Texas Uniform Fraudulent Transfer Act

As business lawyers in Texas, we are sometimes asked about a creditor’s remedies when a debtor transfers its assets to others in an effort to avoid its creditors.  The Texas Uniform Fraudulent Transfer Act gives creditors a cause of action against the transferee under certain circumstances.   If a debtor makes a transfer with the actual intent to hinder, delay or defraud a creditor of the debtor, a transfer is fraudulent as to that creditor.  Some factors that can be used to determine the actual intent of the debtor are whether: (1) the transfer or obligation was to an insider; (2) the debtor retained possession or control of the property transferred after the transfer; (3) the transfer or obligation was concealed; (4) before the transfer was made or obligation incurred, the debtor had been sued or threatened with suit; or (5) the transfer was of substantially all the debtor’s assets.  There are numerous other factors the court can consider in determining the debtor’s actual intent to hinder, delay or defraud a creditor.  The Texas Uniform Fraudulent Transfer Act also provides creditors a cause of action for fraudulent transfer under certain other circumstances such as when the debtor was insolvent and did not receive reasonably equivalent value for the transfer.  The Texas Uniform Fraudulent Transfer Act is a useful tool for creditors when debtors transfer assets in order to avoid paying their obligations.

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