Legal Memorandum: Burden of Proving a Fraudulent Transfer

Issue: Who has the burden of establishing the statutory elements of an action brought under Minnesota’s Fraudulent Transfer Act?

Area of Law: Bankruptcy & Creditors Rights
Keywords: Burden of proving; Fraudulent transfer
Jurisdiction: Minnesota
Cited Cases: 159 F.2d 531
Cited Statutes: Minn. Stat. § 513.45(b) (2011); § 5 of the UFTA
Date: 03/01/2012

Minnesota’s Fraudulent Transfer Act, which is nearly identical to the Uniform Fraudulent Transfer Act (UFTA), provides that (A) a transfer made by a debtor is fraudulent (B) as to a creditor whose claim arose before the transfer was made if (C) the transfer was made to an insider (D) for an antecedent debt, (E) the debtor/transferor was insolvent at that time, and (F) the insider had reasonable cause to believe the debtor/transferor was insolvent.  Minn. Stat. § 513.45(b) (2011).  This particular section of the Minnesota Act is identical with § 5 of the UFTA.  See id., Historical and Statutory Notes.  The creditor alleging a fraudulent transfer has the initial burden of proving the fraud alleged.  Pauling v. Pauling, 159 F.2d 531 (8th Cir. 1947); see also Elliot & Callan, Inc. v. Crofton, 615 F. Supp. 2d 965 (D. Minn. 2009) (stating that the creditor has the burden of proving the elements of a fraudulent transfer under the Minnesota version of the UFTA). 


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