2005 Nevada Revised Statutes - Chapter 112 — Fraudulent Transfers

CHAPTER 112 - FRAUDULENT TRANSFERS

FRAUDULENT TRANSFERS (UNIFORM ACT)

NRS 112.140 Shorttitle.

NRS 112.150 Definitions.

NRS 112.160 Insolvency.

NRS 112.170 Value;reasonably equivalent value; present value.

NRS 112.180 Transfermade or obligation incurred with intent to defraud or without receivingreasonably equivalent value; determination of intent.

NRS 112.190 Transfermade or obligation incurred by insolvent.

NRS 112.200 Timeat which transfer or obligation deemed made or incurred.

NRS 112.210 Rightsof creditor in action for relief against transfer or obligation.

NRS 112.220 Avoidanceof transfer or obligation: Protection of good faith transferee or obligee;recovery of judgment for value of asset transferred; certain transfers notvoidable.

NRS 112.230 Limitationof actions.

NRS 112.240 Supplementarygeneral provisions of law applicable.

NRS 112.250 Constructionof chapter.

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FRAUDULENT TRANSFERS (UNIFORM ACT)

NRS 112.140 Shorttitle. This chapter may be cited as the UniformFraudulent Transfer Act.

(Added to NRS by 1987, 8)

NRS 112.150 Definitions. As used in this chapter, unless the context otherwiserequires:

1. Affiliate means:

(a) A person who directly or indirectly owns, controlsor holds with power to vote, 20 percent or more of the outstanding votingsecurities of the debtor, other than a person who holds the securities:

(1) As a fiduciary or agent without solediscretionary power to vote the securities; or

(2) Solely to secure a debt, if the person hasnot exercised the power to vote;

(b) A corporation 20 percent or more of whoseoutstanding voting securities are directly or indirectly owned, controlled orheld with power to vote, by the debtor or a person who directly or indirectlyowns, controls or holds with power to vote, 20 percent or more of theoutstanding voting securities of the debtor, other than a person who holds thesecurities:

(1) As a fiduciary or agent without sole powerto vote the securities; or

(2) Solely to secure a debt, if the person hasnot in fact exercised the power to vote;

(c) A person whose business is operated by the debtorunder a lease or other agreement, or a person substantially all of whose assetsare controlled by the debtor; or

(d) A person who operates the debtors business under alease or other agreement or controls substantially all of the debtors assets.

2. Asset means property of a debtor, but the termdoes not include:

(a) Property to the extent it is encumbered by a validlien;

(b) Property to the extent it is generally exempt undernonbankruptcy law; or

(c) An interest in property held in tenancy by theentireties or as community property to the extent it is not subject to processby a creditor holding a claim against only one tenant.

3. Claim means a right to payment, whether or notthe right is reduced to judgment, liquidated, unliquidated, fixed, contingent,matured, unmatured, disputed, undisputed, legal, equitable, secured orunsecured.

4. Creditor means a person who has a claim.

5. Debt means liability on a claim.

6. Debtor means a person who is liable on a claim.

7. Insider includes:

(a) If the debtor is a natural person:

(1) A relative of the debtor or of a generalpartner of the debtor;

(2) A partnership in which the debtor is ageneral partner;

(3) A general partner in a partnership describedin subparagraph (2); and

(4) A corporation of which the debtor is adirector, officer or person in control;

(b) If the debtor is a corporation:

(1) A director of the debtor;

(2) An officer of the debtor;

(3) A person in control of the debtor;

(4) A partnership in which the debtor is ageneral partner;

(5) A general partner in a partnership describedin subparagraph (4); and

(6) A relative of a general partner, director,officer or person in control of the debtor;

(c) If the debtor is a partnership:

(1) A general partner in the debtor;

(2) A relative of a general partner in, ageneral partner of, or a person in control of the debtor;

(3) Another partnership in which the debtor is ageneral partner;

(4) A general partner in a partnership describedin subparagraph (3); and

(5) A person in control of the debtor;

(d) An affiliate, or an insider of an affiliate as ifthe affiliate were the debtor; and

(e) A managing agent of the debtor.

8. Lien means a charge against or an interest inproperty to secure payment of a debt or performance of an obligation, andincludes a security interest created by agreement, a judicial lien obtained bylegal or equitable process or proceedings, a common-law lien and a statutorylien.

9. Person includes a government and a governmentalsubdivision or agency.

10. Property means anything that may be the subjectof ownership.

11. Relative means a natural person related byconsanguinity within the third degree as determined by the common law, aspouse, or a natural person related to a spouse within the third degree as sodetermined, and includes a natural person in an adoptive relationship withinthe third degree.

12. Transfer means every mode, direct or indirect,absolute or conditional, voluntary or involuntary, of disposing of or partingwith an asset or an interest in an asset, and includes payment of money,release, lease and creation of a lien or other encumbrance.

13. Valid lien means a lien that is effectiveagainst the holder of a judicial lien subsequently obtained by legal orequitable process or proceedings.

(Added to NRS by 1987, 8)

NRS 112.160 Insolvency.

1. A debtor is insolvent if the sum of the debtorsdebts is greater than all of the debtors assets at a fair valuation.

2. A debtor who is generally not paying his debts asthey become due is presumed to be insolvent.

3. A partnership is insolvent under subsection 1 ifthe sum of the partnerships debts is greater than the aggregate, at a fairvaluation, of all of the partnerships assets and the sum of the excess of thevalue of each general partners nonpartnership assets over the partnersnonpartnership debts.

4. Assets under this section do not include propertythat has been transferred, concealed or removed with intent to hinder, delay ordefraud creditors or that has been transferred in a manner making the transfervoidable under this chapter.

5. Debts under this section do not include anobligation to the extent it is secured by a valid lien on property of thedebtor not included as an asset.

(Added to NRS by 1987, 10)

NRS 112.170 Value;reasonably equivalent value; present value.

1. Value is given for a transfer or an obligation if,in exchange for the transfer or obligation, property is transferred or anantecedent debt is secured or satisfied, but value does not include anunperformed promise made otherwise than in the ordinary course of thepromisors business to furnish support to the debtor or another person.

2. For the purposes of paragraph (b) of subsection 1of NRS 112.180 and NRS 112.190, a person gives a reasonablyequivalent value if the person acquires an interest of the debtor in an assetpursuant to a regularly conducted, noncollusive foreclosure sale or executionof a power of sale for the acquisition or disposition of the interest of thedebtor upon default under a mortgage, deed of trust or security agreement.

3. A transfer is made for present value if theexchange between the debtor and the transferee is intended by them to becontemporaneous and is in fact substantially contemporaneous.

(Added to NRS by 1987, 710)

NRS 112.180 Transfermade or obligation incurred with intent to defraud or without receivingreasonably equivalent value; determination of intent.

1. A transfer made or obligation incurred by a debtoris fraudulent as to a creditor, whether the creditors claim arose before orafter the transfer was made or the obligation was incurred, if the debtor madethe transfer or incurred the obligation:

(a) With actual intent to hinder, delay or defraud anycreditor of the debtor; or

(b) Without receiving a reasonably equivalent value inexchange for the transfer or obligation, and the debtor:

(1) Was engaged or was about to engage in abusiness or a transaction for which the remaining assets of the debtor wereunreasonably small in relation to the business or transaction; or

(2) Intended to incur, or believed or reasonablyshould have believed that he would incur, debts beyond his ability to pay asthey became due.

2. In determining actual intent under paragraph (a) ofsubsection 1, consideration may be given, among other factors, to whether:

(a) The transfer or obligation was to an insider;

(b) The debtor retained possession or control of theproperty transferred after the transfer;

(c) The transfer or obligation was disclosed orconcealed;

(d) Before the transfer was made or obligation wasincurred, the debtor had been sued or threatened with suit;

(e) The transfer was of substantially all the debtorsassets;

(f) The debtor absconded;

(g) The debtor removed or concealed assets;

(h) The value of the consideration received by thedebtor was reasonably equivalent to the value of the asset transferred or theamount of the obligation incurred;

(i) The debtor was insolvent or became insolventshortly after the transfer was made or the obligation was incurred;

(j) The transfer occurred shortly before or shortlyafter a substantial debt was incurred; and

(k) The debtor transferred the essential assets of thebusiness to a lienor who transferred the assets to an insider of the debtor.

(Added to NRS by 1987, 11)

NRS 112.190 Transfermade or obligation incurred by insolvent.

1. A transfer made or obligation incurred by a debtoris fraudulent as to a creditor whose claim arose before the transfer was madeor the obligation was incurred if the debtor made the transfer or incurred theobligation without receiving a reasonably equivalent value in exchange for thetransfer or obligation and the debtor was insolvent at that time or the debtorbecame insolvent as a result of the transfer or obligation.

2. A transfer made by a debtor is fraudulent as to acreditor whose claim arose before the transfer was made if the transfer wasmade to an insider for an antecedent debt, the debtor was insolvent at thattime, and the insider had reasonable cause to believe that the debtor wasinsolvent.

(Added to NRS by 1987, 11)

NRS 112.200 Timeat which transfer or obligation deemed made or incurred. For the purposes of this chapter:

1. A transfer is made:

(a) With respect to an asset that is real propertyother than a fixture, but including the interest of a seller or purchaser undera contract for the sale of the asset, when the transfer is so far perfectedthat a good faith purchaser of the asset from the debtor against whomapplicable law permits the transfer to be perfected cannot acquire an interestin the asset that is superior to the interest of the transferee; and

(b) With respect to an asset that is not real propertyor that is a fixture, when the transfer is so far perfected that a creditor ona simple contract cannot acquire a judicial lien otherwise than under thischapter that is superior to the interest of the transferee.

2. If applicable law permits the transfer to beperfected as provided in subsection 1 and the transfer is not so perfectedbefore the commencement of an action for relief under this chapter, thetransfer is deemed made immediately before the commencement of the action.

3. If applicable law does not permit the transfer tobe perfected as provided in subsection 1, the transfer is made when it becomeseffective between the debtor and the transferee.

4. A transfer is not made until the debtor hasacquired rights in the asset transferred.

5. An obligation is incurred:

(a) If oral, when it becomes effective between theparties; or

(b) If evidenced by a writing, when the writing executedby the obligor is delivered to or for the benefit of the obligee.

(Added to NRS by 1987, 12)

NRS 112.210 Rightsof creditor in action for relief against transfer or obligation.

1. In an action for relief against a transfer orobligation under this chapter, a creditor, subject to the limitations in NRS 112.220, may obtain:

(a) Avoidance of the transfer or obligation to theextent necessary to satisfy the creditors claim;

(b) An attachment or garnishment against the assettransferred or other property of the transferee pursuant to NRS 31.010 to 31.460, inclusive; and

(c) Subject to applicable principles of equity and inaccordance with applicable rules of civil procedure:

(1) An injunction against further disposition bythe debtor or a transferee, or both, of the asset transferred or of otherproperty;

(2) Appointment of a receiver to take charge ofthe asset transferred or of other property of the transferee; or

(3) Any other relief the circumstances mayrequire.

2. If a creditor has obtained a judgment on a claimagainst the debtor, the creditor, if the court so orders, may levy execution onthe asset transferred or its proceeds.

(Added to NRS by 1987, 12)

NRS 112.220 Avoidanceof transfer or obligation: Protection of good faith transferee or obligee;recovery of judgment for value of asset transferred; certain transfers notvoidable.

1. A transfer or obligation is not voidable underparagraph (a) of subsection 1 of NRS 112.180against a person who took in good faith and for a reasonably equivalent valueor against any subsequent transferee or obligee.

2. Except as otherwise provided in this section, tothe extent a transfer is voidable in an action by a creditor under paragraph(a) of subsection 1 of NRS 112.210, thecreditor may recover judgment for the value of the asset transferred, asadjusted under subsection 3 of this section, or the amount necessary to satisfythe creditors claim, whichever is less. The judgment may be entered against:

(a) The first transferee of the asset or the person forwhose benefit the transfer was made; or

(b) Any subsequent transferee other than a transfereewho took in good faith for value or from any subsequent transferee.

3. If the judgment under subsection 2 is based uponthe value of the asset transferred, the judgment must be for an amount equal tothe value of the asset at the time of the transfer, subject to adjustment asthe equities may require.

4. Notwithstanding voidability of a transfer or anobligation under this chapter, a transferee or obligee who took in good faithis entitled, to the extent of the value given the debtor for the transfer orobligation, to:

(a) A lien on or a right to retain any interest in theasset transferred;

(b) Enforcement of any obligation incurred; or

(c) A reduction in the amount of the liability on thejudgment.

5. A transfer is not voidable under paragraph (b) ofsubsection 1 of NRS 112.180 or NRS 112.190 if the transfer results from:

(a) Termination of a lease upon default by the debtorwhen the termination is pursuant to the lease and applicable law; or

(b) Enforcement of a security interest in compliancewith NRS 104.9101 to 104.9709, inclusive.

6. A transfer is not voidable under subsection 2 of NRS 112.190:

(a) To the extent the insider gave new value to or forthe benefit of the debtor after the transfer was made unless the new value wassecured by a valid lien;

(b) If made in the ordinary course of business orfinancial affairs of the debtor and the insider; or

(c) If made pursuant to a good faith effort torehabilitate the debtor and the transfer secured present value given for thatpurpose as well as an antecedent debt of the debtor.

(Added to NRS by 1987, 12; A 1999, 389)

NRS 112.230 Limitationof actions. Except as otherwise provided in NRS 166.170, a claim for relief withrespect to a fraudulent transfer or obligation under this chapter isextinguished unless action is brought:

1. Under paragraph (a) of subsection 1 of NRS 112.180, within 4 years after thetransfer was made or the obligation was incurred or, if later, within 1 yearafter the transfer or obligation was or could reasonably have been discoveredby the claimant;

2. Under paragraph (b) of subsection 1 of NRS 112.180 or subsection 1 of NRS 112.190, within 4 years after thetransfer was made or the obligation was incurred; or

3. Under subsection 2 of NRS 112.190, within 1 year after thetransfer was made or the obligation was incurred.

(Added to NRS by 1987, 13; A 1999, 1239)

NRS 112.240 Supplementarygeneral provisions of law applicable. Unlessdisplaced by the provisions of this chapter, the principles of law and equity,including the law merchant and the law relating to principal and agent,estoppel, laches, fraud, misrepresentation, duress, coercion, mistake,insolvency or other validating or invalidating cause, supplement itsprovisions.

(Added to NRS by 1987, 14)

NRS 112.250 Constructionof chapter. This chapter must be applied andconstrued to effectuate its general purpose to make uniform the law withrespect to the subject of this chapter among states enacting it.

(Added to NRS by 1987, 14)

 

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