242.04(2)(d)
(d) Before the transfer was made or the obligation was incurred, the debtor had been sued or threatened with suit;
242.04(2)(e)
(e) The transfer was of substantially all the debtor's assets;
242.04(2)(h)
(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;
242.04(2)(i)
(i) The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;
242.04(2)(j)
(j) The transfer occurred shortly before or shortly after a substantial debt was incurred; and
242.04(2)(k)
(k) The debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.
242.04(3)
(3) A creditor making a claim for relief under sub.
(1) has the burden of proving the elements of the claim for relief by a preponderance of the evidence.
242.04 History
History: 1987 a. 192;
2023 a. 246.
242.04 Annotation
Federal law does not preclude a labor union from bringing a state action for an alleged fraudulent conveyance by an employer when the claim does not require substantial interpretation of a collective bargaining agreement. International Machinist Association v. United States Can Co.,
150 Wis. 2d 479,
441 N.W.2d 710 (1989).
242.04 Annotation
The Wisconsin Uniform Fraudulent Transfer Act exists independently from the common law history of the law of fraudulent conveyances and fulfills a purpose quite separate from that of the fraudulent transaction exception to the rule of successor non-liability. Whereas the Act is designed to assist creditors in collecting on claims that may be frustrated by recent asset transfers, the fraudulent transaction exception is a doctrine that prevents successor companies from avoiding obligations incurred by their predecessors. This chapter has not supplanted the common law fraudulent transaction exception to the rule of successor non-liability. Springer v. Nohl Electric Products Corporation,
2018 WI 48,
381 Wis. 2d 438,
912 N.W.2d 1,
15-0829.
242.05
242.05
Transfer or obligation voidable as to present creditor. 242.05(1)(1)
A transfer made or obligation incurred by a debtor is voidable 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.
242.05(2)
(2) A transfer made by a debtor is voidable as to a creditor whose claim arose before the transfer was made if the transfer was made 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.
242.05(3)
(3) Subject to s.
242.02 (3), a creditor making a claim for relief under sub.
(1) or
(2) has the burden of proving the elements of the claim for relief by a preponderance of the evidence.
242.05 History
History: 1987 a. 192;
2023 a. 246.
242.05 Annotation
Unlike other provisions of the Uniform Fraudulent Transfer Act governing transfers made with fraudulent intent, this section deems certain transactions constructively fraudulent based on the circumstances of the transfer. Proving fraudulent intent is not necessary under this section. Beck v. BidRX, LLC,
2018 WI App 61,
384 Wis. 2d 207,
918 N.W.2d 96,
17-2043.
242.05 Annotation
Sub. (2) addresses “preferential transfers," a novel category of fraudulent transaction based on bankruptcy principles that attacks a transfer by an insolvent debtor to pay an antecedent debt to a preferred insider. The provision is aimed at diminishing the sometimes unfair advantages insiders possess when they are familiar with the debtor's financial status. A person attacking a transfer under sub. (2) must show that the debtor is improperly preferring insider creditors over others. Beck v. BidRX, LLC,
2018 WI App 61,
384 Wis. 2d 207,
918 N.W.2d 96,
17-2043.
242.05 Annotation
The evidence in this case was insufficient to prove a fraudulent transfer under sub. (2) because no evidence was introduced showing that the allegedly fraudulent transfers were made to satisfy an antecedent debt. The fact of a transfer to an insider is not enough; it is the preferential payment of prior debts to insiders to which sub. (2) is addressed. Beck v. BidRX, LLC,
2018 WI App 61,
384 Wis. 2d 207,
918 N.W.2d 96,
17-2043.
242.05 Annotation
Intent to defraud need not be proved under this section. DeWitt, Porter v. Kovalic,
991 F.2d 1243 (1993).
242.06
242.06
When transfer is made or obligation is incurred. For the purposes of this chapter:
242.06(1)(a)
(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.
242.06(1)(b)
(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 other than under this chapter that is superior to the interest of the transferee.
242.06(2)
(2) If applicable law permits the transfer to be perfected as provided in sub.
(1) and the transfer is not so perfected before the commencement of an action for relief under this chapter, the transfer is deemed made immediately before the commencement of the action.
242.06(3)
(3) If applicable law does not permit the transfer to be perfected as provided in sub.
(1), the transfer is made when it becomes effective between the debtor and the transferee.
242.06(4)
(4) A transfer is not made until the debtor has acquired rights in the asset transferred.
242.06(5)(a)
(a) If oral, when it becomes effective between the parties.
242.06(5)(b)
(b) If evidenced by a record, when the record signed by the obligor is delivered to or for the benefit of the obligee.
242.06 History
History: 1987 a. 192;
2023 a. 246.
242.06 Annotation
Sub. (1) requires viewing a transfer exclusively from the perspective of the creditor and not a transferee. What the transferees may have believed regarding with whom they were dealing is irrelevant under sub. (1). The good-faith defense under s. 242.08 (1) applies only to claims made under s. 242.04 (1) (a), not to claims under this section. Badger State Bank v. Taylor,
2004 WI 128,
276 Wis. 2d 312,
688 N.W.2d 439,
03-0750.
242.07
242.07
Remedies of creditors. 242.07(1)(1)
In an action for relief against a transfer or obligation under this chapter, a creditor, subject to the limitations in s.
242.08, may obtain any of the following:
242.07(1)(a)
(a) Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor's claim.
242.07(1)(b)
(b) An attachment or other provisional remedy against the asset transferred or other property of the transferee if available under chs.
810 to
813 or other applicable law.
242.07(1)(c)
(c) Subject to applicable principles of equity and in accordance with applicable rules of civil procedure:
242.07(1)(c)1.
1. An injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property;
242.07(1)(c)2.
2. Appointment of a receiver to take charge of the asset transferred or of other property of the transferee; or
242.07(2)
(2) If a creditor has obtained a judgment on a claim against the debtor, the creditor, if the court so orders, may levy execution on the asset transferred or its proceeds.
242.07 History
History: 1987 a. 192;
2023 a. 246.
242.07 Annotation
Nothing in ch. 242 changes the principle of law that compensatory damages are a threshold requirement for awarding punitive damages or otherwise permits a punitive damages award. Rescission under sub. (1) is an equitable remedy and does not constitute compensatory damages. C & A Investments v. Kelly,
2010 WI App 151,
330 Wis. 2d 223,
792 N.W.2d 644,
09-2420.
242.08
242.08
Defenses, liability, and protection of transferee or obligee. 242.08(1)(1)
A transfer or obligation is not voidable under s.
242.04 (1) (a) against a person who took in good faith and for a reasonably equivalent value given the debtor or against any subsequent transferee or obligee.
242.08(2)
(2) To the extent a transfer is voidable in an action by a creditor under s.
242.07 (1) (a), all of the following rules apply:
242.08(2)(am)
(am) Except as otherwise provided in this section, the creditor may recover judgment for the value of the asset transferred, as adjusted under sub.
(3), or the amount necessary to satisfy the creditor's claim, whichever is less. The judgment may be entered against any of the following:
242.08(2)(am)1.
1. The first transferee of the asset or the person for whose benefit the transfer was made.
242.08(2)(am)2.
2. An immediate or mediate transferee of the first transferee, other than any of the following:
242.08(2)(bm)
(bm) Recovery pursuant to s.
242.07 (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 par.
(am) 1. or
2. 242.08(3)
(3) If the judgment under sub.
(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.
242.08(4)
(4) Notwithstanding voidability of a transfer or an obligation under this chapter, a good-faith transferee or obligee is entitled, to the extent of the value given the debtor for the transfer or obligation, to any of the following:
242.08(4)(a)
(a) A lien on or a right to retain any interest in the asset transferred.
242.08(4)(c)
(c) A reduction in the amount of the liability on the judgment.
242.08(5)(a)
(a) Termination of a lease upon default by the debtor when the termination is pursuant to the lease and applicable law.
242.08(5)(b)
(b) Enforcement of a security interest in compliance with ch.
409, other than acceptance of collateral in full or partial satisfaction of the obligation it secures.
242.08(6)(a)
(a) To the extent that 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;
242.08(6)(b)
(b) If made in the ordinary course of business or financial affairs of the debtor and the insider; or
242.08(6)(c)
(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.
242.08(7)
(7) The following rules determine the burden of proving matters referred to in this section:
242.08(7)(a)
(a) A party that seeks to invoke sub.
(1),
(4),
(5), or
(6) has the burden of proving the applicability of that subsection.
242.08(7)(b)
(b) Except as otherwise provided in pars.
(c) and
(d), the creditor has the burden of proving each applicable element of sub.
(2) or
(3).
242.08(7)(d)
(d) A party that seeks adjustment under sub.
(3) has the burden of proving the adjustment.
242.08(8)
(8) The standard of proof required to establish matters referred to in this section is preponderance of the evidence.
242.08 History
History: 1987 a. 192;
2023 a. 246.
242.09
242.09
Statute of limitation. Actions under this chapter are barred as provided in s.
893.425.
242.09 History
History: 1987 a. 192.
242.094(1)(1)
In this section, the following rules determine a debtor's location:
242.094(1)(a)
(a) A debtor who is an individual is located at the individual's principal residence.
242.094(1)(b)
(b) A debtor that is an organization and has only one place of business is located at its place of business.
242.094(1)(c)
(c) A debtor that is an organization and that has more than one place of business is located at its chief executive office.
242.094(2)
(2) A claim for relief in the nature of a claim for relief under this chapter is governed by the local law of the jurisdiction in which the debtor is located when the transfer is made or the obligation is incurred.
242.094 History
History: 2023 a. 246.
242.096
242.096
Application to series organization. 242.096(1)(a)
(a) “Protected series” means an arrangement, however denominated, created by a series organization that, pursuant to the law under which the series organization is organized, has the characteristics set forth in par.
(b).
242.096(1)(b)
(b) “Series organization” means an organization that, pursuant to the law under which it is organized, has the following characteristics:
242.096(1)(b)1.
1. The organic record of the organization provides for creation by the organization of one or more protected series, however denominated, with respect to specified property of the organization, and for records to be maintained for each protected series that identify the property of or associated with the protected series.
242.096(1)(b)2.
2. Debt incurred or existing with respect to the activities of, or property of or associated with, a particular protected series is enforceable against the property of or associated with the protected series only, and not against the property of or associated with the organization or other protected series of the organization.
242.096(1)(b)3.
3. Debt incurred or existing with respect to the activities or property of the organization is enforceable against the property of the organization only, and not against the property of or associated with a protected series of the organization.
