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Senate of Pennsylvania
Session of 2017 - 2018 Regular Session

MEMORANDUM

Posted:	February 2, 2017 04:29 PM
From:	Senator Guy Reschenthaler
To:	All Senate members
Subject:	Uniform Voidable Transactions Act

In the near future, I will be introducing legislation to amend Pennsylvania law on fraudulent transfers. The uniform act will be known as the Uniform Voidable Transactions Act. Fraudulent transfer law limits a person’s ability to deal with their property vis à vis its creditors and implements the saying that a debtor must be just before being generous. In other words, before a person gives property away, that person should pay its existing creditors. This legislation amends the Pennsylvania Uniform Fraudulent Transfer Act (PUFTA), 12 Pa. C.S. § 5101 et seq. and is based on a set of amendments to the Uniform Fraudulent Transfer Act promulgated by the Uniform Law Commission in 2014. My legislation will: Clarify evidentiary rules by including provisions establishing the respective standards of proof of the parties making claims and establishing defenses under the Act. PUFTA does not include standards of proof; as a result, some courts apply a preponderance of the evidence standard while others impose clear and convincing evidence. The Act adopts a preponderance of the evidence standard, which is the standard of proof typically required in civil actions; Provide a choice of law rule for actions of the nature governed by the Act. The Act provides that the law of the state in which the debtor is located will govern causes of action governed by the Act; Modernize the definition of insolvency for partnerships; Recognize series organizations by providing that each “protected series” of a series organization is treated as a person under the Act. With the series structure, specified assets can be allocated to specific business activities, thus shielding some LLC assets from some creditors. Update the terminology used in the law by replacing the term “fraudulent” with “voidable” to recognize the fact that the fraudulent intent necessary for a claim of common law fraud has never been necessary for an action to avoid a transfer under fraudulent transfer law. The bill renames the PUFTA the “Pennsylvania Uniform Voidable Transactions Act.” Please join me in supporting this legislation that will improve and modernize existing Pennsylvania law on fraudulent transfers. Please contact my office with any questions at 717-787-5839.

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