(a) A transfer is not voidable under Section 8-9B-5(a)(1) against a person that took in good faith and for a reasonably equivalent value given the debtor or against any subsequent transferee that took in good faith.
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Terms Used In Alabama Code 8-9B-9

  • Asset: means property of a debtor, but the term does not include:
    (i) property to the extent it is encumbered by a valid lien;
    (ii) property to the extent it is generally exempt under nonbankruptcy law; or
    (iii) an interest in property held in tenancy in common for life with cross contingent remainder to the survivor in fee to the extent it is not subject to process by a creditor holding a claim against only one tenant. See Alabama Code 8-9B-2
  • Creditor: means a person that has a claim. See Alabama Code 8-9B-2
  • Debt: means liability on a claim. See Alabama Code 8-9B-2
  • Debtor: means a person that is liable on a claim. See Alabama Code 8-9B-2
  • Deed: The legal instrument used to transfer title in real property from one person to another.
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • following: means next after. See Alabama Code 1-1-1
  • Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
  • Insider: includes :
    (i) if the debtor is an individual:
    (A) a relative of the debtor or of a general partner of the debtor;
    (B) a partnership in which the debtor is a general partner;
    (C) a general partner in a partnership described in clause (B); or
    (D) a corporation of which the debtor is a director, officer, or person in control;
    (ii) if the debtor is a corporation:
    (A) a director of the debtor;
    (B) an officer of the debtor;
    (C) a person in control of the debtor;
    (D) a partnership in which the debtor is a general partner;
    (E) a general partner in a partnership described in clause (D); or
    (F) a relative of a general partner, director, officer, or person in control of the debtor;
    (iii) if the debtor is a partnership:
    (A) a general partner in the debtor;
    (B) a relative of a general partner in, a general partner of, or a person in control of the debtor;
    (C) another partnership in which the debtor is a general partner;
    (D) a general partner in a partnership described in clause (C); or
    (E) a person in control of the debtor;
    (iv) an affiliate, or an insider of an affiliate as if the affiliate were the debtor; and
    (v) a managing agent of the debtor. See Alabama Code 8-9B-2
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Lien: means a charge against or an interest in property to secure payment of a debt or performance of an obligation, and includes a security interest created by agreement, a judicial lien obtained by legal or equitable process or proceedings, a common-law lien, or a statutory lien. See Alabama Code 8-9B-2
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Person: means an individual, estate, partnership, association, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal or commercial entity. See Alabama Code 8-9B-2
  • Transfer: means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, license, and creation of a lien or other encumbrance. See Alabama Code 8-9B-2
  • Uniform Commercial Code: A set of statutes enacted by the various states to provide consistency among the states' commercial laws. It includes negotiable instruments, sales, stock transfers, trust and warehouse receipts, and bills of lading. Source: OCC
(b) To the extent a transfer is avoidable in an action by a creditor under Section 8-9B-8(a)(1), the following rules apply:

(1) Except as otherwise provided in this section, the creditor may recover judgment for the value of the asset transferred, as adjusted under subsection (c), or the amount necessary to satisfy the creditor’s claim, whichever is less. The judgment may be entered against:

(i) the first transferee of the asset or the person for whose benefit the transfer was made; or
(ii) any subsequent transferee, other than:

(A) a good-faith transferee that took for value; or
(B) a subsequent transferee of a person described in clause (A).
(2) Recovery pursuant to Section 8-9B-8(a)(1) or (b) of or from the asset transferred or its proceeds, by levy or otherwise, is available only against a person described in paragraph (1)(i) or (ii).
(c) If the judgment under subsection (b) is based upon the value of the asset transferred, the judgment must be for an amount equal to the value of the asset at the time of the transfer, subject to adjustment as the equities may require.
(d) Notwithstanding voidability of a transfer under this chapter, a good-faith transferee is entitled, to the extent of the value given the debtor for the transfer, to:

(1) a lien on or a right to retain an interest in the asset transferred; or
(2) a reduction in the amount of the liability on the judgment.
(e) A transfer is not voidable under Section 8-9B-5(a)(2) or Section 8-9B-6 if the transfer results from:

(1) termination of a lease upon default by the debtor when the termination is pursuant to the lease and applicable law;
(2) enforcement of a security interest in compliance with Article 9 of the Uniform Commercial Code, Article 9A, commencing with Section 7-9A-1, of Title 7, other than acceptance of collateral in full or partial satisfaction of the obligation it secures; or
(3) a regularly conducted, noncollusive foreclosure sale or execution of a power of sale for the acquisition or disposition of the interest of the debtor under a mortgage, deed of trust, or security agreement.
(f) A transfer is not voidable under Section 8-9B-6(b):

(1) to the extent the insider gave new value to or for the benefit of the debtor after the transfer was made, except to the extent the new value was secured by a valid lien;
(2) if made in the ordinary course of business or financial affairs of the debtor and the insider; or
(3) if made pursuant to a good-faith effort to rehabilitate the debtor and the transfer secured present value given for that purpose as well as an antecedent debt of the debtor.
(g) The following rules determine the burden of proving matters referred to in this section:

(1) A party that seeks to invoke subsection (a), (d), (e), or (f) has the burden of proving the applicability of that subsection.
(2) Except as otherwise provided in paragraphs (3) and (4), the creditor has the burden of proving each applicable element of subsection (b) or (c).
(3) The transferee has the burden of proving the applicability to the transferee of subsection (b)(1)(ii)(A) or (B).
(4) A party that seeks adjustment under subsection (c) has the burden of proving the adjustment.
(h) The standard of proof required to establish matters referred to in this section is preponderance of the evidence.
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