Second Regular Session
Seventy-third General Assembly
STATE OF COLORADO
INTRODUCED
LLS NO. 22-0692.01 Yelana Love x2295
SENATE BILL 22-122
Senate Committees House Committees
Judiciary
A BILL FOR AN ACT
C
ONCERNING THE ENACTMENT OF AMENDMENTS TO THE "COLORADO101
U
NIFORM FRAUDULENT TRANSFER ACT" RECOMMENDED BY102
THE UNIFORM LAW COMMISSION , AND, IN CONNECTION103
THEREWITH, CHANGING THE NAME OF THE "COLORADO104
U
NIFORM FRAUDULENT TRANSFER ACT" TO THE "COLORADO105
U
NIFORM VOIDABLE TRANSACTIONS ACT".106
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
http://leg.colorado.gov/
.)
Colorado Commission on Uniform State Laws. In 2014, the
SENATE SPONSORSHIP
Gardner,
HOUSE SPONSORSHIP
Tipper,
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing statute.
Dashes through the words indicate deletions from existing statute. Uniform Law Commission approved a set of amendments to the
"Colorado Uniform Fraudulent Transfer Act". The bill enacts those
amendments. The principal features of the amendments are:
! Title change. The title of the act is changed to the
"Colorado Uniform Voidable Transactions Act" (act).
! Choice of law. A new provision sets forth a choice of law
rule applicable to claims for relief of the nature governed
by the act.
! Evidentiary matters. New provisions add uniform rules
allocating the burden of proof and defining the standard of
proof with respect to claims for relief and defenses under
the act.
! Deletion of the special definition of "insolvency" for
partnerships. The act as originally written set forth a
special definition of "insolvency" applicable to
partnerships. The amendments delete the original language,
with the result that the general definition of insolvency now
applies to partnerships.
! Defenses. Defenses available to a transferee or obligee are
refined as follows:
! As originally written, the act created a complete
defense to an action for a fraudulent transfer (which
renders voidable a transfer made or obligation
incurred with actual intent to hinder, delay, or
defraud any creditor of the debtor) if the transferee
or obligee takes the transfer in good faith and for a
reasonably equivalent value. The amendments add
to the act the further requirement that the reasonably
equivalent value must be given to the debtor.
! The act created, in a provision derived from the
federal "Bankruptcy Code", a defense for a
subsequent transferee (that is, a transferee other
than the first transferee) that takes a transfer in good
faith and for value, and for any subsequent
good-faith transferee from a person. The
amendments clarify the meaning of the defense by
rewording it to follow more closely the wording of
the federal "Bankruptcy Code", which is
substantially unchanged as of 2014. Among other
things, the amendments make clear that the defense
applies to recovery of or from the transferred
property or its proceeds, by levy or otherwise, as
well as to an action for a money judgment.
! The act as originally written created a defense to an
action for a fraudulent transfer or to avoid a transfer
SB22-122
-2- if the transfer results from enforcement of a security
interest in compliance with the secured transactions
provisions of the "Uniform Commercial Code". The
amendments exclude from that defense acceptance
of collateral in full or partial satisfaction of the
obligation it secures (a remedy sometimes referred
to as "strict foreclosure").
! Medium neutrality. In order to accommodate modern
technology, the references in the act to a "writing" have
been replaced with "record" and related changes are made.
! Style. The amendments make a number of stylistic changes
that are not intended to change the meaning of the act,
including retitling of the act.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. In Colorado Revised Statutes, amend 38-8-101 as2
follows:3
38-8-101. Short title. This article, shall be known and may be
4
cited THE SHORT TITLE OF THIS ARTICLE 8, WHICH WAS FORMERLY KNOWN5
as the "Colorado Uniform Fraudulent Transfer Act",
IS THE "COLORADO6
U
NIFORM VOIDABLE TRANSACTIONS ACT".7
SECTION 2. In Colorado Revised Statutes, 38-8-102, amend the8
introductory portion, (1)(a) introductory portion, (1)(a)(II), (1)(b)9
introductory portion, (1)(b)(I), (1)(d), (3), and (10); and add (7.5), (7.7),10
(11.5), and (12.5) as follows:11
38-8-102. Definitions. As used in this article
ARTICLE 8, unless12
the context otherwise requires:13
(1) "Affiliate" means:14
(a) A person who THAT directly or indirectly owns, controls, or15
holds with power to vote twenty percent or more of the outstanding16
voting securities of the debtor, other than a person who THAT holds the17
securities:18
SB22-122-3- (II) Solely to secure a debt, if the person has not IN FACT exercised1
the power to vote;2
(b) A corporation, twenty percent or more of whose outstanding3
voting securities are directly or indirectly owned, controlled, or held with4
power to vote, by the debtor or a person who THAT directly or indirectly5
owns, controls, or holds with power to vote, twenty percent or more of the6
outstanding voting securities of the debtor, other than a person who THAT7
holds the securities:8
(I) As a fiduciary or agent without sole
DISCRETIONARY power to9
vote the securities; or10
(d) A person who
THAT operates the debtor's business under a11
lease or other agreement or controls substantially all of the debtor's assets.12
(3) "Claim",
EXCEPT AS USED IN "CLAIM FOR RELIEF", means a13
right to payment, whether or not the right is reduced to judgment,14
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,15
undisputed, legal, equitable, secured, or unsecured.16
(7.5) "E
LECTRONIC" MEANS RELATING TO TECHNOLOGY HAVING17
ELECTRICAL, DIGITAL, MAGNETIC , WIRELESS , OPTICAL,18
ELECTROMAGNETIC, OR SIMILAR CAPABILITIES.19
(7.7) "E
NTITY" HAS THE SAME MEANING AS SET FORTH IN SECTION20
7-90-102
(20).21
(10) "Person" means an individual, partnership, corporation,
22
association, organization, government or governmental subdivision or23
agency, business trust, estate, trust, or any other legal or commercial24
entity HAS THE SAME MEANING AS SET FORTH IN SECTION 7-90-102 (49).25
(11.5) "R
ECORD" MEANS INFORMATION THAT IS INSCRIBED ON A26
TANGIBLE MEDIUM OR THAT IS STORED IN AN ELECTRONIC OR OTHER27
SB22-122
-4- MEDIUM AND IS RETRIEVABLE IN PERCEIVABLE FORM .1
(12.5) "S
IGN" OR "SIGNATURE" HAS THE SAME MEANING AS SET2
FORTH IN SECTION 7-90-102 (60.5).3
SECTION 3. In Colorado Revised Statutes, 38-8-103, amend (2)4
and (3) as follows:5
38-8-103. Insolvency. (2) A debtor who
THAT is generally not6
paying his THE DEBTOR'S debts as they become due OTHER THAN AS A7
RESULT OF A BONA FIDE DISPUTE is presumed to be insolvent. THE8
PRESUMPTION IMPOSES ON THE PARTY AGAINST WHICH THE PRESUMPTION9
IS DIRECTED THE BURDEN OF PROVING THAT THE NONEXISTENCE OF10
INSOLVENCY IS MORE PROBABLE THAN ITS EXISTENCE .11
(3) A partnership is insolvent under subsection (1) of this section12
if the sum of the partnership's debts is greater than the aggregate of all of13
the partnership's assets, at a fair valuation, and the sum of the excess of14
the value of each general partner's nonpartnership assets over the partner's15
nonpartnership debts A DEBTOR THAT IS INSOLVENT WITHIN THE MEANING16
OF THE FEDERAL BANKRUPTCY LAW IS INSOLVENT .17
SECTION 4. In Colorado Revised Statutes, 38-8-104, amend (2)18
as follows:19
38-8-104. Value. (2) For the purposes of sections 38-8-10520
38-8-105 (1)(b) and 38-8-106, a person gives a reasonably equivalent21
value if the person acquires an interest of the debtor in an asset pursuant22
to a regularly conducted, noncollusive sale, foreclosing on assets subject23
to a lien, or pursuant to the execution of a power of sale for the24
acquisition or disposition of the interest of the debtor upon default under25
a mortgage, deed of trust, or security agreement.26
SECTION 5. In Colorado Revised Statutes, 38-8-105, amend (1)27
SB22-122
-5- introductory portion, (1)(b)(II), (2) introductory portion, and (2)(k); and1
add (3) as follows:2
38-8-105. Transfer or obligation voidable as to present or3
future creditor. (1) A transfer made or obligation incurred by a debtor4
is fraudulent VOIDABLE as to a creditor, whether the creditor's claim arose5
before or after the transfer was made or the obligation was incurred, if the6
debtor made the transfer or incurred the obligation:7
(b) Without receiving a reasonably equivalent value in exchange8
for the transfer or obligation, and the debtor:9
(II) Intended to incur, or believed or reasonably should have10
believed that he THE DEBTOR would incur, debts beyond his THE DEBTOR'S11
ability to pay as they became due.12
(2) In determining actual intent under paragraph (a) of subsection13
(1) SUBSECTION (1)(a) of this section, consideration may be given, among14
other factors, to whether:15
(k) The debtor transferred the essential assets of the business to16
a lienor who THAT transferred the assets to an insider of the debtor.17
(3) A
CREDITOR MAKING A CLAIM FOR RELIEF UNDER SUBSECTION18
(1)
OF THIS SECTION HAS THE BURDEN OF PROVING THE ELEMENTS OF THE19
CLAIM FOR RELIEF BY A PREPONDERANCE OF THE EVIDENCE .20
SECTION 6. In Colorado Revised Statutes, amend 38-8-106 as21
follows:22
38-8-106. Transfer or obligation voidable as to present23
creditor. (1) A transfer made or obligation incurred by a debtor is24
fraudulent
VOIDABLE as to a creditor whose claim arose before the25
transfer was made or the obligation was incurred if the debtor made the26
transfer or incurred the obligation without receiving a reasonably27
SB22-122
-6- equivalent value in exchange for the transfer or obligation and the debtor1
was insolvent at that time or the debtor became insolvent as a result of the2
transfer or obligation.3
(2) A transfer made by a debtor is fraudulent VOIDABLE as to a4
creditor whose claim arose before the transfer was made if the transfer5
was made to an insider for an antecedent debt, the debtor was insolvent6
at that time, and the insider had reasonable cause to believe that the7
debtor was insolvent.8
(3) S
UBJECT TO SECTION 38-8-103 (2), A CREDITOR MAKING A9
CLAIM FOR RELIEF UNDER SUBSECTION (1) OR (2) OF THIS SECTION HAS THE10
BURDEN OF PROVING THE ELEMENTS OF THE CLAIM FOR RELIEF BY A11
PREPONDERANCE OF THE EVIDENCE .12
SECTION 7. In Colorado Revised Statutes, 38-8-107, amend (1)13
introductory portion, (1)(a)(I), (4), and (5)(b) as follows:14
38-8-107. When transfer is made or obligation is incurred.15
(1) For the purposes of this article
ARTICLE 8:16
(a) A transfer is made:17
(I) With respect to an asset that is real property other than a18
fixture, but including the interest of a seller or purchaser under a contract19
for the sale of the asset, when the transfer is so far perfected that a20
good-faith purchaser of the asset from the debtor against whom WHICH21
applicable law permits the transfer to be perfected cannot acquire an22
interest in the asset that is superior to the interest of the transferee; and23
(4) A transfer is not made until the debtor has acquired rights in24
the asset transferred.25
(5) An obligation is incurred:26
(b) If evidenced by a writing RECORD, when the writing executed27
SB22-122
-7- RECORD SIGNED by the obligor is delivered to or for the benefit of the1
obligee.2
SECTION 8. In Colorado Revised Statutes, 38-8-108, amend (1)3
introductory portion, (1)(b), and (1)(c) as follows:4
38-8-108. Remedies of creditor. (1) In an action for relief5
against a transfer or obligation under this article ARTICLE 8, a creditor,6
subject to the limitations in section 38-8-109, may obtain:7
(b) An attachment or other provisional remedy against the asset8
transferred or other property of the transferee in accordance with the9
procedure prescribed by the Colorado rules of civil procedure IF10
AVAILABLE UNDER APPLICABLE LAW ;11
(c) With respect to a transfer made or obligation incurred that is12
fraudulent VOIDABLE under section 38-8-105 (1)(a), a judgment for one13
and one-half the value of the asset transferred or for one and one-half the14
amount necessary to satisfy the creditor's claim, whichever is less,15
together with the creditor's actual costs; except that any judgment entered16
against a person under this paragraph (c) SUBSECTION (1)(c) is in lieu of,17
not in addition to, a judgment against the same person under section18
38-8-109 (2). No judgment may be entered pursuant to this paragraph (c)19
SUBSECTION (1)(c) against a person other than the debtor unless that20
person also acts with wrongful intent as defined in section 38-8-10521
(1)(a); otherwise, judgment for money damages against a person other22
than the debtor may be entered only as provided in section 38-8-109. No23
judgment may be entered under this paragraph (c) SUBSECTION (1)(c)24
unless a court of competent jurisdiction enters or has entered a judgment25
or order establishing the validity of the creditor's claim against the debtor.26
SECTION 9. In Colorado Revised Statutes, 38-8-109, amend (1),27
SB22-122
-8- (2), (4) introductory portion, (4)(a), (4)(b), (5)(b), and (6)(a); and add (7)1
and (8) as follows:2
38-8-109. Defenses, liability, and protection of transferee or3
obligee. (1) A transfer or obligation is not voidable under section4
38-8-105 (1)(a) against a person who THAT took in good faith and for a5
reasonably equivalent value
GIVEN TO THE DEBTOR or against any6
subsequent transferee or obligee.7
(2) T
O THE EXTENT A TRANSFER IS
AVOIDABLE IN AN ACTION BY A8
CREDITOR UNDER SECTION 38-8-108 (1)(a), THE FOLLOWING RULES APPLY:9
(a) Except as otherwise provided in this section, to the extent a10
transfer is voidable in an action by a creditor under section 38-8-108 (1)11
(a), the creditor may recover judgment for the value of the asset12
transferred, as adjusted under subsection (3) of this section, or the amount13
necessary to satisfy the creditor's claim, whichever is less. The judgment14
may be entered against:15
(a) (I) The first transferee of the asset or the person for whose16
benefit the transfer was made; or17
(b) (II) Any subsequent AN IMMEDIATE OR MEDIATE transferee OF18
THE FIRST TRANSFEREE, other than:19
(A) A good-faith transferee or obligee who THAT took for value;20
or from any subsequent transferee or obligee.21
(B) A
N IMMEDIATE OR MEDIATE GOOD -FAITH TRANSFEREE OF A22
PERSON DESCRIBED IN SUBSECTION (2)(a)(II)(A) OF THIS SECTION.23
(b) R
ECOVERY PURSUANT TO SECTION 38-8-108 (1)(a) OR (2) OF24
OR FROM THE ASSET TRANSFERRED OR ITS PROCEEDS , BY LEVY OR25
OTHERWISE, IS AVAILABLE ONLY AGAINST A PERSON DESCRIBED IN26
SUBSECTION (2)(a)(I) OR (2)(a)(II) OF THIS SECTION.27
SB22-122
-9- (4) Notwithstanding voidability of a transfer or an obligation1
under this article ARTICLE 8, a good-faith transferee or obligee is entitled,2
to the extent of the value given the debtor for the transfer or obligation,3
to:4
(a) A lien on or a right to retain any AN interest in the asset5
transferred;6
(b) Enforcement of any AN obligation incurred; or7
(5) A transfer is not voidable under section 38-8-105 (1)(b) or8
38-8-106 if the transfer results from:9
(b) Enforcement of a security interest in compliance with the10
provisions of the "Uniform Commercial Code - Secured Transactions",11
article 9 of title 4, C.R.S., OTHER THAN ACCEPTANCE OF COLLATERAL IN12
FULL OR PARTIAL SATISFACTION OF THE OBLIGATION IT SECURES .13
(6) A transfer is not voidable under section 38-8-106 (2):14
(a) To the extent the insider gave new value to or for the benefit15
of the debtor after the transfer was made, unless EXCEPT TO THE EXTENT16
the new value was secured by a valid lien;17
(7) T
HE FOLLOWING RULES DETERMINE THE BURDEN OF PROVING18
MATTERS REFERRED TO IN THIS SECTION:19
(a) A
PARTY THAT SEEKS TO INVOKE SUBSECTION (1), (4), (5), OR20
(6)
OF THIS SECTION HAS THE BURDEN OF PROVING THE APPLICABILITY OF21
THAT SUBSECTION.22
(b) E
XCEPT AS PROVIDED IN SUBSECTIONS (7)(c) AND (7)(d) OF23
THIS SECTION, THE CREDITOR HAS THE BURDEN OF PROVING EACH24
APPLICABLE ELEMENT OF SUBSECTION (2) OR (3) OF THIS SECTION.25
(c) T
HE TRANSFEREE HAS THE BURDEN OF PROVING THE26
APPLICABILITY TO THE TRANSFEREE OF SUBSECTION (2)(a)(II)(A) OR27
SB22-122
-10- (2)(a)(II)(B) OF THIS SECTION.1
(d) A
PARTY THAT SEEKS ADJUSTMENT UNDER SUBSECTION (3) OF2
THIS SECTION HAS THE BURDEN OF PROVING THE ADJUSTMENT .3
(8) T
HE STANDARD OF PROOF REQUIRED TO ESTABLISH MATTERS4
REFERRED TO IN THIS SECTION IS PREPONDERANCE OF THE EVIDENCE .5
SECTION 10. In Colorado Revised Statutes, amend 38-8-110 as6
follows:7
38-8-110. Extinguishment of claim for relief. (1) A cause of
8
action CLAIM FOR RELIEF with respect to a fraudulent transfer or9
obligation under this article ARTICLE 8 is extinguished unless action is10
brought:11
(a) Under section 38-8-105 (1)(a), within NOT LATER THAN four12
years after the transfer was made or the obligation was incurred or, if13
later, within NOT LATER THAN one year after the transfer or obligation was14
or could reasonably have been discovered by the claimant;15
(b) Under section 38-8-105 (1)(b) or 38-8-106 (1), within NOT16
LATER THAN four years after the transfer was made or the obligation was17
incurred; or18
(c) Under section 38-8-106 (2), within NOT LATER THAN one year19
after the transfer was made. or the obligation was incurred.20
SECTION 11. In Colorado Revised Statutes, add 38-8-110.3 and21
38-8-113 as follows:22
38-8-110.3. Governing law. (1) I
N THIS SECTION, THE23
FOLLOWING RULES DETERMINE A DEBTOR 'S LOCATION:24
(a) A
DEBTOR WHO IS AN INDIVIDUAL IS LOCATED AT THE25
INDIVIDUAL'S PRINCIPAL RESIDENCE.26
(b) A
DEBTOR THAT IS AN ENTITY AND HAS ONLY ONE PLACE OF27
SB22-122
-11- BUSINESS IS LOCATED AT ITS PLACE OF BUSINESS.1
(c) A
DEBTOR THAT IS AN ENTITY AND HAS MORE THAN ONE PLACE2
OF BUSINESS IS LOCATED AT ITS CHIEF EXECUTIVE OFFICE.3
(2) A
CLAIM FOR RELIEF IN THE NATURE OF A CLAIM FOR RELIEF4
UNDER THIS ARTICLE 8 IS GOVERNED BY THE LOCAL LAW OF THE5
JURISDICTION IN WHICH THE DEBTOR OR ASSET IS LOCATED WHEN THE6
TRANSFER IS MADE OR THE OBLIGATION IS INCURRED .7
38-8-113. Relation to electronic signatures in federal8
"Electronic Signatures in Global and National Commerce Act". T
HIS9
ARTICLE 8 MODIFIES, LIMITS, OR SUPERSEDES THE FEDERAL "ELECTRONIC10
S
IGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT", 15 U.S.C. SEC.11
7001
ET SEQ., BUT DOES NOT MODIFY, LIMIT, OR SUPERSEDE SECTION 10112
(c)
OF THAT ACT, 15 U.S.C. SEC. 7001 (c), OR AUTHORIZE ELECTRONIC13
DELIVERY OF ANY OF THE NOTICES DESCRIBED IN SECTION 103 (b) OF THAT14
ACT, 15 U.S.C. SEC. 7003 (b).15
SECTION 12. In Colorado Revised Statutes, 2-5-102, amend (7)16
as follows:17
2-5-102. Inclusions - nonstatutory. (7) There shall be included18
in the publication of the "Colorado Uniform Fraudulent Transfer Act"
19
"C
OLORADO UNIFORM VOIDABLE TRANSACTIONS ACT", as nonstatutory20
matter, following each section of the article, the full text of the official21
comments to that section contained in the official volume containing the22
1984 official text of the "Uniform Fraudulent Transfer Act" issued by the23
National Conference of Commissioners on Uniform State Laws,24
INCLUDING CHANGES TO THE OFFICIAL COMMENTS MADE BY THE 201425
AMENDMENTS TO THE UNIFORM ACT , with any changes in the official26
comments or Colorado comments to correspond to Colorado changes in27
SB22-122
-12- the uniform act. The comments shall be prepared by the revisor of statutes1
and approved for publication by the committee on legal services.2
SECTION 13. Act subject to petition - effective date -3
applicability. (1) This act takes effect at 12:01 a.m. on the day following4
the expiration of the ninety-day period after final adjournment of the5
general assembly; except that, if a referendum petition is filed pursuant6
to section 1 (3) of article V of the state constitution against this act or an7
item, section, or part of this act within such period, then the act, item,8
section, or part will not take effect unless approved by the people at the9
general election to be held in November 2022 and, in such case, will take10
effect on the date of the official declaration of the vote thereon by the11
governor.12
(2) This act applies to transactions occurring on or after the13
applicable effective date of this act.14
SB22-122
-13-