features of the amendments are: Title change. The title of the act is changed to the "Colorado Uniform Voidable Transactions Act" (act). Choice of law. A new provision sets forth a choice of law rule applicable to claims for relief of the nature governed by the act. Evidentiary matters. New provisions add uniform rules allocating the burden of proof and defining the standard of proof with respect to claims for relief and defenses under the act. Deletion of the special definition of "insolvency" for partnerships. The act as originally written set forth a special definition of "insolvency" applicable to partnerships. The amendments delete the original language, with the result that the general definition of insolvency now applies to partnerships. Defenses. Defenses available to a transferee or obligee are refined as follows: As originally written, the act created a complete defense to an action for a fraudulent transfer (which renders voidable a transfer made or obligation incurred with actual intent to hinder, delay, or defraud any creditor of the debtor) if the transferee or obligee takes the transfer in good faith and for a reasonably equivalent value. The amendments add to the act the further requirement that the reasonably equivalent value must be given to the debtor. The act created, in a provision derived from the federal "Bankruptcy Code", a defense for a subsequent transferee (that is, a transferee other than the first transferee) that takes a transfer in good faith and for value, and for any subsequent good-faith transferee from a person. The amendments clarify the meaning of the defense by rewording it to follow more closely the wording of the federal "Bankruptcy Code", which is substantially unchanged as of 2014. Among other things, the amendments make clear that the defense applies to recovery of or from the transferred property or its proceeds, by levy or otherwise, as well as to an action for a money judgment. The act as originally written created a defense to an action for a fraudulent transfer or to avoid a transfer if the transfer results from enforcement of a security interest in compliance with the secured transactions provisions of the "Uniform Commercial Code". The amendments exclude from that defense acceptance of collateral in full or partial satisfaction of the obligation it secures (a remedy sometimes referred to as "strict foreclosure"). Medium neutrality. In order to accommodate modern technology, the references in the act to a "writing" have been replaced with "record" and related changes are made. Style. The amendments make a number of stylistic changes that are not intended to change the meaning of the act, including retitling of the act.(Note: This summary applies to this bill as introduced.)