Legal Memorandum: Fraudulent Transfer in ND

Issue: What constitutes a ‘fraudulent transfer’ under the Uniform Fraudulent Transfer Act in North Dakota?

Area of Law: Bankruptcy & Creditors Rights
Keywords: Fraudulent transfer; Uniform Fraudulent Transfer Act; Actual intent
Jurisdiction: North Dakota
Cited Cases: 802 N.W.2d 436; 980 F.2d 734
Cited Statutes: N.D. Cent. Code § 13-02.1-04(1) (2009); § 13-02-05; § 13‑02.1‑04; § 13-02.1-04(2); N.D. Cent. Code § 13-02.1-01(4), (6); § 13-02.1-01(3); N.D. Cent. Code § 13-02.1-1(12)
Date: 09/01/2012


A transfer is fraudulent and may be avoided when it is made “with actual intent to hinder, delay, or defraud any creditor of the debtor.”  N.D. Cent. Code § 13-02.1-04(1) (2009).  Under this provision, a plaintiff does not need to prove that the debtor was insolvent.  Cf. id. § 13-02-05.*FN1  “Actual intent” is shown by the “badges of fraud” set forth in the statute.  Id. § 13‑02.1‑04.  The relevant “badges” in this case are:

(a)     The transfer or obligation was to an insider;


(b)     The debtor retained possession or control of the property transferred after the transfer;


(c)     The transfer or obligation was disclosed or concealed;


(d)    Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;


. . . .


(j)      The transferred occurred shortly before or shortly after a substantial debt was incurred . . . .


Id. § 13-02.1-04(2).

The UFTA defines “creditor” as “a person who has a claim” against the debtor and a “debtor” is “a person who is liable on a claim.” N.D. Cent. Code § 13-02.1-01(4), (6).  A “claim” is broadly defined as “the right to payment, whether or not the right is reduced to judgment, liquidated or unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured.”  […]

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