The Texas Uniform Fraudulent Transfer Act (“TUFTA”) provides that a transfer of an asset is fraudulent, as to a creditor, if the debtor made the transfer with the actual intent to hinder, delay or defraud any of the debtor’s creditors.
The definitions portions of TUFTA defines “creditor” as a person. . .who has a claim.” Tex. [1]Bus. & Com. Code. § 24.002(4) . “Claim” is defined as a right to payment or property, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured. [2]See Tex. Bus. & Com. Code. § 24.002(3)(emphasis added) .
Texas courts have given a broad construction to the term creditor, so that TUFTA “protects the holders of unliquidated unmatured contingent claims.” [3]Zahra Spiritual Trust v. United States, 910 F.2d 240, 248 (5th Cir.1990) . Therefore, creditors are “persons having subsisting obligations against the debtor at the time the fraudulent alienation was made or the secret trust created, although their claims may not have matured or even been reduced to judgment until after such conveyance.” [4]Burnett at 743; see also First State Bank of Mobeetie v. Goodner, 168 S.W.2d 941 (Tex.Civ.App.—Amarillo 1943, no writ) .
To summarize, a plaintiff does not need to first prove that a debt is owed or obtain a judgment before it can be considered a “creditor” entitled to relief by way of the TUFTA.
The next blog will answer the question: How does one obtain an injunction to stop further transfers from taking place during litigation?
References
| ↑1 | Bus. & Com. Code. § 24.002(4) |
|---|---|
| ↑2 | See Tex. Bus. & Com. Code. § 24.002(3)(emphasis added) |
| ↑3 | Zahra Spiritual Trust v. United States, 910 F.2d 240, 248 (5th Cir.1990) |
| ↑4 | Burnett at 743; see also First State Bank of Mobeetie v. Goodner, 168 S.W.2d 941 (Tex.Civ.App.—Amarillo 1943, no writ) |