Senate Bill25-133 Preamended

A Bill for an Act

• Page 1, Line 101Concerning voidable transactions, and, in connection

• Page 1, Line 102therewith, updating the "Colorado Uniform

• Page 1, Line 103Fraudulent Transfers Act" and renaming it the

• Page 1, Line 104"Colorado Voidable Transactions Act".

Bill Summary

(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.)

Under current law, fraudulent transactions are controlled by the "Colorado Uniform Fraudulent Transfers Act". The bill makes updates to the "Colorado Uniform Fraudulent Transfers Act" and renames it as the "Colorado Voidable Transactions Act" (act). The bill changes references in the act from "fraudulent transfers" to "voidable transactions".

The bill proposes changes to the act that would make the act align better with uniform law regarding voidable transactions, as well as makes updates to some of the definitions and terminology used in the act.

The bill establishes burdens of proof and evidentiary requirements for various claims under the act. The bill also establishes which jurisdictional laws control certain types of claims based on the location of a debtor and makes numerous technical amendments throughout the act.

• This Unofficial Version Includes Committee

• Amendments Not Yet Adopted on Second Reading

• Page 2, Line 1Be it enacted by the General Assembly of the State of Colorado:

• Page 2, Line 2SECTION 1.  In Colorado Revised Statutes, amend 38-8-101 as follows:

• Page 2, Line 338-8-101.  Short title.This article shall be known and may be

• Page 2, Line 4cited The short title of this article 8, which was formerly known

• Page 2, Line 5as the "Colorado Uniform Fraudulent Transfer Act", is the "Colorado Voidable Transactions Act".

• Page 2, Line 6SECTION 2.  In Colorado Revised Statutes, 38-8-102, amend the

• Page 2, Line 7introductory portion, (1)(a) introductory portion, (1)(a)(II), (1)(b)

• Page 2, Line 8introductory portion, (1)(b)(I), (1)(d), (3), (8) introductory portion, and (10); and add (7.5), (7.7), (11.5), and (12.5) as follows:

• Page 2, Line 938-8-102.  Definitions. As used in this article article 8, unless the context otherwise requires:

• Page 2, Line 10(1)  "Affiliate" means:

• Page 2, Line 11(a)  A person who that directly or indirectly owns, controls, or

• Page 2, Line 12holds with power to vote twenty percent or more of the outstanding

• Page 2, Line 13voting securities of the debtor, other than a person who that holds the securities:

• Page 2, Line 14(II)  Solely to secure a debt, if the person has not in fact exercised

• Page 2, Line 15the power to vote;

• Page 3, Line 1(b)  A corporation, twenty percent or more of whose outstanding

• Page 3, Line 2voting securities are directly or indirectly owned, controlled, or held with

• Page 3, Line 3power to vote, by the debtor or a person who that directly or indirectly

• Page 3, Line 4owns, controls, or holds with power to vote, twenty percent or more of the

• Page 3, Line 5outstanding voting securities of the debtor, other than a person who that holds the securities:

• Page 3, Line 6(I)  As a fiduciary or agent without sole discretionary power to vote the securities; or

• Page 3, Line 7(d)  A person who that operates the debtor's business under a lease or other agreement or controls substantially all of the debtor's assets.

• Page 3, Line 8(3)  "Claim", except as the term is used in "claim for relief",

• Page 3, Line 9means a right to payment, whether or not the right is reduced to judgment,

• Page 3, Line 10liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.

• Page 3, Line 11(7.5)  "Electronic" means technology having electrical,

• Page 3, Line 12digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

• Page 3, Line 13(7.7)  "Entity" has the same meaning as set forth in section 7-90-102 (20).

• Page 3, Line 14(8)  "Insider" means includes:

• Page 3, Line 15(10)  "Person" means an individual, partnership, corporation,

• Page 3, Line 16association, organization, government or governmental subdivision or

• Page 3, Line 17agency, business trust, estate, trust, or any other legal or commercial entity has the meaning set forth in section 7-90-102 (49).

• Page 3, Line 18(11.5)  "Record" means information that is inscribed on a

• Page 3, Line 19tangible medium or that is stored in an electronic or other

• Page 3, Line 20medium and is retrievable in perceivable form.

• Page 4, Line 1(12.5)  "Sign" or "signature" has the meaning set forth in section 7-90-102 (60.5).

• Page 4, Line 2SECTION 3.  In Colorado Revised Statutes, 38-8-103, amend (2) and (3) as follows:

• Page 4, Line 338-8-103.  Insolvency. (2)  A debtor who that is generally not

• Page 4, Line 4paying his their debts as they become due is presumed to be insolvent.

• Page 4, Line 5The presumption imposes on the debtor the burden of proving

• Page 4, Line 6that the nonexistence of insolvency is more probable than the existence of insolvency.

• Page 4, Line 7(3)  A partnership is insolvent under subsection (1) of this section

• Page 4, Line 8if the sum of the partnership's debts is greater than the aggregate of all of

• Page 4, Line 9the partnership's assets, at a fair valuation, and the sum of the excess of

• Page 4, Line 10the value of each general partner's nonpartnership assets over the partner's

• Page 4, Line 11nonpartnership debts A debtor that is insolvent as defined in 11 U.S.C. sec. 101 (32) of the federal bankruptcy code is insolvent.

• Page 4, Line 12SECTION 4.  In Colorado Revised Statutes, 38-8-105, amend (1)

• Page 4, Line 13introductory portion, (1)(b)(II), (2) introductory portion, and (2)(k); and add (3) as follows:

• Page 4, Line 1438-8-105.  Transfer or obligation voidable as to present and

• Page 4, Line 15future creditors. (1)  A transfer made or obligation incurred by a debtor

• Page 4, Line 16is fraudulent voidable as to a creditor, whether the creditor's claim arose

• Page 4, Line 17before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:

• Page 4, Line 18(b)  Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:

• Page 4, Line 19(II)  Intended to incur, or believed or reasonably should have

• Page 4, Line 20believed that he the debtor would incur, debts beyond his the debtor's ability to pay as they became due.

• Page 5, Line 1(2)  In determining actual intent under paragraph (a) of subsection

• Page 5, Line 2(1) subsection (1)(a) of this section, consideration may be given, among other factors, to whether:

• Page 5, Line 3(k)  The debtor transferred the essential assets of the business to a lienor who that transferred the assets to an insider of the debtor.

• Page 5, Line 4(3)  A creditor making a claim for relief under subsection

• Page 5, Line 5(1) of this section has the burden of proving the elements of the claim for relief by a preponderance of the evidence.

• Page 5, Line 6SECTION 5.  In Colorado Revised Statutes, amend 38-8-106 as follows:

• Page 5, Line 738-8-106.  Transfers or obligation voidable as to present

• Page 5, Line 8creditors. (1)  A transfer made or obligation incurred by a debtor is

• Page 5, Line 9fraudulent voidable as to a creditor whose claim arose before the

• Page 5, Line 10transfer was made or the obligation was incurred if the debtor made the

• Page 5, Line 11transfer or incurred the obligation without receiving a reasonably

• Page 5, Line 12equivalent value in exchange for the transfer or obligation and the debtor

• Page 5, Line 13was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.

• Page 5, Line 14(2)  A transfer made by a debtor is fraudulent voidable as to a

• Page 5, Line 15creditor whose claim arose before the transfer was made if the transfer

• Page 5, Line 16was made to an insider for an antecedent debt, the debtor was insolvent

• Page 5, Line 17at that time, and the insider had reasonable cause to believe that the debtor was insolvent.

• Page 5, Line 18(3)  Except as provided by section 38-8-103 (2), a creditor

• Page 5, Line 19making a claim for relief pursuant to subsection (1) or (2) of this

• Page 5, Line 20section has the burden of proving the elements of the claim for relief by a preponderance of the evidence.

• Page 6, Line 1SECTION 6.  In Colorado Revised Statutes, 38-8-107, amend (1) introductory portion, (1)(a)(I), and (5)(b) as follows:

• Page 6, Line 238-8-107.  When transfer is made or obligation is incurred. (1)  For the purposes of this article article 8:

• Page 6, Line 3(a)  A transfer is made:

• Page 6, Line 4(I)  With respect to an asset that is real property other than a

• Page 6, Line 5fixture, but including the interest of a seller or purchaser under a contract

• Page 6, Line 6for the sale of the asset, when the transfer is so far perfected that a good

• Page 6, Line 7faith purchaser of the asset from the debtor against whom which

• Page 6, Line 8applicable law permits the transfer to be perfected cannot acquire an interest in the asset that is superior to the interest of the transferee; and

• Page 6, Line 9(5)  An obligation is incurred:

• Page 6, Line 10(b)  If evidenced by a writing record, when the writing executed

• Page 6, Line 11record signed by the obligor is delivered to or for the benefit of the obligee.

• Page 6, Line 12SECTION 7.  In Colorado Revised Statutes, 38-8-108, amend (1) introductory portion and (1)(c) as follows:

• Page 6, Line 1338-8-108.  Remedies of creditors. (1)  In an action for relief

• Page 6, Line 14against a transfer or obligation under this article article 8, a creditor, subject to the limitations in section 38-8-109, may obtain:

• Page 6, Line 16(c)  With respect to a transfer made or obligation incurred that is

• Page 6, Line 17fraudulent voidable under section 38-8-105 (1)(a), a judgment for one

• Page 6, Line 18and one-half the value of the asset transferred or for one and one-half the

• Page 6, Line 19amount necessary to satisfy the creditor's claim, whichever is less,

• Page 6, Line 20together with the creditor's actual costs; except that any a judgment

• Page 7, Line 1entered against a person under this paragraph (c) subsection (1)(c) is in

• Page 7, Line 2lieu of, not in addition to, a judgment against the same person under

• Page 7, Line 3section 38-8-109 (2). No A judgment may not be entered pursuant to this

• Page 7, Line 4paragraph (c) subsection (1)(c) against a person other than the debtor

• Page 7, Line 5unless that person also acts with wrongful intent as defined in section

• Page 7, Line 638-8-105 (1)(a); otherwise, judgment for money damages against a person

• Page 7, Line 7other than the debtor may be entered only as provided in section

• Page 7, Line 838-8-109. No A judgment may not be entered under this paragraph (c)

• Page 7, Line 9subsection (1)(c) unless a court of competent jurisdiction enters or has

• Page 7, Line 10entered a judgment or order establishing the validity of the creditor's claim against the debtor.

• Page 7, Line 11SECTION 8.  In Colorado Revised Statutes, 38-8-109, amend (1),

• Page 7, Line 12(2), (4) introductory portion, (4)(a), (4)(b), and (5)(b); and add (7) and (8) as follows:

• Page 7, Line 1338-8-109.  Defenses, liability, and protection of transferee or

• Page 7, Line 14obligee. (1)  A transfer or obligation is not voidable under section

• Page 7, Line 1538-8-105 (1)(a) against a person who that took in good faith and for a

• Page 7, Line 16reasonably equivalent value given to the debtor or against any a subsequent transferee or obligee.

• Page 7, Line 17(2)  To the extent a transfer is voidable in an action by a creditor under section 38-8-108 (1)(a), the following rules apply:

• Page 7, Line 18(a)  Except as otherwise provided in this section, to the extent a

• Page 7, Line 19transfer is voidable in an action by a creditor under section 38-8-108

• Page 7, Line 20(1)(a), the creditor may recover judgment for the value of the asset

• Page 7, Line 21transferred, as adjusted under subsection (3) of this section, or the amount

• Page 7, Line 22necessary to satisfy the creditor's claim, whichever is less. The judgment

• Page 7, Line 23may be entered against:

• Page 8, Line 1(a)  (I)  The first transferee of the asset or the person for whose benefit the transfer was made; or

• Page 8, Line 2(b)  (II)  Any subsequent A direct or indirect transferee of the first transferee, other than:

• Page 8, Line 3(A)  A good faith transferee or obligee who that took for value; or from any subsequent transferee or obligee.

• Page 8, Line 4(B)  A direct or indirect good faith transferee of a person described in subsection (2)(a)(II)(A) of this section;

• Page 8, Line 6(4)  Notwithstanding voidability of a transfer or an obligation

• Page 8, Line 7under this article article 8, a good faith transferee or obligee is entitled,

• Page 8, Line 8to the extent of the value given the debtor for the transfer or obligation, to:

• Page 8, Line 9(a)  A lien on or a right to retain any an interest in the asset transferred;

• Page 8, Line 10(b)  Enforcement of any an obligation incurred; or

• Page 8, Line 11(5)  A transfer is not voidable under section 38-8-105 (1)(b) or 38-8-106 if the transfer results from:

• Page 8, Line 12(b)  Enforcement of a security interest in compliance with the

• Page 8, Line 13provisions of the "Uniform Commercial Code - Secured Transactions",

• Page 8, Line 14article 9 of title 4, C.R.S. other than the acceptance of collateral in full or partial satisfaction of the obligation it secures.

• Page 8, Line 16(7)  The burden of proving matters referred to in this section is determined according to the following:

• Page 8, Line 17(a)  A party that seeks to invoke subsection (1), (4), (5), or

• Page 8, Line 18(6) of this section has the burden of proving the applicability of that section;

• Page 9, Line 1(b)  Except as provided in subsections (7)(c) and (7)(d) of

• Page 9, Line 2this section, the creditor has the burden of proving each applicable element of subsection (2) or (3) of this section;

• Page 9, Line 3(c)  The transferee has the burden of proving the

• Page 9, Line 4applicability to the transferee of subsection (2)(a)(II)(A) or (2)(a)(II)(B) of this section; and

• Page 9, Line 5(d)  A party that seeks adjustment under subsection (3) of this section has the burden of proving the adjustment.

• Page 9, Line 6(8)  The standard of proof required to establish matters referred to in this section is preponderance of the evidence.

• Page 9, Line 7SECTION 9.  In Colorado Revised Statutes, amend 38-8-110 as follows:

• Page 9, Line 838-8-110.  Extinguishment of a claim for relief. (1)  A cause of

• Page 9, Line 9action claim for relief with respect to a fraudulent voidable transfer

• Page 9, Line 10or obligation under this article article 8 is extinguished unless action is brought:

• Page 9, Line 11(a)  Under section 38-8-105 (1)(a), within not later than four

• Page 9, Line 12years after the transfer was made or the obligation was incurred or, if

• Page 9, Line 13later, within not later than one year after the transfer or obligation was or could reasonably have been discovered by the claimant;

• Page 9, Line 14(b)  Under section 38-8-105 (1)(b) or 38-8-106 (1), within not

• Page 9, Line 15later than four years after the transfer was made or the obligation was incurred; or

• Page 9, Line 16(c)  Under section 38-8-106 (2), within one year not later than four years after the transfer was made. or the obligation was incurred.

• Page 10, Line 1SECTION 10.  In Colorado Revised Statutes, add 38-8-113 as follows:

• Page 10, Line 238-8-113.  Relation to electronic signatures in the federal

• Page 10, Line 3"Electronic Signatures in Global and National Commerce Act".This

• Page 10, Line 4article 8 modifies, limits, or supersedes the federal "Electronic

• Page 10, Line 5Signatures in Global and National Commerce Act", 15 U.S.C. sec.

• Page 10, Line 67001 et seq., but does not modify, limit, or supercede 15 U.S.C. sec.

• Page 10, Line 77001 (c) or authorize electronic delivery of any of the notices described in 15 U.S.C. sec. 7003 (b).

• Page 10, Line 8SECTION 11.  In Colorado Revised Statutes, 2-5-102, amend (7) as follows:

• Page 10, Line 92-5-102.  Inclusions - nonstatutory. (7)  There shall be included

• Page 10, Line 10in the publication of the "Colorado Uniform Fraudulent Transfer Act"

• Page 10, Line 11"Colorado Voidable Transactions Act", as nonstatutory matter,

• Page 10, Line 12following each section of the article, the full text of the official comments

• Page 10, Line 13to that section contained in the official volume containing the 1984

• Page 10, Line 14official text of the "Uniform Fraudulent Transfer Act" issued by the

• Page 10, Line 15national conference of commissioners on uniform state laws, including

• Page 10, Line 16changes to the official comments made by the 2014 amendments

• Page 10, Line 17to the "Uniform Voidable Transactions Act", with any changes in

• Page 10, Line 18the official comments or Colorado comments to correspond to Colorado

• Page 10, Line 19changes in the uniform act. The comments shall be prepared by the

• Page 10, Line 20revisor of statutes and approved for publication by the committee on legal services.

• Page 10, Line 21SECTION 12.  Act subject to petition - effective date -

• Page 10, Line 22applicability. (1)  This act takes effect at 12:01 a.m. on the day following

• Page 10, Line 23the expiration of the ninety-day period after final adjournment of the

• Page 11, Line 1general assembly; except that, if a referendum petition is filed pursuant

• Page 11, Line 2to section 1 (3) of article V of the state constitution against this act or an

• Page 11, Line 3item, section, or part of this act within such period, then the act, item,

• Page 11, Line 4section, or part will not take effect unless approved by the people at the

• Page 11, Line 5general election to be held in November 2026 and, in such case, will take

• Page 11, Line 6effect on the date of the official declaration of the vote thereon by the governor.

• Page 11, Line 7(2)  This act applies to claims filed on or after the applicable effective date of this act.