Chapter 1336: OHIO UNIFORM FRAUDULENT TRANSFER ACT

1336.01 Ohio uniform fraudulent transfer act definitions.

As used in this chapter:

(A) "Affiliate" means any of the following:

(1) A person who directly or indirectly owns, controls, or holds with power to vote, twenty per cent or more of the outstanding voting securities of the debtor, other than a person who holds the securities in either of the following manners:

(a) As a fiduciary or agent without sole discretionary power to vote the securities;

(b) Solely to secure a debt, if the person has not exercised the power to vote.

(2) A corporation twenty per cent or more of the outstanding voting securities of which are directly or indirectly owned, controlled, or held with power to vote, by the debtor or a person who directly or indirectly owns, controls, or holds with power to vote, twenty per cent or more of the outstanding voting securities of the debtor, other than a person who holds the securities in either of the following manners:

(a) As a fiduciary or agent without sole discretionary power to vote the securities;

(b) Solely to secure a debt, if the person has not exercised the power to vote.

(3) A person whose business is operated by the debtor under a lease or other agreement, or a person substantially all of whose assets are controlled by the debtor;

(4) A person who operates the business of the debtor under a lease or other agreement, or controls substantially all of the assets of the debtor.

(B) "Asset" means property of a debtor, but does not include any of the following:

(1) Property to the extent it is encumbered by a valid lien;

(2) Property to the extent it generally is exempt under nonbankruptcy law, including, but not limited to, section 2329.66 of the Revised Code;

(3) An interest in property held in the form of a tenancy by the entireties created under section 5302.17 of the Revised Code prior to April 4, 1985, to the extent it is not subject to process by a creditor holding a claim against only one tenant.

(C) "Claim" means a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.

(D) "Creditor" means a person who has a claim.

(E) "Debt" means liability on a claim.

(F) "Debtor" means a person who is liable on a claim.

(G) "Insider" includes all of the following:

(1) If the debtor is an individual, any of the following:

(a) A relative of the debtor or of a general partner of the debtor;

(b) A partnership in which the debtor is a general partner;

(c) A general partner in a partnership described in division (G)(1)(b) of this section;

(d) A corporation of which the debtor is a director, officer, or person in control.

(2) If the debtor is a corporation, any of the following:

(a) A director of the debtor;

(b) An officer of the debtor;

(c) A person in control of the debtor;

(d) A partnership in which the debtor is a general partner;

(e) A general partner in a partnership described in division (G)(2)(d) of this section;

(f) A relative of a general partner, director, officer, or person in control of the debtor.

(3) If the debtor is a partnership, any of the following:

(a) A general partner in the debtor;

(b) A relative of a general partner in, a general partner of, or a person in control of the debtor;

(c) Another partnership in which the debtor is a general partner;

(d) A general partner in a partnership described in division (G)(3)(c) of this section;

(e) A person in control of the debtor.

(4) An affiliate, or an insider of an affiliate as if the affiliate were the debtor;

(5) A managing agent of the debtor.

(H) "Lien" means a charge against or an interest in property to secure payment of a debt or performance of an obligation, and includes a security interest created by agreement, a judicial lien obtained by legal or equitable process or proceedings, a common law lien, or a statutory lien.

(I) "Person" means an individual, partnership, corporation, association, organization, government or governmental subdivision or agency, business trust, estate, trust, or any other legal or commercial entity.

(J) "Property" means anything that may be the subject of ownership.

(K) "Relative" means an individual related by consanguinity within the third degree as determined by the common law, a spouse, or an individual related to a spouse within the third degree as so determined, and includes an individual in an adoptive relationship within the third degree.

(L) "Transfer" means every direct or indirect, absolute or conditional, and voluntary or involuntary method of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, and creation of a lien or other encumbrance.

(M) "Valid lien" means a lien that is effective against the holder of a judicial lien subsequently obtained by legal or equitable process or proceedings.

Effective Date: 09-28-1990

1336.02 Insolvent debtor.

(A)

(1) A debtor is insolvent if the sum of the debts of the debtor is greater than all of the assets of the debtor at a fair valuation.

(2) A debtor who generally is not paying his debts as they become due is presumed to be insolvent.

(B) A partnership is insolvent under division (A)(1) of this section if the sum of the debts of the partnership is greater than the aggregate, at a fair valuation, of all of the assets of the partnership and the sum of the excess of the value of the nonpartnership assets of each general partner over the nonpartnership debts of the general partner.

(C) For purposes of this section:

(1) "Assets" do not include property that has been transferred, concealed, or removed with intent to hinder, delay, or defraud creditors, or that has been transferred in a manner making the transfer fraudulent under section 1336.04 or 1336.05 of the Revised Code.

(2) "Debts" do not include an obligation to the extent that it is secured by a valid lien on property of the debtor not included as an asset.

Effective Date: 09-28-1990

1336.03 Giving value.

(A) Value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or an antecedent debt is secured or satisfied, but value does not include an unperformed promise made otherwise than in the ordinary course of the business of the promisor to furnish support to the debtor or another person.

(B) For the purposes of division (A)(2) of section 1336.04 and division (A) of section 1336.05 of the Revised Code, a person gives a reasonably equivalent value if the person acquires an interest of the debtor in an asset pursuant to a regularly conducted, noncollusive foreclosure sale or execution of power of sale for the acquisition or disposition of the interest of the debtor upon default under a mortgage, deed of trust, or security agreement.

(C) A transfer is made for present value if the exchange between the debtor and the transferee is intended by them to be contemporaneous and in fact is substantially contemporaneous.

Effective Date: 09-28-1990

1336.04 Transfer made or obligation incurred fraudulent as to creditor.

(A) A transfer made or an obligation incurred by a debtor is fraudulent as to a creditor, whether the claim of the creditor arose before, or within a reasonable time not to exceed four years 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 ways:

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

(2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and if either of the following applies:

(a) The debtor 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;

(b) The debtor 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.

(B) In determining actual intent under division (A)(1) of this section, consideration may be given to all relevant factors, including, but not limited to, the following:

(1) Whether the transfer or obligation was to an insider;

(2) Whether the debtor retained possession or control of the property transferred after the transfer;

(3) Whether the transfer or obligation was disclosed or concealed;

(4) Whether before the transfer was made or the obligation was incurred, the debtor had been sued or threatened with suit;

(5) Whether the transfer was of substantially all of the assets of the debtor;

(6) Whether the debtor absconded;

(7) Whether the debtor removed or concealed assets;

(8) Whether 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;

(9) Whether the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;

(10) Whether the transfer occurred shortly before or shortly after a substantial debt was incurred;

(11) Whether the debtor transferred the essential assets of the business to a lienholder who transferred the assets to an insider of the debtor.

Amended by 129th General AssemblyFile No.201, HB 479, §1, eff. 3/27/2013.

Effective Date: 09-28-1990

1336.05 Claims arising before the transfer or obligation incurred.

(A) A transfer made or an obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.

(B) A transfer made or an obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the transfer was made to or the obligation was incurred with respect to an insider for an antecedent debt, the debtor was insolvent at that time, and the insider had reasonable cause to believe that the debtor was insolvent.

Effective Date: 09-28-1990

1336.06 When transfer made or obligation incurred.

For the purposes of this chapter:

(A)

(1) A transfer is made if either of the following applies:

(a) With respect to an asset that is real property other than a fixture, but including the interest of a seller or purchaser under a contract for the sale of the asset, when the transfer is so far perfected that a good faith purchaser of the asset from the debtor against whom applicable law permits the transfer to be perfected cannot acquire an interest in the asset that is superior to the interest of the transferee;

(b) With respect to an asset that is not real property or that is a fixture, when the transfer is so far perfected that a creditor on a simple contract cannot acquire a judicial lien otherwise than under this chapter that is superior to the interest of the transferee.

(2)

(a) If applicable law permits the transfer to be perfected as provided in division (A) of this section and the transfer is not so perfected before the commencement of an action for relief arising out of a transfer that is fraudulent under section 1336.04 or 1336.05 of the Revised Code, the transfer is deemed made immediately before the commencement of the action.

(b) If applicable law does not permit the transfer to be perfected as provided in division (A) of this section, the transfer is made when it becomes effective between the debtor and the transferee.

(3) A transfer is not made until the debtor has acquired rights in the asset transferred.

(B) An obligation is incurred as follows:

(1) If oral, when it becomes effective between the parties;

(2) If evidenced by a writing, when the writing executed by the obligor is delivered to or for the benefit of the obligee.

Effective Date: 09-28-1990

1336.07 Remedies of creditor.

(A) In an action for relief arising out of a transfer or an obligation that is fraudulent under section 1336.04 or 1336.05 of the Revised Code, a creditor or a child support enforcement agency on behalf of a support creditor, subject to the limitations in section 1336.08 of the Revised Code, may obtain one of the following:

(1) Avoidance of the transfer or obligation to the extent necessary to satisfy the claim of the creditor;

(2) An attachment or garnishment against the asset transferred or other property of the transferee in accordance with Chapters 2715. and 2716. of the Revised Code;

(3) Subject to the applicable principles of equity and in accordance with the Rules of Civil Procedure, any of the following:

(a) An injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property;

(b) Appointment of a receiver to take charge of the asset transferred or of other property of the transferee;

(c) Any other relief that the circumstances may require.

(B) If a creditor or child support enforcement agency has obtained a judgment on a claim against the debtor, the creditor or agency, if the court so orders, may levy execution on the asset transferred or its proceeds in accordance with Chapter 2329. of the Revised Code.

Effective Date: 01-01-1998

1336.08 Bona fide transfers - voidable transfers.

(A) A transfer or an obligation is not fraudulent under division (A)(1) of section 1336.04 of the Revised Code against a person who took in good faith and for a reasonably equivalent value or against any subsequent transferee or obligee.

(B)

(1) Except as otherwise provided in this section, to the extent a transfer is voidable in an action by a creditor or a child support enforcement agency under division (A)(1) of section 1336.07 of the Revised Code, the creditor or agency may recover a judgment for the value of the asset transferred, as adjusted under division (B)(2) of this section, or the amount necessary to satisfy the claim of the creditor or agency, whichever is less. The judgment may be entered against either of the following:

(a) The first transferee of the asset or the person for whose benefit the transfer was made;

(b) Any subsequent transferee other than a good faith transferee who took for value or from any subsequent transferee.

(2) If the judgment under division (B)(1) of this section is based upon the value of the asset transferred, the judgment shall be in an amount equal to the value of the asset at the time of the transfer, subject to adjustment as the equities may require.

(C) Notwithstanding the voidability of a transfer or an obligation under division (A)(1) of section 1336.07 of the Revised Code, a good faith transferee or obligee is entitled, to the extent of the value given to the debtor for the transfer or obligation, to any of the following:

(1) A lien on or a right to retain any interest in the asset transferred;

(2) Enforcement of any obligation incurred;

(3) A reduction in the amount of the liability on the judgment.

(D) A transfer is not fraudulent under division (A)(2) of section 1336.04 or section 1336.05 of the Revised Code if the transfer results from either of the following:

(1) Termination of a lease upon default by the debtor when the termination is pursuant to the lease and applicable law;

(2) Enforcement of a security interest in compliance with section sections 1309.601 to 1309.604 of the Revised Code.

(E) A transfer is not fraudulent under division (B) of section 1336.05 of the Revised Code as follows:

(1) To the extent the insider gave new value to or for the benefit of the debtor after the transfer was made, unless the new value was secured by a valid lien;

(2) If made in the ordinary course of business or financial affairs of the debtor and the insider;

(3) 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.

Effective Date: 07-01-2001

1336.09 Statute of limitations.

A claim for relief with respect to a transfer or an obligation that is fraudulent under section 1336.04 or 1336.05 of the Revised Code is extinguished unless an action is brought in accordance with one of the following:

(A) If the transfer or obligation is fraudulent under division (A)(1) of section 1336.04 of the Revised Code, within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or reasonably could have been discovered by the claimant;

(B) If the transfer or obligation is fraudulent under division (A)(2) of section 1336.04 or division (A) of section 1336.05 of the Revised Code, within four years after the transfer was made or the obligation was incurred;

(C) If the transfer or obligation is fraudulent under division (B) of section 1336.05 of the Revised Code, within one year after the transfer was made or the obligation was incurred.

Effective Date: 09-28-1990

1336.10 Laws supplementing chapter.

Unless displaced by this chapter, the principles of law and equity, including, but not limited to, the law merchant and the law relating to principal and agent, estoppel, laches, fraud, misrepresentation, duress, coercion, mistake, insolvency, or other validating or invalidating cause, supplement the provisions of this chapter.

Effective Date: 09-28-1990

1336.11 Citing chapter.

This chapter may be cited as the Ohio uniform fraudulent transfer act.

Effective Date: 09-28-1990

1336.12 [Repealed].

Effective Date: 09-28-1990