A fraudulent transfer is an attempt to avoid a debt by improperly transferring assets to a third party, or a transfer of assets for less than fair value made while the company is insolvent or will become insolvent as a result of the transfer. Each state has its own statute regarding fraudulent transfers generally based on the Uniform Voidable Transactions Act or Uniform Fraudulent Transfer Act. Section 548 of the Bankruptcy Code provides an additional statutory basis to avoid fraudulent transfers when a company is in bankruptcy. This framework is designed to prevent a debtor from thwarting its creditors’ rights by improperly transferring its assets.
Troutman Pepper's Creditor’s Rights Toolkit is a series that provides practical insights to help creditors confront the challenges of commercial bankruptcy.
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