Issue: How is the presumption of insolvency defined in Minnesota?
Area of Law:
Bankruptcy & Creditors Rights
Presumption of insolvency; Debtor; Bankruptcy
Minn. Stat. § 513.42(b); UFTA § 2, Comment (2)
The presumption of insolvency referenced in Minn. Stat. § 513.42(b) arises if the debtor was not paying her debts as they become due. This presumption is a carryover from the bankruptcy context:
The presumption is established in recognition of the difficulties typically imposed on a creditor in proving insolvency in the bankruptcy sense, as provided in subsection (a) [liabilities greater than assets]. Not only is the relevant information in the possession of a noncooperative debtor but the debtor’s records are more often than not incomplete and inaccurate. As a practical matter, insolvency is most cogently evidenced by a general cessation of payment of debts, as has long been recognized by the laws of other countries and is now reflected in the Bankruptcy Code.