O.C.G.A. § 18-2-75 (2019)

Annotations

JUDICIAL DECISIONS Transfer of property set aside. - Debtor’s transfer of property to the debtor’s daughter, without consideration, was properly set aside since the deed was recorded nearly 18 months after the deed was signed, recorded the day after the appellate court entered judgment on the case, the debtor continued to occupy the property without paying rent, and the debtor disposed of assets worth at least $500,000 in the seven months after the deed was recorded, leading to the debtor’s insolvency. Kent v. A.O. White, Jr., Consulting Eng’r, Inc., 279 Ga. App. 563, 631 S.E.2d 782, 2006 Ga. App. LEXIS 639 (2006), cert. denied, No. S06C1710, 2006 Ga. LEXIS 790 (Ga. Oct. 2, 2006). After the debtor transferred funds to the debtor’s sister, who had ownership, dominion and control over the funds, the sister was a transferee under 11 U.S.C. § 550, and the funds were recoverable as a fraudulent conveyance under 11 U.S.C. § 544 and O.C.G.A. § 18-2-75. Ogier v. Braswell (In re Clark), 435 B.R. 753, 2009 Bankr. LEXIS 3294 (Bankr. N.D. Ga. 2009). When an investor asserted fraudulent transfer and related claims against accounts in the names of the former wife and widow of a consultant who allegedly defrauded the investor, the claims survived a motion to dismiss because the investor: (1) stated viable claims; (2) did not have to anticipate affirmative defenses; and (3) did not admit such defenses. Speedway Motorsports, Inc. v. Pinnacle Bank, 315 Ga. App. 320, 727 S.E.2d 151, 2012 Ga. App. LEXIS 366 (2012), cert. denied, No. S12C1329, 2013 Ga. LEXIS 50 (Ga. Jan. 7, 2013). Evidence that a corporation was insolvent at the time the corporation made payments in the amount of $248,367 to each of two principals, and that the corporation did not receive reasonably equiva-

lent value for the payments, was sufficient to show that the payments were constructively fraudulent and could be recovered for the corporation’s bankruptcy estate under 11 U.S.C. § 544 and O.C.G.A. § 182-75; although the principals claimed that the payments were due on a loan the principals made to the corporation and that the principals returned some payments to the corporation’s accounts, there was no evidence supporting the principal’s claims. Anderson v. Patel (In re Diplomat Constr., Inc.), No. 09-68613-MGD, No. 115609, 2013 Bankr. LEXIS 4303 (Bankr. N.D. Ga. Aug. 26, 2013). No property transfer involved. - Trial court correctly granted summary judgment in favor of the defendants as to the plaintiff’s fraud counts pursuant to the Uniform Fraudulent Transfers Act (UFTA) (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., because the UFTA explicitly requires a transfer of an asset, which is defined as certain forms of property and neither defending entity owned property in that classic sense; thus, the UFTA was not the appropriate vehicle for the plaintiff’s recovery. Dan J. Sheehan Co. v. Fairlawn on Jones Condo. Ass’n, Inc., 334 Ga. App. 595, 780 S.E.2d 35, 2015 Ga. App. LEXIS 685 (2015), cert. denied, No. S16C0473, 2016 Ga. LEXIS 217 (Ga. Mar. 7, 2016). Reasonably equivalent value. - Debtor’s twice monthly $1833 payments to the defendant in exchange for regular, hotel managerial services did not constitute avoidable fraudulent transfers under O.C.G.A. §§ 18-2-74(a)(2)(B) and 18-2-75 because the defendant’s work for the debtor constituted reasonably equivalent value in exchange for the payments. Anderson v. Patel (In re Diplomat Constr., Inc.), No. 09-68613-MGD, No. 11-5611, 2013 Bankr. LEXIS 4297 (Bankr. N.D. Ga. Aug. 6, 2013).

Trial court did not err in ruling that the transfers of the properties for one dollar and love and affection were not for reasonably equivalent value under the Georgia Uniform Fraudulent Transfers Act, O.C.G.A. § 18-2-7 et seq., as the UFTA’s purpose was to protect creditors from the depletion of the debtor’s estate to the prejudice of unsecured creditors. Tuggle v. Ameris Bank, 363 Ga. App. 600, 872 S.E.2d 1, 2022 Ga. App. LEXIS 183 (2022). In a voidable-transaction action, the CEO attested that company defendants lost money on the transaction, and the landlord did not set forth facts rebutting those assertions, or facts showing that transaction of paying all for utilizing the debtor’s numbers in exchange for 98 percent of revenue, was not for reasonably equivalent value. Windward Campus Owner, LLC v. Good Night Med. of Ohio, LLC, 363 Ga. App. 177, 871 S.E.2d 36, 2022 Ga. App. LEXIS 135 (2022). Failure to offer evidence of value. - Transferees were not entitled to summary judgment on a Chapter 7 trustee’s constructive fraud claims under the Bankruptcy Code and Georgia law as the transferees failed to offer any evidence of the value of the collateral at issue and, thus, the trustee’s evidence created a question of fact. Howell v. Fulford (In re Southern Home & Ranch Supply, Inc.), 515 B.R. 699, 2014 Bankr. LEXIS 3493 (Bankr. N.D. Ga. 2014). Transfers not made by debtor not subject to attack. - Judgment creditor could seek relief under the Uniform Fraudulent Transfers Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., against the judgment debtor and transferees, but it could not pursue the judgment debtor’s mother and sister or their corporation because they did not receive any interest from the judgment debtor and were not themselves debtors of the judgment creditor whose transfers were subject to attack. RES-GA YPL, LLC v. Rowland, 340 Ga. App. 713, 798 S.E.2d 315, 2017 Ga. App. LEXIS 130 (2017). Accrual of action for fraudulent conveyance. - In determining when a cause of action accrued for purposes of O.C.G.A. § 9-3-32, it was necessary to

ascertain the time when the plaintiff could first have maintained the plaintiff’s action to a successful result. The relevant date for determining the statute of limitations on a fraudulent conveyance claim, pursuant to O.C.G.A. §§ 18-2-74, 18-2-75, and 18-2-76, was the date that the debtor incurred the obligation to make the transfer. Kipperman v. Onex Corp., 411 B.R. 805, 2009 U.S. Dist. LEXIS 71666 (N.D. Ga. 2009). Claims not subject to arbitration. - When a trustee of a creditor trust under bankruptcy debtors’ confirmed plan alleged that providers of financial services to the debtors were the transferees of fraudulent transfers from the debtors under O.C.G.A. § 18-2-75(a), the claims were not subject to arbitration under arbitration clauses in contracts between the providers and the debtors; the claims were not derived from the rights of the debtors under the contracts since the debtors were the transferors, and the trustee asserted the claims on behalf of the creditors. Cohen v. Ernst & Young, LLP, 372 B.R. 530, 2007 Bankr. LEXIS 2810 (Bankr. S.D. Ga. 2007). Summary judgment improper. - Trial court erred by granting summary judgment to a creditor because under O.C.G.A. § 18-2-75(b), the questioned real estate transfer involved the debtor purchasing the property for the debtor’s mother because the debtor had the right to purchase the property and the property was only deeded to the debtor briefly the same day, which transfer was not to satisfy an antecedent debt, thus, no fraudulent transfer occurred. Truelove v. Buckley, 318 Ga. App. 207, 733 S.E.2d 499, 2012 Ga. App. LEXIS 879 (2012), cert. denied, No. S13C0374, 2013 Ga. LEXIS 345 (Ga. Apr. 15, 2013). Summary judgment was inappropriate as to a lender’s claims under Georgia’s Uniform Fraudulent Transfers Act (now Uniform Voidable Transactions Act), O.C.G.A. § 18-2-70 et seq., because the evidence was not undisputed, particularly given the evidence of the guarantor’s optimistic efforts to secure additional investors and shore up the financials of the guarantor’s businesses during the same approximate time frame. Nissan Motor

Acceptance Corp. v. Sowega Motors, Inc., No. 4:10-CV-111, 2012 U.S. Dist. LEXIS 128854 (M.D. Ga. Sept. 11, 2012). Trustee’s avoidance action alleging fraudulent conveyance could not be resolved on summary judgment because genuine issue of material fact existed with respect to the debtor’s insolvency. Kelley v. Speciale (In re Gregg), No. 11-40125- JTL, No. 11-4047, 2013 Bankr. LEXIS 3285 (Bankr. M.D. Ga. July 2, 2013). Dispute over law firm’s fees payable by debtor. - In a complaint seeking to recover pre-petition transfers made by a Chapter 11 debtor to a law firm, the law firm’s motion for summary judgment was denied as there was a genuine dispute of material fact regarding whether the debtor failed to receive reasonably equivalent value for the transfers as required by either 11 U.S.C. § 548(a)(1)(B)(I) or O.C.G.A. § 18-2-75(a). The law firm contended that the firm’s invoices demonstrated that the firm provided substantial legal services to the debtor in exchange for the payments the firm received, while the debtor’s responsible officer contended that the descriptions of work in the invoices were too vague and cursory to evaluate whether the services constituted reasonably equivalent value. Davis v. McDermott Will & Emery LLP (In re Tom’s Foods, Inc.), No. 05-40683-JDW, No. 074012, 2010 Bankr. LEXIS 3720 (Bankr. M.D. Ga. Oct. 20, 2010). Obligation and payments thereon evaluated separately. - In a fraudulent conveyance action, the need to evaluate a debt separately from the payments thereon was evidenced by 11 U.S.C. § 548 and O.C.G.A. § 18-2-75(a), which permitted the obligation and the payments to be avoided separately or together. Watts v. Peachtree Tech. Partners, LLC (In re Palisades at West Paces Imaging Ctr., LLC), No. 09-87600-WLH, No. 11-5183, 2011 Bankr. LEXIS 3576 (Bankr. N.D. Ga. Sept. 13, 2011). Bankruptcy trustee failed to allege that payments to a creditor were avoidable as fraudulent since the bankruptcy debtor incurred the obligation upon execution of an agreement which occurred outside the look-back period for avoiding fraudulent transfers. Gordon v. Harrison (In re Alpha

Protective Servs.), 531 B.R. 889, 2015 Bankr. LEXIS 1741 (Bankr. M.D. Ga. 2015). Fraudulent transfer shown. - One million three hundred forty thousand dollars ($1,340,000) in payments made by the debtor to an insider, allegedly for a construction management fee, were avoidable because there was no evidence to support any reasonably equivalent value in excess of the $175,000 contract price since there was no evidence as to what the “extras” were, the cost of the “extras”, or even a contractual basis for the extra charges. Watts v. MTC Dev., LLC (In re Palisades at W. Paces Imaging Ctr., LLC), 501 B.R. 896, 2013 Bankr. LEXIS 4870 (Bankr. N.D. Ga. 2013). Payments made by Chapter 7 debtor to an insider, allegedly for a construction management fee, were avoidable as a transfer made to an insider for an antecedent debt because the insider had reasonable cause to believe the debtor was insolvent at the time the payments were made, and, even under the insider’s version of the facts, the payments were for antecedent debt. Watts v. MTC Dev., LLC (In re Palisades at W. Paces Imaging Ctr., LLC), 501 B.R. 896, 2013 Bankr. LEXIS 4870 (Bankr. N.D. Ga. 2013). Checks payable from a Chapter 7 debtor that were deposited in an insider’s account were avoidable because there was no evidence that the debtor, which was insolvent at the time of the transfers, received any value as a result of the checks, nor any evidence that the insider used the funds to pay any valid expenses of the debtor. Watts v. MTC Dev., LLC (In re Palisades at W. Paces Imaging Ctr., LLC), 501 B.R. 896, 2013 Bankr. LEXIS 4870 (Bankr. N.D. Ga. 2013). Checks payable from a Chapter 7 debtor that were deposited in an insider’s account were avoidable because the checks were on account of antecedent debt. Watts v. MTC Dev., LLC (In re Palisades at W. Paces Imaging Ctr., LLC), 501 B.R. 896, 2013 Bankr. LEXIS 4870 (Bankr. N.D. Ga. 2013). Although transfers by a Chapter 7 debtor to insiders could not be avoided because the debtor received reasonably equivalent value, the transfers were none-

theless avoidable because they were made on account of antecedent debt at a time when the debtor was insolvent. Watts v. MTC Dev., LLC (In re Palisades at W. Paces Imaging Ctr., LLC), 501 B.R. 896, 2013 Bankr. LEXIS 4870 (Bankr. N.D. Ga. 2013). Actual fraud was adequately pled by alleging badges of fraud sufficient to infer the fraudulent nature of transfers to insiders; moreover, insolvency resulting in constructive fraud also was adequately pled. Ralls Corp. v. Huerfano River Wind, LLC, 27 F. Supp. 3d 1303, 2014 U.S. Dist. LEXIS 87414 (N.D. Ga. 2014). Fraudulent transfer not shown. - Trial court did not err in failing to find

that the transfer of the home at issue from the debtor to a family member was a fraudulent conveyance and ordering a money judgment against the family member because the family member complied with the divorce court’s order to sell the marital home and to give the bulk of the proceeds to the debtor and the debtor’s wife, supporting a finding that the debtor received reasonably equivalent value for the debtor’s interest in the marital home, which would defeat a claim for a constructive fraudulent conveyance. Agricommodities, Inc. v. Moore, 359 Ga. App. 1, 854 S.E.2d 781, 2021 Ga. App. LEXIS 105 (2021).