Legal Memorandum: Definition of a "Claim" in MN

Issue: What is the definition of ‘claim’ under Minn. Stat. 513.41(3) and the parallel provision of the UFTA?   

Area of Law: Bankruptcy & Creditors Rights
Keywords: Claim; Minnesota's Fraudulent Transfer Act; Uniform Fraudulent Transfer Act
Jurisdiction: Federal, Minnesota
Cited Cases: 334 F. Supp. 799; 849 F.2d 354; 501 U.S. 78; 97 P.3d 140; 495 U.S. 552; 714 N.E.2d 519; 523 U.S. 213; 952 P.2d 1067; 661 F.2d 979; 201 F.3d 251
Cited Statutes: Minn. Stat. 513.41(3); Minn. Stat. § 513.45(b) (2012); UFTA § 1(3); UFTA § 1(4); Minn. Stat. § 513.41(4) (creditor), (5) (debt), (6) (debtor); 11 U.S.C. § 101(5) (2011); Bankruptcy Code § 101(5); 11 U.S.C. § 101; 37 C.J.S. Fraudulent Transfers § 3 (2012); UFTA § 1; UFTA § 6(5)(ii); Minn. Stat. 513.46(5)(ii); Minn. Stat. § 513.45(a)
Date: 09/01/2012

Minnesota’s Fraudulent Transfer Act provides that 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/transferor was insolvent at that time, and the insider had reasonable cause to believe that the debtor/transferor was insolvent.  Minn. Stat. § 513.45(b) (2012).  The focus of the present discussion is on the emphasized term, “claim.”  A “claim” is expansively defined in Minnesota’s Fraudulent Transfer Act as 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.”  Id. § 513.41(3). 

The Uniform Fraudulent Transfer Act definition of “claim” is identical, see UFTA § 1(3), and most states have adopted the same or a similar definition, see id., Action in Adopting Jurisdictions.  Since the purpose of the UFTA is primarily to protect unsecured creditors against transfers and obligations injurious to their rights, the word “claim” as used therein generally refers to an unsecured claim.  See id. § 1, Comment 3.  If the context indicates otherwise, however, usage of the term is not so restricted.  Id. 

Several other Fraudulent Transfer Act definitions are interdependent on the definition of “claim.”  A “creditor,” for example, is defined in UFTA § 1(4) as a person who has a claimId. § 1(4); see also id. § 1, Comment 4 (reiterating that the holder of even a contingent claim may be a “creditor” […]

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