Massachusetts 2023-2024 Regular Session

Massachusetts House Bill H4984 Compare Versions

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1	1	HOUSE . . . . . . . . No. 4984
2	2	The Commonwealth of Massachusetts
3	3	________________________________________
4	4	HOUSE OF REPRESENTATIVES, August 5, 2024.
5	5	The committee on The Judiciary, to whom was referred the petition
6	6	(accompanied by bill, House, No. 1716) of Alice Hanlon Peisch relative to
7	7	uniform voidable transactions, reports recommending that the
8	8	accompanying bill (House, No. 4984) ought to pass.
9	9	For the committee,
10	10	MICHAEL S. DAY. 1 of 9
11	11	FILED ON: 7/31/2024
12	12	HOUSE . . . . . . . . . . . . . . . No. 4984
13	13	The Commonwealth of Massachusetts
14	14	_______________
15	15	In the One Hundred and Ninety-Third General Court
16	16	(2023-2024)
17	17	_______________
18	18	An Act relative to the uniform voidable transactions act.
19	19	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
20	20	of the same, as follows:
21	21	1 SECTION 1. Chapter 109A of the General Laws is hereby amended by striking out the
22	22	2title, as so appearing, and inserting in place thereof the following title:- UNIFORM VOIDABLE
23	23	3TRANSACTIONS ACT.
24	24	4 SECTION 2. Section 1 of chapter 109A, as appearing in the 2022 Official Edition, is
25	25	5hereby amended by striking out, in lines 1 and 2, the words “may be cited as the Uniform
26	26	6Fraudulent Transfer Act” and inserting in place thereof the following words:- , which was
27	27	7formerly cited as the Uniform Fraudulent Transfer Act, may be cited as the Uniform Voidable
28	28	8Transactions Act.
29	29	9 SECTION 3. Section 2 of said chapter 109A, as so appearing, is hereby amended by
30	30	10inserting, in line 17, after the word “sole” the following word:- discretionary.
31	31	11 SECTION 4. Said section 2 of said chapter 109A is hereby further amended by inserting
32	32	12after the definition of “debtor” the following definition:- 2 of 9
33	33	13 “Electronic”, relating to technology having electrical, digital, magnetic, wireless, optical,
34	34	14electromagnetic or similar capabilities.
35	35	15 SECTION 5. Said section 2 of said chapter 109A is hereby further amended by striking
36	36	16out the definition of “person” and inserting in place thereof the following definitions:-
37	37	17 “Organization”, a person other than an individual.
38	38	18 “Person”, an individual, estate, partnership, association, trust, business or nonprofit
39	39	19entity, public corporation, government or governmental subdivision, agency, or instrumentality,
40	40	20or other legal or commercial entity.
41	41	21 SECTION 6. Said section 2 of said chapter 109A is hereby further amended by inserting
42	42	22after the definition of “property” the following definition:-
43	43	23 “Record”, information that is inscribed on a tangible medium or that is stored in an
44	44	24electronic or other medium and is retrievable in perceivable form.
45	45	25 SECTION 7. Said section 2 of said chapter 109A is hereby further amended by inserting
46	46	26after the definition of “relative” the following definition:-
47	47	27 “Sign”, with present intent to authenticate or adopt a record: (i) to execute or adopt a
48	48	28tangible symbol; or (ii) to attach to or logically associate with the record an electronic symbol,
49	49	29sound, or process.
50	50	30 SECTION 8. Said section 2 of said chapter 109A is hereby further amended by inserting,
51	51	31in line 82, after the word “lease,” the following word:- license. 3 of 9
52	52	32 SECTION 9. Said chapter 109A is hereby amended by striking out section 3 and
53	53	33inserting in place thereof the following section:-
54	54	34 Section 3. (a) A debtor is insolvent if, at a fair valuation, the sum of the debtor’s debts is
55	55	35greater than the sum of the debtor’s assets.
56	56	36 (b) A debtor that is generally not paying the debtor’s debts as they become due other than
57	57	37as a result of a bona fide dispute is presumed to be insolvent. The presumption imposes on the
58	58	38party against which the presumption is directed the burden of proving that the nonexistence of
59	59	39insolvency is more probable than its existence.
60	60	40 (c) Assets under this section shall not include property that has been transferred,
61	61	41concealed, or removed with intent to hinder, delay, or defraud creditors or that has been
62	62	42transferred in a manner making the transfer voidable under this chapter.
63	63	43 (d) Debts under this section shall not include an obligation to the extent it is secured by a
64	64	44valid lien on property of the debtor not included as an asset.
65	65	45 SECTION 10. Section 5 of said chapter 109A, as so appearing, is hereby amended by
66	66	46striking out, in line 2, the word “fraudulent” and inserting in place thereof the following word:-
67	67	47voidable.
68	68	48 SECTION 11. Said section 5 of said chapter 109A is hereby further amended by striking
69	69	49out, in line 13, the words “he would incur, debts beyond his” and inserting in place thereof the
70	70	50following words:- the debtor would incur, debts beyond the debtor’s.
71	71	51 SECTION 12. Said section 5 of said chapter 109A is hereby further amended by striking
72	72	52out, in line 34, the word “who” and inserting in place thereof the following word:- that. 4 of 9
73	73	53 SECTION 13. Said section 5 of said chapter 109A is hereby further amended by inserting
74	74	54after subsection (b) the following subsection:-
75	75	55 (c) A creditor making a claim for relief under subsection (a) has the burden of proving the
76	76	56elements of the claim for relief by a preponderance of the evidence.
77	77	57 SECTION 14. Section 6 of said chapter 109A, as so appearing, is hereby amended by
78	78	58striking out, in lines 2 and 8, the word “fraudulent” each time it appears and inserting in place
79	79	59thereof, in each instance, the following word:- “voidable”.
80	80	60 SECTION 15. Said section 6 of said chapter 109A is hereby further amended by inserting
81	81	61after subsection (b) the following subsection:-
82	82	62 (c) Subject to subsection (b) of section 3, a creditor making a claim for relief under
83	83	63subsection (a) or (b) has the burden of proving the elements of the claim for relief by a
84	84	64preponderance of the evidence.
85	85	65 SECTION 16. Section 7 of said chapter 109A, as so appearing, is hereby amended by
86	86	66striking out, in line 7, the word “whom” and inserting in place thereof the following word:-
87	87	67which.
88	88	68 SECTION 17. Said section 7 of said chapter 109A is hereby further amended by
89	89	69inserting, in line 23, after the word “transferred;” the following word:- and.
90	90	70 SECTION 18. Said section 7 of said chapter 109A is hereby further amended by striking
91	91	71out, in line 26, the words “writing, when the writing executed and inserting in place thereof the
92	92	72following words:- record, when the record signed. 5 of 9
93	93	73 SECTION 19. Section 8 of said chapter 109A, as so appearing, is hereby amended by
94	94	74striking out paragraph (2) of subsection (a) and inserting in place thereof the following
95	95	75paragraph:-
96	96	76 (2) an attachment or other provisional remedy against the asset transferred or other
97	97	77property of the transferee if available under applicable law; and
98	98	78 SECTION 20. Said section 8 of said chapter 109A is hereby further amended by striking
99	99	79out, in line 13, the comma after the word “procedure” and inserting in place thereof a colon.
100	100	80 SECTION 21. Said chapter 109A is hereby amended by striking out section 9 and
101	101	81inserting in place thereof the following section:-
102	102	82 Section 9. (a) A transfer or obligation is not voidable under paragraph (1) of subsection
103	103	83(a) of section 5 against a person that took in good faith and for a reasonably equivalent value
104	104	84given the debtor or against any subsequent transferee or obligee.
105	105	85 (b) To the extent a transfer is avoidable in an action by a creditor under paragraph (1) of
106	106	86subsection (a) of section 8, the following rules apply:
107	107	87 (1) Except as otherwise provided in this section, the creditor may recover judgment for
108	108	88the value of the asset transferred, as adjusted under subsection (c), or the amount necessary to
109	109	89satisfy the creditor’s claim, whichever is less. The judgment may be entered against:
110	110	90 (i) the first transferee of the asset or the person for whose benefit the transfer was made;
111	111	91or
112	112	92 (ii) an immediate or mediate transferee of the first transferee, other than: 6 of 9
113	113	93 (A) a good-faith transferee that took for value; or
114	114	94 (B) an immediate or mediate good-faith transferee of a person described in clause (A).
115	115	95 (2) Recovery pursuant to paragraph (1) of subsection (a) or (b) of section 8 of or from the
116	116	96asset transferred or its proceeds, by levy or otherwise, is available only against a person
117	117	97described in clause (i) or (ii) of paragraph (1).
118	118	98 (c) If the judgment under subsection (b) is based upon the value of the asset transferred,
119	119	99the judgment shall be for an amount equal to the value of the asset at the time of the transfer,
120	120	100subject to adjustment as the equities may require.
121	121	101 (d) Notwithstanding voidability of a transfer or an obligation under this chapter, a good-
122	122	102faith transferee or obligee is entitled, to the extent of the value given the debtor for the transfer or
123	123	103obligation, to:
124	124	104 (1) a lien on or a right to retain an interest in the asset transferred;
125	125	105 (2) enforcement of an obligation incurred; or
126	126	106 (3) a reduction in the amount of the liability on the judgment.
127	127	107 (e) A transfer is not voidable under paragraph (2) of subsection (a) of section 5 or section
128	128	1086 if the transfer results from:
129	129	109 (1) termination of a lease upon default by the debtor when the termination is pursuant to
130	130	110the lease and applicable law; or
131	131	111 (2) enforcement of a security interest in compliance with Article 9 of chapter 106, other
132	132	112than acceptance of collateral in full or partial satisfaction of the obligation it secures. 7 of 9
133	133	113 (f) A transfer is not voidable under subsection (b) of section 6:
134	134	114 (1) to the extent the insider gave new value to or for the benefit of the debtor after the
135	135	115transfer was made, except to the extent the new value was secured by a valid lien;
136	136	116 (2) if made in the ordinary course of business or financial affairs of the debtor and the
137	137	117insider; or
138	138	118 (3) if made pursuant to a good-faith effort to rehabilitate the debtor and the transfer
139	139	119secured present value given for that purpose as well as an antecedent debt of the debtor.
140	140	120 (g) The following rules determine the burden of proving matters referred to in this
141	141	121section:
142	142	122 (1) A party that seeks to invoke subsection (a), (d), (e) or (f) has the burden of proving
143	143	123the applicability of that subsection.
144	144	124 (2) Except as otherwise provided in paragraphs (3) and (4), the creditor has the burden of
145	145	125proving each applicable element of subsection (b) or (c).
146	146	126 (3) The transferee has the burden of proving the applicability to the transferee of clause
147	147	127(A) or (B) of clause (ii) of paragraph 1 of subsection (b).
148	148	128 (4) A party that seeks adjustment under subsection (c) has the burden of proving the
149	149	129adjustment.
150	150	130 (h) The standard of proof required to establish matters referred to in this section is by a
151	151	131preponderance of the evidence. 8 of 9
152	152	132 SECTION 22. Section 10 of said chapter 109A, as so appearing, is hereby amended by
153	153	133striking out, in line 1, the words “A cause of action with respect to a fraudulent” and inserting in
154	154	134place thereof the following words:- A claim for relief with respect to a.
155	155	135 SECTION 23. Said section 10 of said chapter 109A is hereby further amended by striking
156	156	136out, in lines 4, 6, 9 and 11, the word “within” each time it appears and inserting in place thereof,
157	157	137in each instance, the following words:- not later than.
158	158	138 SECTION 24. Said chapter 109A is hereby amended by striking out sections 11 and 12
159	159	139and inserting in place thereof the following sections:-
160	160	140 Section 11. (a) In this section, the following rules determine a debtor’s location:
161	161	141 (1) A debtor who is an individual is located at the individual’s principal residence.
162	162	142 (2) A debtor that is an organization and has only one place of business is located at its
163	163	143place of business.
164	164	144 (3) A debtor that is an organization and has more than one place of business is located at
165	165	145its principal place of business.
166	166	146 (b) A claim for relief under this chapter is governed by the local law of the jurisdiction in
167	167	147which the debtor is located when the transfer is made or the obligation is incurred.
168	168	148 Section 12. Unless otherwise required by the provisions of this chapter, the principles of
169	169	149law and equity, including the law merchant and the law relating to principal and agent, estoppel,
170	170	150laches, fraud, misrepresentation, duress, coercion, mistake, insolvency, or other validating or
171	171	151invalidating cause, shall supplement its provisions. 9 of 9
172	172	152 SECTION 25. Said chapter 109A is hereby amended by inserting after section 13 the
173	173	153following sections:-
174	174	154 Section 14. This chapter shall be applied and construed to effectuate its general purpose
175	175	155to make uniform the law with respect to the subject of this chapter among states which enact it.
176	176	156 Section15. This chapter modifies, limits or supersedes the Electronic Signatures in Global
177	177	157and National Commerce Act, 15 U.S.C. Section 7001 et seq., but does not modify, limit, or
178	178	158supersede Section 101(c) of that act, 15 U.S.C. Section 7001(c), or authorize electronic delivery
179	179	159of any of the notices described in Section 103(b) of that act, 15 U.S.C. Section 7003(b).
180	180	160 Section 16. The official comments to the Uniform Voidable Transactions Act, as added
181	181	161by the Uniform Law Commission in 2014 with the adoption of the changes to the Uniform
182	182	162Fraudulent Transfer Act, are not part of this act and may or may not reflect current
183	183	163Massachusetts law.
184	184	164 SECTION 26. The amendments to chapter 109A made by this Act: (a) apply to a transfer
185	185	165made or obligation incurred on or after the effective date of the amendments; (b) do not apply to
186	186	166a transfer made or obligation incurred before the effective date of the amendments; and (c) do
187	187	167not apply to a right of action that has accrued before the effective date of the amendments. A
188	188	168transfer is made and an obligation is incurred at the time provided in section 6 of chapter 109A.