Michigan Laws 566.38 – Transfer or obligation not voidable; recovery of judgment; rights of good-faith transferee or oblige; burden of proof; preponderance of evidence as standard of proof
Current as of: 2023 | Check for updates
|
Other versions
Terms Used In Michigan Laws 566.38
- Asset: means property of a debtor. See Michigan Laws 566.31
- Creditor: means a person that has a claim. See Michigan Laws 566.31
- Debt: means liability on a claim. See Michigan Laws 566.31
- Debtor: means a person that is liable on a claim. See Michigan Laws 566.31
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Insider: includes all of the following:
(i) If the debtor is an individual, all of the following:
(A) A relative of the debtor or of a general partner of the debtor. See Michigan Laws 566.31Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC 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. See Michigan Laws 566.31 Lien: A claim against real or personal property in satisfaction of a debt. Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period. Person: means an individual, estate, partnership, association, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See Michigan Laws 566.31 Transfer: means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset. See Michigan Laws 566.31 Uniform Commercial Code: A set of statutes enacted by the various states to provide consistency among the states' commercial laws. It includes negotiable instruments, sales, stock transfers, trust and warehouse receipts, and bills of lading. Source: OCC
(1) A transfer or obligation is not voidable under section 4(1)(a) against a person that took in good faith and for a reasonably equivalent value given the debtor or against any subsequent transferee or obligee.
(2) To the extent a transfer is avoidable in an action by a creditor under section 7(1)(a), all of the following rules apply:
(a) Except as otherwise provided in this section, the creditor may recover a judgment for the value of the asset transferred, as adjusted under subsection (3), or the amount necessary to satisfy the creditor’s claim, whichever is less. The judgment may be entered against either of the following:
(i) The first transferee of the asset or the person for whose benefit the transfer was made.
(ii) An immediate or mediate transferee of the first transferee, other than either of the following:
(A) A good-faith transferee who took for value.
(B) An immediate or mediate good-faith transferee of a person described in sub-subparagraph (A).
(b) Recovery pursuant to section 7(1)(a) or (2) of or from the asset transferred or its proceeds, by levy or otherwise, is available only against a person described in subdivision (a)(i) or (ii).
(3) If the judgment under subsection (2) is based upon the value of the asset transferred, the judgment must be for an amount equal to the value of the asset at the time of the transfer, subject to adjustment as the equities may require.
(4) Notwithstanding the voidability of a transfer or an obligation under this act, a good-faith transferee or obligee is entitled, to the extent of the value given the debtor for the transfer or obligation, to 1 or more of the following:
(a) A lien on or a right to retain an interest in the asset transferred.
(b) Enforcement of an obligation incurred.
(c) A reduction in the amount of the liability on the judgment.
(5) A transfer is not voidable under section 4(1)(b) or section 5 if the transfer results from either of the following:
(a) Termination of a lease upon default by the debtor when the termination is pursuant to the lease and applicable law.
(b) Enforcement of a security interest in compliance with article 9 of the uniform commercial code, other than an acceptance of collateral in full or partial satisfaction of the obligation it secures.
(6) A transfer is not voidable under section 5(2) in 1 or more of the following circumstances:
(a) To the extent the insider gave new value to or for the benefit of the debtor after the transfer was made, except to the extent the new value was secured by a valid lien.
(b) If made in the ordinary course of business or financial affairs of the debtor and the insider.
(c) 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.
(7) The following rules determine the burden of proving matters referred to in this section:
(a) A party that seeks to invoke subsection (1), (4), (5), or (6) has the burden of proving the applicability of that subsection.
(b) Except as otherwise provided in subdivisions (c) and (d), the creditor has the burden of proving each applicable element of subsection (2) or (3).
(c) The transferee has the burden of proving the applicability to the transferee of subsection (2)(a)(ii)(A) or (B).
(d) A party that seeks adjustment under subsection (3) has the burden of proving the adjustment.
(8) The standard of proof required to establish matters referred to in this section is preponderance of the evidence.