2019 - 2020 LEGISLATURE
January 8, 2020 - Introduced by Senators Risser,
Wanggaard and Olsen,
cosponsored by Representatives
Tusler, Hebl, Anderson, Knodl, Brooks
and Stubbs. Referred to Committee on Insurance, Financial Services,
Government Oversight and Courts.
1An Act to repeal
242.02 (4); to renumber
242.08 (2) (a); to renumber and
242.08 (2) (b); to amend
chapter 242 (title), 242.01 (3), 242.01 (9), 3
242.01 (12), 242.02 (2), 242.02 (3), 242.04 (title), 242.04 (1) (intro.), 242.05 4
(title), 242.05 (1), 242.05 (2), 242.06 (5) (b), 242.07 (1) (b), 242.08 (title), 242.08 5
(1), 242.08 (2) (intro.), 242.08 (5) (b), 402.402 (3) (b), 411.308 (2) (b), 705.07 (2), 6
815.18 (10) and 893.425; and to create
242.01 (6m), 242.01 (8m), 242.01 (10m), 7
242.01 (11m), 242.04 (3), 242.05 (3), 242.08 (2) (am) 2. b. and (bm), 242.08 (7) 8
and (8), 242.094, 242.096, 242.12 and 242.13 of the statutes; relating to:
9adopting modifications to, and renaming, the Uniform Fraudulent Transfer
Analysis by the Legislative Reference Bureau
This bill adopts the Uniform Law Commission's 2014 modifications to the
Uniform Fraudulent Transfer Act, including its renaming as the Uniform Voidable
Current law incorporates the Uniform Fraudulent Transfer Act (1984), adopted
in this state in 1988. Under current law, a creditor may challenge certain transfers
of property or obligations incurred by a debtor that may deprive the creditor of assets
that would otherwise be available to satisfy debts if the debtor is or is about to become
insolvent, such as the transfer of the debtor's assets to a family member or corporate
insider. A “creditor” is any person who has a claim and a “debtor” is any person who
is liable on a claim. A “claim” is a right to payment, whether it arises by contract, tort,
or otherwise, and a “debt” means liability on a claim. There are four basic situations
in which the creditor may challenge a transfer made or obligation incurred by the
debtor (hereafter referred to as voidable transactions):
1. If the transfer is made or obligation incurred by the debtor to intentionally
hinder, delay, or defraud the creditor.
2. If the debtor transfers property or incurs the obligation without receiving a
reasonably equivalent value in exchange, and the debtor engages in business or a
transaction for which the debtor's remaining assets are unreasonably small or the
debtor intends to incur debts beyond the debtor's ability to pay as they become due.
3. If there is an existing creditor-debtor relationship, the debtor makes a
transfer or incurs an obligation without receiving a reasonably equivalent value in
exchange, and the debtor was insolvent at that time or the debtor became insolvent
as a result of the transfer or obligation. A debtor is insolvent if the sum of the debtor's
debts is greater than all of the debtor's assets at a fair valuation. A debtor who is
generally not paying debts as they become due is presumed to be insolvent.
4. If the debtor makes a transfer to an insider for a preexisting debt, the debtor
was insolvent at the time of the transfer, and the insider had reasonable cause to
believe that the debtor was insolvent. “Insider” is a defined term and includes
certain relatives of an individual debtor and officers and directors of a corporate
Current law specifies various remedies available to a creditor if a voidable
transaction has occurred. These remedies include the avoidance of the transfer or
obligation to the extent necessary to satisfy the creditor's claim, attachment against
the asset transferred or other property of the person to whom the asset was
transferred, an injunction, and appointment of a receiver.
This bill adopts the ULC's 2014 modifications to the uniform act, including the
1. The bill renames the provisions of the act to be the Uniform Voidable
Transactions Law and replaces the term “fraudulent” with “voidable” in various
provisions. The ULC specified that these changes were not intended to have
substantive effect and were made to more accurately convey the effect of current law,
which frequently uses the term “fraudulent” but does not actually require fraudulent
activity as a condition to its application.
2. The bill creates provisions that specify, for claims and defenses related to
voidable transactions, which party has the burden of proof and establishes the
standard of proof as a preponderance of the evidence.
3. The bill creates a choice-of-law rule for courts to determine which state's
voidable transactions law applies in a given case. Under the bill, a court must apply
the law of the state where the debtor is located at the time the transfer is made or
4. The bill eliminates a provision that applies a different standard for
determining insolvency for a partnership, so that the general insolvency standard
applies to partnerships.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
Chapter 242 (title) of the statutes is amended to read:
UNIFORM FRAUDULENT TRANSFER ACT voidable transactions
242.01 (3) of the statutes is amended to read:
except as used in “claim for relief,”
means a right to 7
payment, whether or not the right is reduced to judgment, liquidated, unliquidated, 8
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, 9
secured or unsecured.
242.01 (6m) of the statutes is created to read:
“Electronic" means relating to technology having electrical, 12
digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
242.01 (8m) of the statutes is created to read:
“Organization” means a person other than an individual.
242.01 (9) of the statutes is amended to read:
“Person" means an individual,
partnership, corporation, 17
limited liability company, association, organization, trust, business or nonprofit
18entity, public corporation,
government or governmental subdivision
agency, 19business trust, estate, trust or instrumentality,
or any other legal or commercial 20
242.01 (10m) of the statutes is created to read:
“Record" means information that is inscribed on a tangible 3
medium or that is stored in an electronic or other medium and is retrievable in 4
242.01 (11m) of the statutes is created to read:
“Sign" means, with present intent to authenticate or adopt a 7
record, any of the following:
(a) To execute or adopt a tangible symbol.
(b) To attach to or logically associate with the record an electronic symbol, 10
sound, or process.
242.01 (12) of the statutes is amended to read:
“Transfer" means every mode, direct or indirect, absolute or 13
conditional, voluntary or involuntary, of disposing of or parting with an asset or an 14
interest in an asset, and includes payment of money, release, lease
creation of a lien or other encumbrance.
242.02 (2) of the statutes is amended to read:
A debtor is insolvent if, at a fair valuation,
the sum of the debtor's 18
debts is greater than all the sum
of the debtor's assets at a fair valuation
242.02 (3) of the statutes is amended to read:
A debtor who is generally not paying
debts as they 21
become due other than as a result of a bona fide dispute
is presumed to be insolvent. 22The presumption imposes on the party against which the presumption is directed the
23burden of proving that the nonexistence of insolvency is more probable than its
242.02 (4) of the statutes is repealed.
242.04 (title) of the statutes is amended to read:
(title) Transfers fraudulent Transfer or obligation voidable as
3to present and or future creditors creditor
242.04 (1) (intro.) of the statutes is amended to read:
(intro.) A transfer made or obligations obligation
incurred by a 6
debtor is fraudulent voidable
as to a creditor, whether the creditor's claim arose 7
before or after the transfer was made or the obligation was incurred, if the debtor 8
made the transfer or incurred the obligation:
242.04 (3) of the statutes is created to read:
A creditor making a claim for relief under sub. (1) has the burden 11
of proving the elements of the claim for relief by a preponderance of the evidence.