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HOUSE DOCKET, NO. 3382 FILED ON: 1/20/2023
HOUSE . . . . . . . . . . . . . . . No. 1716
The Commonwealth of Massachusetts
_________________
PRESENTED BY:
Alice Hanlon Peisch
_________________
To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:
The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
An Act relative to the uniform voidable transactions act.
_______________
PETITION OF:
NAME:DISTRICT/ADDRESS :DATE ADDED:Alice Hanlon Peisch14th Norfolk1/11/2023 1 of 15
HOUSE DOCKET, NO. 3382 FILED ON: 1/20/2023
HOUSE . . . . . . . . . . . . . . . No. 1716
By Representative Peisch of Wellesley, a petition (accompanied by bill, House, No. 1716) of
Alice Hanlon Peisch relative to uniform voidable transactions. The Judiciary.
The Commonwealth of Massachusetts
_______________
In the One Hundred and Ninety-Third General Court
(2023-2024)
_______________
An Act relative to the uniform voidable transactions act.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
of the same, as follows:
1 SECTION 1. The title of chapter 109A of the General Laws is hereby amended by
2striking out the words “FRAUDULENT TRANSFER” in that title and by inserting in place
3thereof the following words:-- “VOIDABLE TRANSACTIONS”.
4 SECTION 2. Said chapter 109A is hereby amended by striking out Section 1 and by
5inserting in place thereof the following Section:--
6 § 1. Citation of chapter
7 This chapter, which was formerly cited as the Uniform Fraudulent Transfer Act, may be
8cited as the Uniform Voidable Transactions Act.
9 SECTION 3. Said chapter 109A is hereby amended by striking out Section 2 and by
10inserting in place thereof the following Section:--
11 § 2. Definitions 2 of 15
12 As used in this chapter, the following words shall, unless the context requires otherwise,
13have the following meanings:—
14 “Affiliate”, (i) a person that directly or indirectly owns, controls, or holds with power to
15vote, twenty percent or more of the outstanding voting securities of the debtor, other than a
16person that holds the securities:
17 (A) as a fiduciary or agent without sole discretionary power to vote the securities; or
18 (B) solely to secure a debt, if the person has not in fact exercised the power to vote;
19 (ii) a corporation twenty percent or more of whose outstanding voting securities are
20directly or indirectly owned, controlled, or held with power to vote, by the debtor or a person that
21directly or indirectly owns, controls, or holds, with power to vote, twenty percent or more of the
22outstanding voting securities of the debtor, other than a person that holds the securities:
23 (A) as a fiduciary or agent without sole discretionary power to vote the securities; or
24 (B) solely to secure a debt, if the person has not in fact exercised the power to vote;
25 (iii) a person whose business is operated by the debtor under a lease or other agreement,
26or a person substantially all of whose assets are controlled by the debtor; or
27 (iv) a person that operates the debtor’s business under a lease or other agreement or
28controls substantially all of the debtor’s assets.
29 “Asset”, property of a debtor, but the term shall not include:
30 (i) property to the extent it is encumbered by a valid lien; 3 of 15
31 (ii) property to the extent it is generally exempt under nonbankruptcy law; or
32 (iii) an interest in property held in tenancy by the entireties to the extent it is not subject
33to process by a creditor holding a claim against only one tenant.
34 “Claim”, except as used in “claim for relief”, a right to payment, whether or not the right
35is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
36disputed, undisputed, legal, equitable, secured, or unsecured.
37 “Creditor”, a person that has a claim.
38 “Debt”, liability on a claim.
39 “Debtor”, a person that is liable on a claim.
40 “Electronic”, relating to technology having electrical, digital, magnetic, wireless, optical,
41electromagnetic, or similar capabilities.
42 “Insider”, includes:
43 (i) if the debtor is an individual:
44 (A) a relative of the debtor or of a general partner of the debtor;
45 (B) a partnership in which the debtor is a general partner;
46 (C) a general partner in a partnership described in clause (B); or
47 (D) a corporation of which the debtor is a director, officer, or person in control;
48 (ii) if the debtor is a corporation: 4 of 15
49 (A) a director of the debtor;
50 (B) an officer of the debtor;
51 (C) a person in control of the debtor;
52 (D) a partnership in which the debtor is a general partner;
53 (E) a general partner in a partnership described in clause (D); or
54 (F) a relative of a general partner, director, officer, or person in control of the debtor;
55 (iii) if the debtor is a partnership:
56 (A) a general partner in the debtor;
57 (B) a relative of a general partner in, a general partner of, or a person in control of the
58debtor;
59 (C) another partnership in which the debtor is a general partner;
60 (D) a general partner in a partnership described in clause (C); or
61 (E) a person in control of the debtor;
62 (iv) an affiliate, or an insider of an affiliate as if the affiliate were the debtor; and
63 (v) a managing agent of the debtor.
64 “Lien”, a charge against or an interest in property to secure payment of a debt or
65performance of an obligation, and includes a security interest created by agreement, a judicial 5 of 15
66lien obtained by legal or equitable process or proceedings, a common-law lien, or a statutory
67lien.
68 “Organization”, a person other than an individual.
69 “Person”, an individual, estate, partnership, association, trust, business or nonprofit
70entity, public corporation, government or governmental subdivision, agency, or instrumentality,
71or other legal or commercial entity.
72 “Property”, anything that may be the subject of ownership.
73 “Record”, information that is inscribed on a tangible medium or that is stored in an
74electronic or other medium and is retrievable in perceivable form.
75 “Relative”, an individual related by consanguinity within the third degree as determined
76by the common law, a spouse, or an individual related to a spouse within the third degree as so
77determined, and includes an individual in an adoptive relationship within the third degree.
78 “Sign”, with present intent to authenticate or adopt a record:
79 (i) to execute or adopt a tangible symbol; or
80 (ii) to attach to or logically associate with the record an electronic symbol, sound, or
81process.
82 “Transfer”, every mode, direct or indirect, absolute or conditional, voluntary or
83involuntary, of disposing of or parting with an asset or an interest in an asset, and includes
84payment of money, release, lease, license and creation of a lien or other encumbrance. 6 of 15
85 “Valid lien”, a lien that is effective against the holder of a judicial lien subsequently
86obtained by legal or equitable process or proceedings.
87 SECTION 4. Said chapter 109A is hereby amended by striking out Section 3 and by
88inserting in place thereof the following Section:--
89 § 3. Insolvency; excluded assets
90 (a) A debtor is insolvent if, at a fair valuation, the sum of the debtor’s debts is greater
91than the sum of the debtor’s assets.
92 (b) A debtor that is generally not paying the debtor’s debts as they become due other than
93as a result of a bona fide dispute is presumed to be insolvent. The presumption imposes on the
94party against which the presumption is directed the burden of proving that the nonexistence of
95insolvency is more probable than its existence.
96 (c) Assets under this section shall not include property that has been transferred,
97concealed, or removed with intent to hinder, delay, or defraud creditors or that has been
98transferred in a manner making the transfer voidable under this chapter.
99 (d) Debts under this section shall not include an obligation to the extent it is secured by a
100valid lien on property of the debtor not included as an asset.
101 SECTION 5. The title of Section 5 of said chapter 109A is hereby amended by striking
102out the word “Fraudulent” in that title and by inserting in place thereof the following word:--
103“Voidable”. 7 of 15
104 SECTION 6. Section 5 of said chapter 109A is hereby further amended by striking out
105the word “fraudulent” in Section 5(a) and by inserting in place thereof the following word:--
106“voidable”.
107 SECTION 7. Section 5 of said chapter 109A is hereby further amended by striking out
108Section 5(a)(2)(ii) and by inserting in place thereof the following subsection:--
109 (ii) intended to incur, or believed or reasonably should have believed that the debtor
110would incur, debts beyond the debtor’s ability to pay as they became due.
111 SECTION 8. Section 5 of said chapter 109A is hereby further amended by striking out
112the word “who” in Section 5(b)(11) and by inserting in place thereof the following word:--
113“that”.
114 SECTION 9. Section 5 of said chapter 109A is hereby further amended by inserting the
115following new subsection at the end of Section 5:--
116 (c) A creditor making a claim for relief under subsection (a) has the burden of proving the
117elements of the claim for relief by a preponderance of the evidence.
118 SECTION 10. The title of Section 6 of said chapter 109A is hereby amended by striking
119out the word “Fraudulent” in that title and by inserting in place thereof the following word:--
120“Voidable”.
121 SECTION 11. Section 6 of said chapter 109A is hereby further amended by striking out
122the word
123 “fraudulent” wherever it appears in that Section and by inserting in each place thereof the
124following word:-- “voidable”. 8 of 15
125 SECTION 12. Section 6 of said chapter 109A is hereby further amended by inserting the
126following new subsection at the end of Section 6:--
127 (c) Subject to subsection (b) of section three, a creditor making a claim for relief under
128subsection (a) or (b) has the burden of proving the elements of the claim for relief by a
129preponderance of the evidence.
130 SECTION 13. Section 7(1)(i) of said chapter 109A is hereby amended by striking out the
131word “whom” in that Section and by inserting in place thereof the following word:-- “which”.
132 SECTION 14. Section 7 of said chapter 109A is hereby further amended by inserting the
133word “and” after the word “transferred;” in Section 7(4).
134 SECTION 15. Section 7 of said chapter 109A is hereby further amended by striking out
135Section 7(5)(ii) and by inserting in place thereof the following subsection:--
136 (ii) if evidenced by a record, when the record signed by the obligor is delivered to or for
137the benefit of the obligee.
138 SECTION 16. Section 8(a)(2) of said chapter 109A is hereby amended by striking out
139that Section and by inserting in place thereof the following subsection:--
140 (2) an attachment or other provisional remedy against the asset transferred or other
141property of the transferee if available under applicable law; and
142 SECTION 17. Section 8 of said chapter 109A is hereby further amended by striking out
143the comma after the word “procedure” in Section 8(a)(3) and by inserting in place thereof the
144following:-- “:”. 9 of 15
145 SECTION 18. Said chapter 109A is hereby amended by striking out Section 9 and by
146inserting in place thereof the following Section:--
147 § 9. Voidable transfers; creditor’s judgment
148 (a) A transfer or obligation is not voidable under paragraph (1) of subsection (a) of
149section five against a person that took in good-faith and for a reasonably equivalent value given
150the debtor or against any subsequent transferee or obligee.
151 (b) To the extent a transfer is avoidable in an action by a credit under paragraph (1) of
152subsection (a) of section eight, the following rules apply:
153 (1) Except as otherwise provided in this section, the creditor may recover judgment for
154the value of the asset transferred, as adjusted under subsection (c), or the amount necessary to
155satisfy the creditor’s claim, whichever is less. The judgment may be entered against:
156 (i) the first transferee of the asset or the person for whose benefit the transfer was made;
157or
158 (ii) an immediate or mediate transferee of the first transferee, other than:
159 (A) a good-faith transferee that took for value; or
160 (B) an immediate or mediate good-faith transferee of a person described in clause (A).
161 (2) Recovery pursuant to paragraph (1) of subsection (a) or (b) of section eight of or from
162the asset transferred or its proceeds, by levy or otherwise, is available only against a person
163described in clause (i) or (ii) of paragraph (1). 10 of 15
164 (c) If the judgment under subsection (b) is based upon the value of the asset transferred,
165the judgment shall be for an amount equal to the value of the asset at the time of the transfer,
166subject to adjustment as the equities may require.
167 (d) Notwithstanding voidability of a transfer or an obligation under this chapter, a good-
168faith transferee or obligee is entitled, to the extent of the value given the debtor for the transfer or
169obligation, to:
170 (1) a lien on or a right to retain an interest in the asset transferred;
171 (2) enforcement of an obligation incurred; or
172 (3) a reduction in the amount of the liability on the judgment.
173 (e) A transfer is not voidable under paragraph (2) of subsection (a) of section five or
174section six if the transfer results from:
175 (1) termination of a lease upon default by the debtor when the termination is pursuant to
176the lease and applicable law; or
177 (2) enforcement of a security interest in compliance with Article 9 of chapter one hundred
178and six, other than acceptance of collateral in full or partial satisfaction of the obligation it
179secures.
180 (f) A transfer is not voidable under subsection (b) of section six:
181 (1) to the extent the insider gave new value to or for the benefit of the debtor after the
182transfer was made, except to the extent the new value was secured by a valid lien; 11 of 15
183 (2) if made in the ordinary course of business or financial affairs of the debtor and the
184insider; or
185 (3) if made pursuant to a good-faith effort to rehabilitate the debtor and the transfer
186secured present value given for that purpose as well as an antecedent debt of the debtor.
187 (g) The following rules determine the burden of proving matters referred to in this
188section:
189 (1) A party that seeks to invoke subsection (a), (d), (e), or (f) has the burden of proving
190the applicability of that subsection.
191 (2) Except as otherwise provided in paragraphs (3) and (4), the creditor has the burden of
192proving each applicable element of subsection (b) or (c).
193 (3) The transferee has the burden of proving the applicability to the transferee of clause
194(A) or (B) of clause (ii) of paragraph 1 of subsection (b).
195 (4) A party that seeks adjustment under subsection (c) has the burden of proving the
196adjustment.
197 (h) The standard of proof required to establish matters referred to in this section is
198preponderance of the evidence.
199 SECTION 19. Said chapter 109A is hereby amended by striking out Section 10 and by
200inserting in place thereof the following Section:--
201 § 10.Limitation of actions 12 of 15
202 A claim for relief with respect to a transfer or obligation under this chapter shall be
203extinguished unless action is brought:
204 (a) under paragraph (1) of subsection (a) of section five, not later than four years after the
205transfer was made or the obligation was incurred or, if later, not later than one year after the
206transfer or obligation was or could reasonably have been discovered by the claimant;
207 (b) under paragraph (2) of subsection (a) of section five or subsection (a) of section six,
208not later than four years after the transfer was made or the obligation was incurred; or
209 (c) under subsection (b) of section six, not later than one year after the transfer was made.
210 SECTION 20. Said chapter 109A is hereby amended by renumbering Section 11 as
211follows:-- “§ 13.” and by inserting the following new Section 11:--
212 § 11.Governing Law
213 (a) In this section, the following rules determine a debtor’s location:
214 (1) A debtor who is an individual is located at the individual’s principal residence.
215 (2) A debtor that is an organization and has only one place of business is located at its
216place of business.
217 (3) A debtor that is an organization and has more than one place of business is located at
218its chief executive office.
219 (b) A claim for relief in the nature of a claim for relief under this chapter is governed by
220the local law of the jurisdiction in which the debtor is located when the transfer is made or the
221obligation is incurred. 13 of 15
222 SECTION 21. Said chapter 109A is hereby amended by renumbering the original Section
22313 as follows:-- “§ 17.”.
224 SECTION 22. Said chapter 109A is hereby amended by renumbering Section 12 as
225follows:-- “§ 14.” and by inserting the following new Section 12:--
226 § 12.Application to series organization
227 (a) In this section:
228 (1) “Protected series” means an arrangement, however denominated, created by a series
229organization that, pursuant to the law under which the series organization is organized, has the
230characteristics set forth in paragraph (2).
231 (2) “Series organization” means an organization that, pursuant to the law under which it
232is organized, has the following characteristics:
233 (i) The organic record of the organization provides for creation by the organization of one
234or more protected series, however denominated, with respect to specified property of the
235organization, and for records to be maintained for each protected series that identify the property
236of or associated with the protected series.
237 (ii) Debt incurred or existing with respect to the activities of, or property of or associated
238with, a particular protected series is enforceable against the property of or associated with the
239protected series only, and not against the property of or associated with the organization or other
240protected series of the organization. 14 of 15
241 (iii) Debt incurred or existing with respect to the activities or property of the organization
242is enforceable against the property of the organization only, and not against the property of or
243associated with a protected series of the organization.
244 (b) A series organization and each protected series of the organization is a separate
245person for purposes of this chapter, even if for other purposes a protected series is not a person
246separate from the organization or other protected series of the organization.
247 SECTION 23. Said chapter 109A is hereby amended by inserting the following new
248Sections 15 and 16:--
249 § 15.Relation to electronic signatures in Global and National Commerce Act
250 This chapter modifies, limits, or supersedes the Electronic Signatures in Global and
251National Commerce Act, 15 U.S.C. Section 7001 et seq., but does not modify, limit, or supersede
252Section 101(c) of that act, 15 U.S.C. Section 7001(c), or authorize electronic delivery of any of
253the notices described in Section 103(b) of that act, 15 U.S.C. Section 7003(b).
254 § 16.Relation to the Official Comments
255 The official comments to the Uniform Voidable Transactions Act, as added by the
256Uniform Law Commission in 2014 with the adoption of the changes to the Uniform Fraudulent
257Transfer Act, are not part of this act and may or may not reflect current Massachusetts law.
258 SECTION 24. The amendments to chapter 109A made by this bill: (a) apply to a transfer
259made or obligation incurred on or after the effective date of the amendments; (b) do not apply to
260a transfer made or obligation incurred before the effective date of the amendments; and (c) do
261not apply to a right of action that has accrued before the effective date of the amendments. For 15 of 15
262the foregoing purposes a transfer is made and an obligation is incurred at the time provided in
263section six of the chapter.