566.34 Transfer with intent to defraud.

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Sec. 4.

(1)Except as otherwise provided in subsection (4), a transfer made or obligation incurred by a debtor is voidable as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation in either of the following circumstances:

(a)With actual intent to hinder, delay, or defraud any creditor of the debtor.

(b)Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor did either of the following:

(i)Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction.

(ii)Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor's ability to pay as they became due.

(2)In determining actual intent under subsection (1)(a) or (4), consideration may be given, among other factors, to whether 1 or more of the following occurred:

(a)The transfer or obligation was to an insider.

(b)The debtor retained possession or control of the property transferred after the transfer.

(c)The transfer or obligation was disclosed or concealed.

(d)Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit.

(e)The transfer was of substantially all of the debtor's assets.

(f)The debtor absconded.

(g)The debtor removed or concealed assets.

(h)The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred.

(i)The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred.

(j)The transfer occurred shortly before or shortly after a substantial debt was incurred.

(k)The debtor transferred the essential assets of the business to a lienor that transferred the assets to an insider of the debtor.

(3)Except as otherwise provided in subsection (4), a creditor that makes a claim for relief under subsection

(1)has the burden of proving the elements of the claim for relief by a preponderance of the evidence.

(4)A qualified disposition is fraudulent as to the creditor whose claim arose after the qualified disposition only if the qualified disposition was made with actual intent to hinder, delay, or defraud any creditor of the debtor. With respect to a qualified disposition, a creditor has the burden of proving the elements of the claim for relief by clear and convincing evidence.

History: 1998, Act 434 , Imd. Eff. Dec. 30, 1998 ;-- Am. 2016, Act 331 , Eff. Mar. 8, 2017 ;-- Am. 2016, Act 552 , Eff. Apr. 10, 2017 ;-- Am. 2022, Act 145 , Imd. Eff. July 19, 2022