Voidable Transfers

Atlanta Lawyers Representing Creditors in Debt Collection Efforts

In Georgia, business owners regularly buy and sell assets and property. However, what may seem like a simple commercial transaction may be unethical if it happens under certain circumstances. For example, some transfers will be subject to scrutiny if they seem to be designed to defraud creditors who could potentially seize the transferred property. If you believe that a debtor conveyed ownership of an asset or property to impair your collection efforts or rights as a creditor, it may be a voidable transfer, and it is advisable to consult an attorney regarding your options. The seasoned Atlanta commercial collections lawyers at Poole Huffman take pride in fighting to protect creditor rights. We frequently assist creditors in matters in Atlanta, Tucker, and Decatur.

Voidable Transfers Under Georgia Law

While the conveyance of property is common in the business world, some seemingly harmless transfers are fraudulent and may be voidable. Specifically, under Georgia’s Uniform Voidable Transactions Act (the Act), a property transfer that a debtor makes with the intent to defraud, delay, or hinder a creditor may be deemed a fraudulent conveyance. The property transferred may be any of a debtor’s assets and include anything that is subject to ownership. In other words, if a debtor conveys assets to another party in a deliberate attempt to avoid paying a creditor, the transfer may be subject to scrutiny.

A court will weigh numerous factors in determining whether a debtor acted with intent, including whether the debtor transferred the property to an insider. Insiders include directors and officers of the debtor, the owner of the debtor, or a partnership in which the debtor is a general partner. A court will also examine whether the debtor retained control of the property after the transfer or concealed the transfer. Additionally, a court will assess whether the debtor had been sued prior to the transfer or became insolvent shortly after it was made.

Even if a debtor sells an asset without an intent to deceive a creditor, the exchange may nonetheless be fraudulent in certain circumstances. For example, if a debtor transfers ownership without receiving reasonable compensation for the exchange, it may be fraudulent. Furthermore, transfers made when a debtor is insolvent or likely to become insolvent, or when a debtor is engaged in a business with unreasonably small assets in relation to the business, can also be deemed duplicitous and therefore may be voidable.

Claims Arising Out of Voidable Transfers

A creditor that believes that a debtor made a fraudulent transfer can seek relief under the Act. The Act expressly allows a creditor to request avoidance of the transfer to the extent that it is required to satisfy the creditor’s claim. A creditor can also seek an attachment against the transferred asset or other property of the party that obtained the asset. In some instances, a creditor can obtain an injunction preventing both the debtor and the receiving party from disbursing the asset, or appointing a receiver to take charge of the asset.

In most cases, creditors pursuing claims arising out of voidable transfers must bring their actions within four years of the transfer, but in some instances, claims must be pursued within one year of the transfer.

Speak With a Knowledgeable Atlanta Attorney

Creditors have rights, and debtors that fraudulently attempt to impair those rights should be held accountable. If you believe that a party that owes you a debt transferred an asset to avoid paying you, you may be able to take legal action against them, and you should speak to an attorney as soon as possible. The knowledgeable Atlanta attorneys at Poole Huffman can assess the facts of your case and assist you in pursuing any claims that may help you protect your rights. We regularly represent creditors in commercial collection actions in Atlanta, Decatur, and Tucker, as well as other cities throughout Fulton, DeKalb, Cobb, and Gwinnett Counties. You can contact us at 404-373-4008 or through our online form to set up a consultation.