John Watson Law Group LLC

Fraudulent Conveyances

Simply put, a fraudulent conveyance is a conveyance or transfer of an interest in property for the purpose of hindering, delaying or defrauding a creditor.  Georgia has adopted the Uniform Fraudulent Conveyances Act.

Such actions are often filed as a means of recovering assets against which to assert a judgment.  For example, if a man transfers his home to his spouse while he is insolvent, as defined, it may be found to be a fraudulent transfer.  Also, such a transfer made with the intent to hinder, delay or defraud a creditor is fraudulent, regardless of solvency.  The remedy is to have the court set aside the transfer, thus putting title back in the defendant's name and subject to the judgment.

This can be a complicated area, and it is an area often overlooked in the enforcement of a judgment, perhaps because it involves yet further litigation.  This office has many years of experience in pursuing fraudulent conveyances.  It is not uncommon for a defendant to settle such an action rather than risk the property being transferred back into his name by the court.  If there are multiple judgments outstanding, and only one creditor has filed a fraudulent conveyance action, it may be prudent for the debtor to quietly resolve the matter with the one pursuing creditor without setting aside the conveyance and thus making it subject to the other judgments.  It is also possible to recover punitive damages against both the transferor and the transferee.

Bulk Sales Violations

While not technically a fraudulent conveyance, businesses need to be aware of the Bulk Sales laws, as adopted via the UCC.  Simply put, if a covered business is selling all or substantially all of its assets, it may be required under the bulk sales laws to provide a notice of the sale to its creditors prior to the sale.  If not done, the creditors may have certain remedies against the property so transferred.  In Georgia, this would generally be attacked by filing a garnishment against the transferee while it is still in possession of the property, while in some states it creates a remedy directly against the transferee.  This, again, is not a commonly known or used remedy, but it can be effective in appropriate cases.

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