Bill Text: MI HB5504 | 2015-2016 | 98th Legislature | Engrossed
Bill Title: Civil procedure; statute of limitations; limitations period under uniform fraudulent transfer act for action relating to qualified dispositions in trust act; modify. Amends secs. 1, 4 & 9 of 1998 PA 434 (MCL 566.31 et seq.).
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2016-12-13 - Assigned Pa 331'16 With Immediate Effect [HB5504 Detail]
Download: Michigan-2015-HB5504-Engrossed.html
HB-5504, As Passed Senate, December 1, 2016
SUBSTITUTE FOR
HOUSE BILL NO. 5504
A bill to amend 1998 PA 434, entitled
"Uniform fraudulent transfer act,"
by amending sections 1, 4, and 9 (MCL 566.31, 566.34, and 566.39),
section 1 as amended by 2009 PA 44.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. As used in this act:
(a) "Affiliate" means 1 or more of the following:
(i) A person who directly or indirectly owns, controls, or
holds with power to vote 20% or more of the outstanding voting
securities of the debtor, other than a person who holds the
securities in either of the following circumstances:
(A) As a fiduciary or agent without sole discretionary power
to vote the securities.
(B) Solely to secure a debt, if the person has not exercised
the power to vote.
(ii) A corporation 20% or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or held
with power to vote by the debtor or a person who directly or
indirectly owns, controls, or holds, with power to vote, 20% or
more of the outstanding voting securities of the debtor, other than
a person who holds the securities in either of the following
circumstances:
(A) As a fiduciary or agent without sole power to vote the
securities.
(B) Solely to secure a debt, if the person has not in fact
exercised the power to vote.
(iii) A person whose business is operated by the debtor under
a lease or other agreement, or a person substantially all of whose
assets are controlled by the debtor.
(iv) A person who operates the debtor's business under a lease
or other agreement or controls substantially all of the debtor's
assets.
(b)
"Asset" means property of a debtor. , but the term Asset
does not include any of the following:
(i) Property to the extent it is encumbered by a valid lien.
(ii) Property to the extent it is generally exempt under
nonbankruptcy law.
(iii) An interest in property held in tenancy by the
entireties to the extent it is not subject to process by a creditor
holding a claim against only 1 tenant.
(c) "Claim" means 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.
(d) "Creditor" means a person who has a claim.
(e) "Debt" means liability on a claim.
(f) "Debtor" means a person who is liable on a claim.
(g) "Insider" includes all of the following:
(i) If the debtor is an individual, all of the following:
(A) A relative of the debtor or of a general partner of the
debtor.
(B) A partnership in which the debtor is a general partner.
(C) A general partner in a partnership described in sub-
subparagraph (B).
(D) A corporation of which the debtor is a director, officer,
or person in control.
(ii) If the debtor is a corporation, all of the following:
(A) A director of the debtor.
(B) An officer of the debtor.
(C) A person in control of the debtor.
(D) A partnership in which the debtor is a general partner.
(E) A general partner in a partnership described in sub-
subparagraph (D).
(F) A relative of a general partner, director, officer, or
person in control of the debtor.
(iii) If the debtor is a partnership, all of the following:
(A) A general partner in the debtor.
(B) A relative of a general partner in, a general partner of,
or a person in control of the debtor.
(C) Another partnership in which the debtor is a general
partner.
(D) A general partner in a partnership described in sub-
subparagraph (C).
(E) A person in control of the debtor.
(iv) An affiliate, or an insider of an affiliate as if the
affiliate were the debtor.
(v) A managing agent of the debtor.
(h) "Lien" means a charge against or an interest in property
to secure payment of a debt or performance of an obligation, and
includes a security interest created by agreement, a judicial lien
obtained by legal or equitable process or proceedings, a common-law
lien, or a statutory lien.
(i) "Person" means an individual, partnership, corporation,
association, organization, government or governmental subdivision
or agency, business trust, estate, trust, or any other legal or
commercial entity.
(j) "Property" means anything that may be the subject of
ownership.
(k) "Qualified disposition" means that term as defined in
section 2 of the qualified dispositions in trust act.
(l) (k)
"Relative" means an
individual related by
consanguinity within the third degree as determined by the common
law, a spouse, or an individual related to a spouse within the
third degree as so determined, and includes an individual in an
adoptive relationship within the third degree.
(m) (l) "Transfer"
means every mode, direct or indirect,
absolute or conditional, voluntary or involuntary, of disposing of
or parting with an asset or an interest in an asset. Transfer
includes payment of money, release, lease, and creation of a lien
or other encumbrance. Transfer does not include any of the
following:
(i) The lapse, release, waiver, or disclaimer of a power of
appointment given to a donee by a third party. As used in this
subparagraph, "donee" means that term as defined in section 2 of
the powers of appointment act of 1967, 1967 PA 224, MCL 556.112.
(ii) The disposing of or parting with an asset or interest in
an asset held in trust to the person who created the trust if all
of the following apply:
(A) The trust is an irrevocable trust for the benefit of third
parties.
(B) The trust is a grantor trust with regard to the person for
income
tax purposes pursuant to under
sections 671 to 679 of the
internal revenue code of 1986, 26 USC 671 to 679.
(C) The trustee has the discretionary authority to reimburse
or advance trust property to the person for taxes concerning income
attributable to the trust property.
(D) The disposing of or parting with the asset or interest in
the asset is the exercise by the trustee of the discretionary
authority described in sub-subparagraph (C).
(n) (m)
"Valid lien" means a lien
that is effective against
the holder of a judicial lien subsequently obtained by legal or
equitable process or proceedings.
Sec.
4. (1) A Except as
otherwise provided in subsection (3),
a transfer made or obligation incurred by a debtor is fraudulent as
to a creditor, whether the creditor's claim arose before or after
the transfer was made or the obligation was incurred, if the debtor
made the transfer or incurred the obligation in either of the
following:
(a) With actual intent to hinder, delay, or defraud any
creditor of the debtor.
(b) Without receiving a reasonably equivalent value in
exchange for the transfer or obligation, and the debtor did either
of the following:
(i) Was engaged or was about to engage in a business or a
transaction for which the remaining assets of the debtor were
unreasonably small in relation to the business or transaction.
(ii) Intended to incur, or believed or reasonably should have
believed that he or she would incur, debts beyond his or her
ability to pay as they became due.
(2) In determining actual intent under subsection (1)(a) or
(3), consideration may be given, among other factors, to whether 1
or more of the following occurred:
(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.
(e) The transfer was of substantially all of the debtor's
assets.
(f) The debtor absconded.
(g) The debtor removed or concealed assets.
(h) The value of the consideration received by the debtor was
reasonably equivalent to the value of the asset transferred or the
amount of the obligation incurred.
(i) The debtor was insolvent or became insolvent shortly after
the transfer was made or the obligation was incurred.
(j) The transfer occurred shortly before or shortly after a
substantial debt was incurred.
(k) The debtor transferred the essential assets of the
business to a lienor who transferred the assets to an insider of
the debtor.
(3) A qualified disposition is fraudulent as to the creditor
whose claim arose after the qualified disposition only if the
qualified disposition was made with actual intent to hinder, delay,
or defraud any creditor of the debtor.
Sec. 9. A cause of action with respect to a fraudulent
transfer or obligation under this act is extinguished unless action
is brought under 1 or more of the following:
(a)
Sections Except as
otherwise provided in subdivision (c),
sections
4(1)(a) and (b) and 5(1), within the
time period specified
provided
in sections section 5813
and or 5855 of the revised
judicature act of 1961, 1961 PA 236, MCL 600.5813 and 600.5855.
(b)
Section Except as
otherwise provided in subdivision (c),
section 5(2), within 1 year after the transfer was made or the
House Bill No. 5504 as amended September 21, 2016
obligation was incurred.
(c) Sections 4 and 5, with respect to a qualified disposition,
the time provided in section 5 of the qualified dispositions in
trust act.
[Enacting section 1. This amendatory act takes effect 90 days after the date it is enacted into law.]
Enacting section [2]. This amendatory act does not take effect
unless Senate Bill No. 597 of the 98th Legislature is enacted into
law.
