Asset Protection/Creditors’ Rights/Confronting Transfers with Intent to Defraud

Adam Keilen

Under the Uniform Fraudulent Transfer Act, Act 434 of 1998, a transfer is fraudulent, regardless of whether the claim arose before or after the transfer was made, if the transfer was executed with intent to hinder, delay, or defraud any creditor or if the transfer was executed without receiving a reasonably equivalent value. MCL § 566.34(1)(a)-(b). Therefore, the question is one of intent. To determine actual intent, the court will consider whether one or more of several factors occurred. MCL § 566.34(2)(a)-(k).

  1. In determining actual intent under subsection (1)(a), consideration may be given, among other factors, to whether 1 or more of the following occurred:
    1. The transfer or obligation was to an insider.
    2. The debtor retained possession or control of the property transferred after the transfer.
    3. The transfer or obligation was disclosed or concealed.
    4. Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit.
    5. The transfer was of substantially all of the debtor’s assets.
    6. The debtor absconded.
    7. The debtor removed or concealed assets.
    8. The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred.
    9. The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred.
    10. The transfer occurred shortly before or shortly after a substantial debt was incurred.
    11. The debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.