Issue: What are the possible defenses to a suit brought under Minnesota’s Fraudulent Transfer Act?
|Area of Law:||Bankruptcy & Creditors Rights|
|Keywords:||Transfer; Minnesota Uniform Fraudulent Transfer Act; Debtor|
|Cited Cases:||424 F.2d 722|
|Cited Statutes:||Minn. Stat. § 513.48(f); Minn. Stat. § 513.45(b); § 547(c)(4) of the Bankruptcy Code; UFTA § 8; UFTA § 9; Minn.Stat. § 541.05, subd. 1(6)|
Under the Minnesota Uniform Fraudulent Transfer Act,
[a] transfer is not voidable under section 513.45(b):
(1) 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;
(2) if made in the ordinary course of business or financial affairs of the debtor and the insider; or
(3) 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.
Minn. Stat. § 513.48(f). This section is adapted from § 547(c)(4) of the Bankruptcy Code, which permits a creditor to set off the amount of new value subsequently advanced against the recovery of an otherwise voidable transfer. The new value may consist of money, goods, services, or the release of a valid lien. In re Ira Haupt & Co., 424 F.2d 722, 724 (2d Cir. 1970).
The defenses section quoted above is taken from UFTA § 8. The next section, UFTA § 9, is relatively new (see UFTA § 9, Comment), and is not included in Minnesota’s version of the Uniform Act. It appears that § 9 was added post-UFTA adoption in Minnesota. Section 9 provides that an action under 5(b) (the parallel provision to Minn. Stat. § 513.45(b)) […]