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California's 'New' Uniform Voidable Transactions Act Helps Creditors Collect

Starting January 1, 2016, California made it a little easier for creditors to recover certain assets that a debtor transfers to a third party. The “Uniform Voidable Transactions Act” (formerly known as the “Uniform Fraudulent Transfer Act”) allows a creditor to void a transfer of any assets to a third party if the creditor can show by a preponderance of the evidence that: (1) the debtor was insolvent at the time of transfer; (2) the third party paid less than its reasonable value. Prior to this law courts sometimes required clear and convincing evidence of fraud. In addition, creditors will generally be able to obtain a pre-judgment attachment of the third party’s whole assets, rather than just the assets transferred. While collecting debts and judgments continues to be a complicated process, the hope is these amended statutes help.

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