Ark. Code Ann. § 4-59-208 (2026)
Defenses, liability, and protection of transferee or obligee
- A transfer or obligation is not voidable under § 4-59-204(a)(1) against a person that took in good faith and for a reasonably equivalent value given the debtor, or against any subsequent transferee or obligee.
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To the extent a transfer is voidable in an action by a creditor under § 4-59-207(a)(1), the following rules apply:
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except as otherwise provided in this section, the creditor may recover judgment for the value of the asset transferred, as adjusted under subsection (c), or the amount necessary to satisfy the creditor's claim, whichever is less. The judgment may be entered against:
- the first transferee of the asset or the person for whose benefit the transfer was made; or
- an immediate or mediate transferee of the first transferee, other than:
- a good-faith transferee that took for value; or
- an immediate or mediate good-faith transferee of a person described in subdivision (b)(1)(ii)(A) of this section.
- recovery pursuant to § 4-59-207(a)(1) or § 4-59-207(b) of or from the asset transferred or its proceeds, by levy or otherwise, is available only against a person described in subdivision (b)(1)(i) or subdivision (b)(1)(ii) of this section.
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except as otherwise provided in this section, the creditor may recover judgment for the value of the asset transferred, as adjusted under subsection (c), or the amount necessary to satisfy the creditor's claim, whichever is less. The judgment may be entered against:
- If the judgment under subsection (b) of this section is based upon the value of the asset transferred, the judgment must be for an amount equal to the value of the asset at the time of the transfer, subject to adjustment as the equities may require.
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Notwithstanding voidability of a transfer or an obligation under this subchapter, a good-faith transferee or obligee is entitled, to the extent of the value given the debtor for the transfer or obligation, to:
- a lien on or a right to retain an interest in the asset transferred;
- enforcement of an obligation incurred; or
- a reduction in the amount of the liability on the judgment.
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A transfer is not voidable under § 4-59-204(a)(2) or § 4-59-205 if the transfer results from:
- termination of a lease upon default by the debtor when the termination is pursuant to the lease and applicable law; or
- enforcement of a security interest in compliance with chapter 9 of the Uniform Commercial Code § 4-9-101 et seq., other than acceptance of collateral in full or partial satisfaction of the obligation it secures.
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A transfer is not voidable under § 4-59-205(b):
- to the extent the insider gave new value to or for the benefit of the debtor after the transfer was made, except to the extent the new value was secured by a valid lien;
- if made in the ordinary course of business or financial affairs of the debtor and the insider; or
- if made pursuant to a good-faith effort to rehabilitate the debtor and the transfer secured present value given for that purpose as well as an antecedent debt of the debtor.
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The following rules determine the burden of proving matters referred to in this section:
- A party that seeks to invoke subsection (a), (d), (e), or (f) has the burden of proving the applicability of that subsection.
- Except as otherwise provided in subdivisions (g)(3) and (g)(4), the creditor has the burden of proving each applicable element of subsection (b) or (c).
- The transferee has the burden of proving the applicability to the transferee of subdivision (b)(1)(ii)(A) or (b)(1)(ii)(B).
- A party that seeks adjustment under subsection (c) has the burden of proving the adjustment.
- The standard of proof required to establish matters referred to in this section is preponderance of the evidence.
History. Acts 1987, No. 967, § 8; 2017, No. 1086, § 1.
Amendments. The 2017 amendment added “or obligee” in the section heading; inserted “given the debtor” in (a); rewrote (b); in (e)(2), substituted “Article 9” for “chapter 9” and “other than acceptance of collateral in full or partial satisfaction of the obligation it secures” for “§ 4-9-101 et seq.”; substituted “except to the extent” for “unless” in (f)(1); added (g) and (h); and made stylistic changes.
Case Notes
In General.
Pretended loans — Rights of creditors of persons in possession of property. Martin v. Vaught, 128 Ark. 293, 194 S.W. 10 (1917) (decision under prior law).
The statute did not apply so as to allow a judgment creditor to recover either from a family farming corporation in which the judgment debtor owned stock or from the majority shareholder in that corporation after the judgment debtor transferred that stock to a family-owned limited partnership. Thomsen Family Trust v. Peterson Family Enters., Inc., 66 Ark. App. 294, 989 S.W.2d 934 (1999).
Conditional Sales.
If former statute applied to conditional sales, it had no application unless the possession continued for the statutory period. Blackwell, Thompson & Co. v. Walker Bros. & Co., 5 F. 419 (C.C.E.D. Ark. 1880) (decision under prior law).
Notice of Fraud.
Purchaser from fraudulent grantee, having sufficient notice to put him on inquiry, as a man of ordinary prudence and experience in business transactions, will not be allowed to protect himself by want of notice, as an innocent purchaser. Ringgold v. Waggoner, 14 Ark. 69 (1853) (decision under prior law).
Persons Protected.
Former statute conferred the absolute right of property by uninterrupted possession only in favor of creditors and purchasers, and not to the possessor for statutory period. State Bank v. Williams, 6 Ark. 156 (1845) (decision under prior law).
Where corporation gave a promissory note to a trust in exchange for a physician's interest in his practice (the physician previously transferred his interest to the trust), although the bankruptcy court determined that the debtor's payments on the note were fraudulent transfers, the court determined that the physician's receipt of distributions from the trust were received in good faith and for value where (1) the physician clearly was unaware that he was accepting payments that might be subject to a subsequent avoidance proceeding in bankruptcy, (2) there was no evidence that he acted in any manner other than in good faith, and (3) the principal, if not sole, asset of the trust — the promissory note from the corporation — represented an asset arising from transfers made to the trust by the physician. Meeks v. Healthcorp of Tenn., Inc. (In re Southern Health Care of Ark.), 299 B.R. 918 (Bankr. E.D. Ark. 2003), aff'd, Meeks v. Don Howard Charitable Remainder Trust (In re S. Health Care of Ark., Inc.), 309 B.R. 314 (B.A.P. 8th Cir. 2004).
Purchaser.
To avoid fraudulent conveyance, proof of grantee's participation in fraud is unnecessary where the grantee is a voluntary donee, but where he is a purchaser for a valuable consideration, such proof is necessary. Hershy v. Latham, 46 Ark. 542 (1885) (decision under prior law).
Reasonably Equivalent Value.
In a case under this subchapter, there were genuine issues of material fact regarding whether a debtor received a reasonably equivalent value as a result of a transfer to her attorney; at the time of the transfer, the debtor believed or reasonably should have believed that she was incurring debts beyond her ability to pay as they became due. Druyvestein v. Gean, 2014 Ark. App. 559, 445 S.W.3d 529 (2014).
Cited: Helm v. Mid-America Indus., Inc., 305 Ark. 12, 804 S.W.2d 727 (1991); First Nat'l Bank & Trust Co. v. Hollingsworth, 931 F.2d 1295 (8th Cir. 1991); In re Armstrong, 217 B.R. 569 (Bankr. E.D. Ark. 1998); Meeks v. Red River Entm't, 231 B.R. 739 (E.D. Ark. 1999).