Creditors Beware - Greater Protection Under the Law Is Now Afforded to a Third-Party Transferee Defending Against a Fraudulent Transfer Claim

Creditors Beware - Greater Protection Under the Law Is Now Afforded to a Third-Party Transferee Defending Against a Fraudulent Transfer Claim

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Pursuant to a recent California Court ruling, to be found liable as a transferee of assets under a creditor’s fraudulent transfer claim, the transferee must know at least some fact that would put the transferee on notice that the debtor was trying to use the transaction to defraud creditors. Absent that fact, a transferee seemingly has no duty to investigate the debtor's affairs generally as to any potential ill intent. (See Nautilus, Inc. v. Yang; Urban Financial Group (2017)).

As such, creditors must now be even more diligent in recording their judgment abstracts and immediately tracing, liening, and providing creditor notices with respect to all of the debtor’s assets prior to the debtor transferring its assets to any third party.

This legal summary is provided by Horner Law Group, P.C., Walnut Creek, CA. for educational and informational purposes only and is not intended and should not be construed as legal advice.

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