Utah Code 25-6-304. Good faith transfer
Current as of: 2024 | Check for updates
|
Other versions
(1) Except as otherwise provided in this section, a transfer or obligation is not voidable under Subsection 25-6-202(1)(a) against a person that took in good faith and for a reasonably equivalent value given the debtor or against any subsequent transferee or obligee.
Terms Used In Utah Code 25-6-304
- Asset: means property of a debtor, but does not include:(2)(a) property to the extent it is encumbered by a valid lien;(2)(b) property to the extent it is generally exempt under nonbankruptcy law; or(2)(c) an interest in property held in tenancy by the entireties to the extent it is not subject to process by a creditor holding a claim against only one tenant. See Utah Code 25-6-102
- Creditor: means a person that has a claim. See Utah Code 25-6-102
- Debt: means liability on a claim. See Utah Code 25-6-102
- Debtor: means a person that is liable on a claim. See Utah Code 25-6-102
- Equal: means , with respect to biological sex, of the same value. See Utah Code 68-3-12.5
- 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.
- Insider: includes :
(8)(a) if the debtor is an individual:(8)(a)(i) a relative of the debtor or of a general partner of the debtor;(8)(a)(ii) a partnership in which the debtor is a general partner;(8)(a)(iii) a general partner in a partnership described in Subsection (8)(a)(ii);(8)(a)(iv) a corporation of which the debtor is a director, officer, or person in control; or(8)(a)(v) a limited liability company of which the debtor is a member or manager;(8)(b) if the debtor is a corporation:(8)(b)(i) a director of the debtor;(8)(b)(ii) an officer of the debtor;(8)(b)(iii) a person in control of the debtor;(8)(b)(iv) a partnership in which the debtor is a general partner;(8)(b)(v) a general partner in a partnership described in Subsection (8)(b)(iv);(8)(b)(vi) a limited liability company of which the debtor is a member or manager; or(8)(b)(vii) a relative of a general partner, director, officer, or person in control of the debtor;(8)(c) if the debtor is a partnership:(8)(c)(i) a general partner in the debtor;(8)(c)(ii) a relative of a general partner in, a general partner of, or a person in control of the debtor;(8)(c)(iii) another partnership in which the debtor is a general partner;(8)(c)(iv) a general partner in a partnership described in Subsection (8)(c)(iii);(8)(c)(v) a limited liability company of which the debtor is a member or manager; or(8)(c)(vi) a person in control of the debtor;(8)(d) if the debtor is a limited liability company:(8)(d)(i) a member or manager of the debtor;(8)(d)(ii) another limited liability company in which the debtor is a member or manager;(8)(d)(iii) a partnership in which the debtor is a general partner;(8)(d)(iv) a general partner in a partnership described in Subsection (8)(d)(iii);(8)(d)(v) a person in control of the debtor; or(8)(d)(vi) a relative of a general partner, member, manager, or person in control of the debtor;(8)(e) an affiliate, or an insider of an affiliate as if the affiliate were the debtor; and(8)(f) a managing agent of the debtor. See Utah Code 25-6-102- 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 Utah Code 25-6-102
- 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, limited liability company, association, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, instrumentality, or other legal or commercial entity. See Utah Code 25-6-102
- Transfer: means every mode, direct or indirect, absolute or conditional, or voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, and creation of a lien or other encumbrance. See Utah Code 25-6-102
- 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
(2) Except as otherwise provided in this section, to the extent a transfer is avoidable in an action by a creditor under Subsection 25-6-303(1)(a), the following rules apply:(2)(a) the creditor may recover judgment for the value of the asset transferred, as adjusted under Subsection (3), or the amount necessary to satisfy the creditor’s claim, whichever is less; and(2)(b) the judgment may be entered against:(2)(b)(i) the first transferee of the asset or the person for whose benefit the transfer was made; or(2)(b)(ii) an immediate or mediate transferee of the first transferee, other than:(2)(b)(ii)(A) a good faith transferee that took for value; or(2)(b)(ii)(B) an immediate or mediate good faith transferee of a person described in Subsection (2)(b)(ii)(A); and(2)(c) recovery under Subsection 25-6-303(1)(a) or (2) of or from the asset transferred or its proceeds, by levy or otherwise, is available only against a person described in Subsection (2)(b)(i) or (ii).(3) If the judgment under Subsection (2) is based upon the value of the asset transferred, the judgment shall be for an amount equal to the value of the asset at the time of the transfer, subject to an adjustment as equities may require.(4) Except as otherwise provided in this section, notwithstanding the voidability of a transfer or an obligation under this chapter, a good faith transferee or obligee is entitled, to the extent of the value given the debtor for the transfer or obligation, to:(4)(a) a lien on or a right to retain an interest in the asset transferred;(4)(b) enforcement of an obligation incurred; or(4)(c) a reduction in the amount of the liability on the judgment.(5) A transfer is not voidable under Subsection 25-6-202(1)(b) or Section 25-6-203 if the transfer results from:(5)(a) termination of a lease upon default by the debtor when the termination is pursuant to the lease and applicable law; or(5)(b) enforcement of a security interest in compliance with Title 70A, Chapter 9a, Uniform Commercial Code – Secured Transactions, other than acceptance of collateral in full or partial satisfaction of the obligation it secures.(6) Except as otherwise provided in this section, a transfer is not voidable under Subsection 25-6-203(2):(6)(a) 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;(6)(b) if made in the ordinary course of business or financial affairs of the debtor and the insider; or(6)(c) 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.(7) A transfer is not voidable under Section 25-6-202 or Subsection 25-6-203(1) if:(7)(a) the transfer was made by the debtor:(7)(a)(i) in payment of or in exchange for goods, services, or other consideration obtained by the debtor or a third party from a merchant in the ordinary course of the merchant’s business; or(7)(a)(ii) in payment of amounts loaned or advanced by a merchant or a credit or financing company to pay for the goods, services, or other consideration obtained by the debtor or a third party from a merchant in the ordinary course of the merchant’s business;(7)(b) the goods, services, or other consideration obtained from the merchant or the amounts loaned or advanced by the merchant or the credit or financing company in payment of the goods, services, or other consideration obtained from the merchant in the ordinary course of the merchant’s business was of a reasonably equivalent value to the transfer, as provided in Subsection (8); and(7)(c) the transferee received the transfer in good faith, in the ordinary course of the transferee’s business, and without actual knowledge that:(7)(c)(i) the transfer was made by the debtor with actual intent to hinder, delay, or defraud any creditor of the debtor; or(7)(c)(ii) that the debtor was insolvent at the time the transfer was made.(8) For purposes of Subsection (7):(8)(a) the term “merchant” means the same as that term is defined in Section 70A-2-104;(8)(b) where the value of the goods, services, or other consideration obtained from the merchant, or where the value of the amounts loaned or advanced by a merchant or a credit or financing company in payment of the goods, services, or other consideration obtained from the merchant, was reasonably equivalent to the value of the transfer, the “reasonably equivalent value” requirement in Subsection (7)(b) will be satisfied regardless of whether the debtor or a third party received the reasonably equivalent value for the transfer; and(8)(c) a transferee’s receipt of payment from a debtor is not, and may not be used as, evidence that:(8)(c)(i) the transferee did not act in good faith;(8)(c)(ii) the goods, services, or other consideration were not provided by the merchant in the ordinary course of the merchant’s business;(8)(c)(iii) the transferee had actual knowledge that the transfer was made by the debtor with actual intent to hinder, delay, or defraud any creditor of the debtor; or(8)(c)(iv) the debtor was insolvent at the time the transfer was made.(9) The following rules determine the burden of proving matters referred to in this section:(9)(a) a party that seeks to invoke Subsection (1), (4), (5), or (6) has the burden of proving the applicability of that subsection;(9)(b) except as otherwise provided in Subsections (9)(c) and (d), the creditor has the burden of proving each applicable element of Subsection (2) or (3);(9)(c) the transferee has the burden of proving the applicability to the transferee of Subsection (2)(b)(ii)(A) or (B); and(9)(d) a party that seeks adjustment under Subsection (3) has the burden of proving the adjustment.(10) The standard of proof required to establish matters referred to in this section is a preponderance of the evidence.