A judgment creditor’s information subpoena to a debtor’s accountant comes back showing a $400,000 transfer to the debtor’s adult son three months before the underlying lawsuit was filed. Under the law every NYC commercial litigator learned in school, that transfer would be analyzed as a “fraudulent conveyance” under New York’s Debtor and Creditor Law, with a six-year statute of limitations and a “fair consideration” test that included good faith on the transferee’s side. That law has been off the books since April 4, 2020. The team at Warner & Scheuerman handles these claims under the new framework constantly, and the gap between current statutory reality and what most practitioners remember from training is wide enough to cost real recoveries.
The rules changed. Many lawyers haven’t updated.
What Changed When the UVTA Took Effect
On December 6, 2019, then-Governor Cuomo signed legislation replacing New York’s 1925 Uniform Fraudulent Conveyance Act with the modern Uniform Voidable Transactions Act, effective April 4, 2020. The new statute is codified in Article 10 of the Debtor and Creditor Law at sections 270 through 281, the same numerical placeholders the old UFCA occupied. The substantive content underneath is largely new.
The terminology change is intentional. “Fraudulent conveyance” and “fraudulent transfer” no longer appear in the statute. The drafters deliberately removed the word “fraud” because some courts had been treating these claims as fraud causes of action subject to the heightened pleading particularity required by CPLR 3016(b). The Uniform Law Commission’s official commentary makes clear that voidable transaction claims are not fraud claims and should not carry that pleading burden.
The new framework also harmonizes New York with the federal Bankruptcy Code at 11 U.S.C. § 548 and with the law of more than two dozen other UVTA states. For litigators handling cases that touch multiple jurisdictions, the consistency is operationally useful.
The transition rule matters. The NY-UVTA applies to transfers made or obligations incurred on or after April 4, 2020. Transfers occurring before that date are still governed by the prior UFCA. Many active New York cases involve mixed claims, with some transfers under each regime, and the analysis differs in important ways depending on which side of the line the transfer falls on.
The Two Tests Under DCL § 273
DCL § 273 sets out the two routes to avoid a transfer.
The actual intent test under DCL § 273(a)(1) requires showing the debtor made the transfer with “actual intent to hinder, delay, or defraud” any creditor, present or future. DCL § 273(b) then codifies eleven non-exhaustive factors courts consider in determining actual intent. These badges of fraud include whether the transfer was to an insider, whether the debtor retained possession or control after the transfer, whether the transfer was concealed, whether the debtor was sued or threatened with suit at the time, whether the transfer involved substantially all of the debtor’s assets, whether the debtor absconded, whether the debtor removed or concealed assets, whether the consideration received was reasonably equivalent to the value transferred, whether the debtor became insolvent shortly after the transfer, whether the transfer occurred shortly before or after the incurrence of a substantial debt, and whether the transfer involved essential business assets transferred to a lienor who then transferred them to an insider.
The constructive test under DCL § 273(a)(2) does not require any showing of intent. The transfer is voidable if the debtor did not receive reasonably equivalent value in exchange and either was engaged or about to engage in a business with unreasonably small remaining assets, intended to incur or believed it would incur debts beyond its ability to pay, or was insolvent at the time of the transfer or rendered insolvent by it.
The “reasonably equivalent value” standard replaces the prior UFCA’s “fair consideration” standard. The change is more than cosmetic. Under the old fair consideration test, a transferee who paid full value could still lose the asset if the transferee was found to have lacked good faith. Under the new reasonably equivalent value standard, the good faith inquiry on the constructive prong is removed. A transferee who paid reasonably equivalent value is protected on the constructive ground regardless of subjective good faith.
DCL § 271(b) modernizes the insolvency definition. A debtor is presumed insolvent if generally not paying its debts as they become due, other than as a result of a bona fide dispute. The presumption shifts the practical burden meaningfully in cases where the debtor’s payment behavior tells the story.
The Statute of Repose Under DCL § 278
DCL § 278 is captioned “extinguishment of a claim for relief,” and the captioning is important.
For claims under DCL § 273(a)(1) (actual intent), the action must be brought within four years of the transfer or, if later, one year after the transfer was or could reasonably have been discovered by the claimant. For claims under DCL § 273(a)(2) and DCL § 274(a) (constructive), the deadline is four years from the date of the transfer. For insider preference claims under DCL § 274(b), the deadline is one year.
The prior UFCA carried a six-year statute of limitations for constructive claims and a separate two-year discovery rule for actual fraud. The shortened periods matter for collection lawyers because asset transfers that would have been reachable under the old law are now extinguished sooner.
The other distinction worth knowing: DCL § 278 operates as a statute of repose rather than a statute of limitations. The claim is extinguished, not just barred. The doctrines of waiver, estoppel, and equitable tolling that can extend a typical CPLR limitations period do not apply in the same way to a statute of repose. A creditor who sleeps on a voidable transaction claim cannot revive it by pointing to the debtor’s litigation conduct.
The New Insider Preference Claim Under DCL § 274(b)
The NY-UVTA created a state-law analog to the federal bankruptcy preference rule at 11 U.S.C. § 547. Under DCL § 274(b), a transfer to an insider on account of an antecedent debt is voidable as to a creditor whose claim arose before the transfer if the debtor was insolvent at the time and the insider had reasonable cause to believe the debtor was insolvent.
The remedy is meaningful. Insiders who were repaid out of dwindling debtor assets while outside creditors were left unpaid can be required to disgorge those payments, with a one-year statute of limitations from the date of transfer.
Unlike the federal preference rule under the Bankruptcy Code, the NY-UVTA’s insider preference does not presume insolvency. The creditor still bears the burden to prove each element. Practical proof comes from financial records obtained through information subpoenas, deposition testimony, and the kinds of documentary patterns that the firm’s investigative team is built to develop.
How Warner & Scheuerman Uses Voidable Transactions Claims in Asset Recovery
Voidable transaction claims rarely stand alone. They function as a layer of the post-judgment toolkit, paired with information subpoenas under CPLR 5224, restraining notices under CPLR 5222, turnover proceedings under CPLR 5225, and where appropriate alter ego analysis to reach the individuals behind a corporate debtor.
The typical sequence on a recovery matter looks like this. Information subpoenas to the debtor, the debtor’s family members, business partners, accountants, and prior counsel surface the asset transfers. Deposition testimony of the debtor under CPLR 5223 fills in the timing and the consideration paid. The voidable transaction claim is then filed under DCL § 273 or § 274 as part of a special proceeding under CPLR 5225(b), allowing the court to order both the avoidance of the transfer and the turnover of the asset to the creditor in a single proceeding. Attorney’s fees are sought under DCL § 276-a, which now permits fee awards on both actual and constructive claims rather than only on actual fraud claims as the old UFCA had limited.
The choice of law rule at DCL § 279 deserves a separate note. Voidable transaction claims are now governed by the law of the jurisdiction where the debtor was located when the transfer was made (the principal place of business for organizations, the principal residence for individuals). For multi-state matters, that rule changes the analytical starting point.
If you hold a New York judgment and information has come to light that the debtor transferred assets to family members, related entities, or business associates before or during the underlying dispute, the voidable transaction claim is often the recovery path. Reach out to Warner & Scheuerman to evaluate whether the transfer falls under the current UVTA framework or the prior UFCA, and what the realistic path to clawing back the asset looks like in your specific case.
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