Fraudulent Conveyance In Texas
A fraudulent conveyance is a transfer by a debtor with the intent to hinder, delay, or defraud his creditors by placing the debtor's property beyond the creditor's reach. See Nobles v. Marcus, 533 S.W.2d 923, 925 (Tex. 1976); Bado Equip. Co. v. Bethlehem Steel Corp., 814 S.W.2d 464, 474 (Tex. App.--Houston [14th Dist.] 1991, no writ).
The Texas Uniform Fraudulent Transfer Act is designed to prevent transfers of property with the intent to defraud creditors. See Act of June 1, 1987, 70th Leg., R.S., ch. 1004, 1, 1987 Tex. Gen. Laws 3388, 3390 (amended 1993) (current version at TEX. BUS. & COM. CODE ANN. 24.005(a)(1) (Vernon Supp. 2000)); Connell v. Connell, 889 S.W.2d 534, 542 (Tex. App.--San Antonio 1994, writ denied).
Various facts and circumstances, described as badges of fraud, may be considered in determining fraudulent intent. See, e.g., Texas Sand Co. v. Shield, 381 S.W.2d 48, 52-3 (Tex. 1964).
If, however, "fraudulent intent is only to be deduced from facts and circumstances which the law considers as mere badges of fraud and not fraud per se, these must be submitted to the trier of fact, which draws the inference as to the fairness or fraudulent character of the transaction." Quinn, 303 S.W.2d at 774.
The Uniform Fraudulent Transfer Act provides a list of factors that may be considered, among other factors, in determining actual intent:
(1) the transfer or obligation was to an insider;
(2) the debtor retained possession or control of the property transferred after the transfer;
(3) the transfer or obligation was concealed;
(4) before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;
(5) the transfer was of substantially all the debtor's assets;
(6) the debtor absconded;
(7) the debtor removed or concealed assets;
(8) 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) the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;
(10) the transfer occurred shortly before or shortly after a substantial debt was incurred; and
(11) the debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor. TEX. BUS. & COM. CODE ANN. 24.005 (Vernon Supp. 2000).