Not so sure about fraudulent conveyance? Consider this. You\u2019re a business owner and a customer owes you a substantial sum.\u00a0 You sense the customer is not going to pay and suspect the customer (individual or business) is shedding assets.\u00a0 You\u2019re evaluating options.\u00a0 What do you do?\u00a0 Where did the assets go?\u00a0 Is the receivable uncollectible?\u00a0 Are you stuck? Your answer may lie in the Voidable Transactions Act.<\/p>\n
Georgia adopted the Georgia Voidable Transactions Act, a model statute followed by numerous states.\u00a0 The Act prohibits transfers made with the intent to hinder, delay or defraud any creditor of the debtor, also known as a \u201cfraudulent conveyance.\u201d<\/p>\n
The Act is not the exclusive remedy for a creditor.\u00a0 Rather, any traditional remedy or relief that existed before the Act was passed remains intact.<\/p>\n
What does the Act cover?\u00a0 The law applies to any \u201casset\u201d of a debtor.\u00a0 In other words, the law\u2019s use of the word asset or property can be anything that may be the subject of ownership.\u00a0 It can be an income producing property (such as a commercial building) which could include both the real property as well as the revenue stream generated from lease interests.<\/p>\n
Who does the Act protect?\u00a0 A \u201ccreditor\u201d is an individual or entity who has a claim.\u00a0 Importantly, one\u2019s claim does not<\/u> need to be reduced to judgment.\u00a0 It does not even need to already be an existing lawsuit.\u00a0 Rather, a \u201cclaim\u201d is very broadly considered, and includes any right to payment, whether liquidated, unliquidated, contingent, disputed, or undisputed.<\/p>\n
Most claims under Act must be filed within four years, although there is one subset of fraudulent conveyance claims that has only a one-year statute of limitations.\u00a0 The varying statutes of limitations points out the need for any creditor who suspects it may have a claim under the law to be vigilant and proactive.<\/p>\n
Who can be sued under the Act? \u00a0If a transaction is determined to violate the Voidable Transfers Act, the creditor has a possible claim against both the transferor (the debtor) and also the transferee (the recipient of the property transferred).<\/p>\n
Creditors would be wise to analyze their rights under the Act in pursuit of a debt.\u00a0 This could be as simple as a financial institution (bank or credit union) seeking recovery of a promissory note; or, in a more complicated scenario, any business or business owner seeking payment under an agreement where it suspects the debtor may have taken steps to make collection efforts more difficult.<\/p>\n