[Rev. 11/21/2013 9:34:38 AM--2013]

CHAPTER 112 - FRAUDULENT TRANSFERS (UNIFORM ACT)

NRS 112.140           Short title.

NRS 112.150           Definitions.

NRS 112.160           Insolvency.

NRS 112.170           Value; reasonably equivalent value; present value.

NRS 112.180           Transfer made or obligation incurred with intent to defraud or without receiving reasonably equivalent value; determination of intent.

NRS 112.190           Transfer made or obligation incurred by insolvent.

NRS 112.200           Time at which transfer or obligation deemed made or incurred.

NRS 112.210           Rights of creditor in action for relief against transfer or obligation.

NRS 112.220           Avoidance of transfer or obligation: Protection of good faith transferee or obligee; recovery of judgment for value of asset transferred; certain transfers not voidable.

NRS 112.230           Limitation of actions.

NRS 112.240           Supplementary general provisions of law applicable.

NRS 112.250           Construction of chapter.

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      NRS 112.140  Short title.  This chapter may be cited as the Uniform Fraudulent Transfer Act.

      (Added to NRS by 1987, 8)

      NRS 112.150  Definitions.  As used in this chapter, unless the context otherwise requires:

      1.  “Affiliate” means:

      (a) A person who directly or indirectly owns, controls or holds with power to vote, 20 percent or more of the outstanding voting securities of the debtor, other than a person who holds the securities:

             (1) As a fiduciary or agent without sole discretionary power to vote the securities; or

             (2) Solely to secure a debt, if the person has not exercised the power to vote;

      (b) A corporation 20 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote, by the debtor or a person who directly or indirectly owns, controls or holds with power to vote, 20 percent or more of the outstanding voting securities of the debtor, other than a person who holds the securities:

             (1) As a fiduciary or agent without sole power to vote the securities; or

             (2) Solely to secure a debt, if the person has not in fact exercised the power to vote;

      (c) A person whose business is operated by the debtor under a lease or other agreement, or a person substantially all of whose assets are controlled by the debtor; or

      (d) A person who operates the debtor’s business under a lease or other agreement or controls substantially all of the debtor’s assets.

      2.  “Asset” means property of a debtor, but the term does not include:

      (a) Property to the extent it is encumbered by a valid lien;

      (b) Property to the extent it is generally exempt under nonbankruptcy law; or

      (c) An interest in property held in tenancy by the entireties or as community property to the extent it is not subject to process by a creditor holding a claim against only one tenant.

      3.  “Claim” means a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured.

      4.  “Creditor” means a person who has a claim.

      5.  “Debt” means liability on a claim.

      6.  “Debtor” means a person who is liable on a claim.

      7.  “Insider” includes:

      (a) If the debtor is a natural person:

             (1) A relative of the debtor or of a general partner of the debtor;

             (2) A partnership in which the debtor is a general partner;

             (3) A general partner in a partnership described in subparagraph (2); and

             (4) A corporation of which the debtor is a director, officer or person in control;

      (b) If the debtor is a corporation:

             (1) A director of the debtor;

             (2) An officer of the debtor;

             (3) A person in control of the debtor;

             (4) A partnership in which the debtor is a general partner;

             (5) A general partner in a partnership described in subparagraph (4); and

             (6) A relative of a general partner, director, officer or person in control of the debtor;

      (c) If the debtor is a partnership:

             (1) A general partner in the debtor;

             (2) A relative of a general partner in, a general partner of, or a person in control of the debtor;

             (3) Another partnership in which the debtor is a general partner;

             (4) A general partner in a partnership described in subparagraph (3); and

             (5) A person in control of the debtor;

      (d) An affiliate, or an insider of an affiliate as if the affiliate were the debtor; and

      (e) A managing agent of the debtor.

      8.  “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 and a statutory lien.

      9.  “Person” includes a government and a governmental subdivision or agency.

      10.  “Property” means anything that may be the subject of ownership.

      11.  “Relative” means a natural person related by consanguinity within the third degree as determined by the common law, a spouse, or a natural person related to a spouse within the third degree as so determined, and includes a natural person in an adoptive relationship within the third degree.

      12.  “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 and creation of a lien or other encumbrance.

      13.  “Valid lien” means a lien that is effective against the holder of a judicial lien subsequently obtained by legal or equitable process or proceedings.

      (Added to NRS by 1987, 8)

      NRS 112.160  Insolvency.

      1.  A debtor is insolvent if the sum of the debtor’s debts is greater than all of the debtor’s assets at a fair valuation.

      2.  A debtor who is generally not paying his or her debts as they become due is presumed to be insolvent.

      3.  A partnership is insolvent under subsection 1 if the sum of the partnership’s debts is greater than the aggregate, at a fair valuation, of all of the partnership’s assets and the sum of the excess of the value of each general partner’s nonpartnership assets over the partner’s nonpartnership debts.

      4.  Assets under this section do not include property that has been transferred, concealed or removed with intent to hinder, delay or defraud creditors or that has been transferred in a manner making the transfer voidable under this chapter.

      5.  Debts under this section do not include an obligation to the extent it is secured by a valid lien on property of the debtor not included as an asset.

      (Added to NRS by 1987, 10)

      NRS 112.170  Value; reasonably equivalent value; present value.

      1.  Value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or an antecedent debt is secured or satisfied, but value does not include an unperformed promise made otherwise than in the ordinary course of the promisor’s business to furnish support to the debtor or another person.

      2.  For the purposes of paragraph (b) of subsection 1 of NRS 112.180 and NRS 112.190, a person gives a reasonably equivalent value if the person acquires an interest of the debtor in an asset pursuant to a regularly conducted, noncollusive foreclosure sale or execution of a power of sale for the acquisition or disposition of the interest of the debtor upon default under a mortgage, deed of trust or security agreement.

      3.  A transfer is made for present value if the exchange between the debtor and the transferee is intended by them to be contemporaneous and is in fact substantially contemporaneous.

      (Added to NRS by 1987, 710)

      NRS 112.180  Transfer made or obligation incurred with intent to defraud or without receiving reasonably equivalent value; determination of intent.

      1.  A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:

      (a) With actual intent to hinder, delay or defraud any creditor of the debtor; or

      (b) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:

             (1) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or

             (2) Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond his or her ability to pay as they became due.

      2.  In determining actual intent under paragraph (a) of subsection 1, consideration may be given, among other factors, to whether:

      (a) The transfer or obligation was to an insider;

      (b) The debtor retained possession or control of the property transferred after the transfer;

      (c) The transfer or obligation was disclosed or concealed;

      (d) Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;

      (e) The transfer was of substantially all the debtor’s assets;

      (f) The debtor absconded;

      (g) The debtor removed or concealed assets;

      (h) 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;

      (i) The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;

      (j) The transfer occurred shortly before or shortly after a substantial debt was incurred; and

      (k) The debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.

      (Added to NRS by 1987, 11)

      NRS 112.190  Transfer made or obligation incurred by insolvent.

      1.  A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.

      2.  A transfer made by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made if the transfer was made to an insider for an antecedent debt, the debtor was insolvent at that time, and the insider had reasonable cause to believe that the debtor was insolvent.

      (Added to NRS by 1987, 11)

      NRS 112.200  Time at which transfer or obligation deemed made or incurred.  For the purposes of this chapter:

      1.  A transfer is made:

      (a) With respect to an asset that is real property other than a fixture, but including the interest of a seller or purchaser under a contract for the sale of the asset, when the transfer is so far perfected that a good faith purchaser of the asset from the debtor against whom applicable law permits the transfer to be perfected cannot acquire an interest in the asset that is superior to the interest of the transferee; and

      (b) With respect to an asset that is not real property or that is a fixture, when the transfer is so far perfected that a creditor on a simple contract cannot acquire a judicial lien otherwise than under this chapter that is superior to the interest of the transferee.

      2.  If applicable law permits the transfer to be perfected as provided in subsection 1 and the transfer is not so perfected before the commencement of an action for relief under this chapter, the transfer is deemed made immediately before the commencement of the action.

      3.  If applicable law does not permit the transfer to be perfected as provided in subsection 1, the transfer is made when it becomes effective between the debtor and the transferee.

      4.  A transfer is not made until the debtor has acquired rights in the asset transferred.

      5.  An obligation is incurred:

      (a) If oral, when it becomes effective between the parties; or

      (b) If evidenced by a writing, when the writing executed by the obligor is delivered to or for the benefit of the obligee.

      (Added to NRS by 1987, 12)

      NRS 112.210  Rights of creditor in action for relief against transfer or obligation.

      1.  In an action for relief against a transfer or obligation under this chapter, a creditor, subject to the limitations in NRS 112.220, may obtain:

      (a) Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor’s claim;

      (b) An attachment or garnishment against the asset transferred or other property of the transferee pursuant to NRS 31.010 to 31.460, inclusive; and

      (c) Subject to applicable principles of equity and in accordance with applicable rules of civil procedure:

             (1) An injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property;

             (2) Appointment of a receiver to take charge of the asset transferred or of other property of the transferee; or

             (3) Any other relief the circumstances may require.

      2.  If a creditor has obtained a judgment on a claim against the debtor, the creditor, if the court so orders, may levy execution on the asset transferred or its proceeds.

      (Added to NRS by 1987, 12)

      NRS 112.220  Avoidance of transfer or obligation: Protection of good faith transferee or obligee; recovery of judgment for value of asset transferred; certain transfers not voidable.

      1.  A transfer or obligation is not voidable under paragraph (a) of subsection 1 of NRS 112.180 against a person who took in good faith and for a reasonably equivalent value or against any subsequent transferee or obligee.

      2.  Except as otherwise provided in this section, to the extent a transfer is voidable in an action by a creditor under paragraph (a) of subsection 1 of NRS 112.210, the creditor may recover judgment for the value of the asset transferred, as adjusted under subsection 3 of this section, or the amount necessary to satisfy the creditor’s claim, whichever is less. The judgment may be entered against:

      (a) The first transferee of the asset or the person for whose benefit the transfer was made; or

      (b) Any subsequent transferee other than a transferee who took in good faith for value or from any subsequent transferee.

      3.  If the judgment under subsection 2 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.

      4.  Notwithstanding voidability of a transfer or an obligation under this chapter, a transferee or obligee who took in good faith is entitled, to the extent of the value given the debtor for the transfer or obligation, to:

      (a) A lien on or a right to retain any interest in the asset transferred;

      (b) Enforcement of any obligation incurred; or

      (c) A reduction in the amount of the liability on the judgment.

      5.  A transfer is not voidable under paragraph (b) of subsection 1 of NRS 112.180 or NRS 112.190 if the transfer results from:

      (a) Termination of a lease upon default by the debtor when the termination is pursuant to the lease and applicable law; or

      (b) Enforcement of a security interest in compliance with NRS 104.9101 to 104.9709, inclusive.

      6.  A transfer is not voidable under subsection 2 of NRS 112.190:

      (a) To the extent the insider gave new value to or for the benefit of the debtor after the transfer was made unless the new value was secured by a valid lien;

      (b) If made in the ordinary course of business or financial affairs of the debtor and the insider; or

      (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.

      (Added to NRS by 1987, 12; A 1999, 389)

      NRS 112.230  Limitation of actions.  Except as otherwise provided in NRS 166.170, a claim for relief with respect to a fraudulent transfer or obligation under this chapter is extinguished unless action is brought:

      1.  Under paragraph (a) of subsection 1 of NRS 112.180, within 4 years after the transfer was made or the obligation was incurred or, if later, within 1 year after the transfer or obligation was or could reasonably have been discovered by the claimant;

      2.  Under paragraph (b) of subsection 1 of NRS 112.180 or subsection 1 of NRS 112.190, within 4 years after the transfer was made or the obligation was incurred; or

      3.  Under subsection 2 of NRS 112.190, within 1 year after the transfer was made or the obligation was incurred.

      (Added to NRS by 1987, 13; A 1999, 1239)

      NRS 112.240  Supplementary general provisions of law applicable.  Unless displaced by the provisions of this chapter, the principles of law and equity, including the law merchant and the law relating to principal and agent, estoppel, laches, fraud, misrepresentation, duress, coercion, mistake, insolvency or other validating or invalidating cause, supplement its provisions.

      (Added to NRS by 1987, 14)

      NRS 112.250  Construction of chapter.  This chapter must be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this chapter among states enacting it.

      (Added to NRS by 1987, 14)