# Title 13 — Debtor and Creditor Relationship

## Chapter 13-02.1 — Uniform Voidable Transactions Act

### § 13-02.1-01. Definitions.

As used in this chapter:
1. "Affiliate" means:
a. A person that directly or indirectly owns, controls, or holds with power to vote,
twenty percent or more of the outstanding voting securities of the debtor, other
than a person that holds the securities;
(1) As a fiduciary or agent without sole discretionary power to vote the
securities; or
(2) Solely to secure a debt, if the person has not in fact exercised the power to
vote;
b. A corporation or a limited liability company twenty percent or more of whose
outstanding voting securities are directly or indirectly owned, controlled, or held
with power to vote, by the debtor, or by a person that directly or indirectly owns,
controls, or holds with power to vote, twenty percent or more of the outstanding
voting securities of the debtor, other than a person that holds the securities:
(1) As a fiduciary or agent without sole discretionary power to vote the
securities; or
(2) Solely to secure a debt, if the person has not in fact exercised the power to
vote;
c. 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; or
d. A person that operates the debtor's business under a lease or other agreement or
controls substantially all of the debtor's assets.
2. "Asset" means property of a debtor, excluding property to the extent it is encumbered
by a valid lien, property to the extent it is generally exempt under nonbankruptcy law,
or an interest in property held in tenancy by the entireties to the extent it is not subject
to process by a creditor holding a claim against only one tenant.
3. "Claim", except as used in "claim for relief", 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.
4. "Creditor" means a person that has a claim.
5. "Debt" means liability on a claim.
6. "Debtor" means a person that is liable on a claim.
7. "Electronic" means relating to technology having electrical, digital, magnetic, wireless,
optical, electromagnetic, or similar capabilities.
8. "Insider" includes:
a. If the debtor is an individual:
(1) A relative of the debtor or of a general partner of the debtor;
(2) A partnership in which the debtor is a general partner;
(3) A general partner in a partnership described in paragraph 2; or
(4) A corporation of which the debtor is a director, officer, or person in control, or
a limited liability company of which the debtor is a governor, manager, or
person in control;
b. If the debtor is a corporation:
(1) A director of the debtor;
(2) An officer of the debtor;
(3) A person in control of the debtor;
(4) A partnership in which the debtor is a general partner;
(5) A general partner in a partnership described in paragraph 4; or
(6) A relative of a general partner, director, officer, or person in control of the
debtor;
c. If the debtor is a partnership:

(1) A general partner in the debtor;
(2) A relative of a general partner in, of a general partner of, or of a person in
control of the debtor;
(3) Another partnership in which the debtor is a general partner;
(4) A general partner in a partnership described in paragraph 3; or
(5) A person in control of the debtor;
d. If the debtor is a limited liability company:
(1) A governor of the debtor;
(2) A manager of the debtor;
(3) A person in control of the debtor;
(4) A partnership in which the debtor is a general partner;
(5) A general partner described in paragraph 4; or
(6) A relative of a general partner, governor, manager, or person in control of
the debtor; and
e. An "insider" also includes an affiliate, or an insider of an affiliate as if the affiliate
were the debtor, and a managing agent of the debtor.
9. "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, a common-law lien, or a statutory lien.
10. "Organization" means a person other than an individual.
11. "Person" means an individual, estate, business or nonprofit entity, public corporation,
government or governmental subdivision, agency, or instrumentality, or other legal
entity.
12. "Property" means anything that may be the subject of ownership.
13. "Record" means information that is inscribed on a tangible medium or that is stored in
an electronic or other medium and is retrievable in perceivable form.
14. "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.
15. "Sign" means, with present intent to authenticate or adopt a record:
a. To execute or adopt a tangible symbol; or
b. To attach to or logically associate with the record an electronic symbol, sound, or
process.
16. "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, and
includes payment of money, release, lease, license, and creation of a lien or other
encumbrance.
17. "Valid lien" means a lien that is effective against the holder of a judicial lien
subsequently obtained by legal process or proceedings.
### § 13-02.1-02. Insolvency.

1. A debtor is insolvent if, at a fair valuation, the sum of the debtor's debts is greater than
the sum of the debtor's assets.
2. A debtor that is generally not paying the debtor's debts as they become due other than
as a result of a bona fide dispute is presumed to be insolvent. The presumption
imposes on the party against which the presumption is directed the burden of proving
that the nonexistence of insolvency is more probable than its existence.
3. Assets under this section 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 voidable under this chapter.
4. Debts under this section do not include an obligation to the extent it is secured by a
valid lien on property of the debtor not included as an asset.

### § 13-02.1-03. Value.

1. 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 promisor's business to furnish support to the debtor or another person.
2. For the purposes of subdivision b of subsection 1 of section 13-02.1-04 and section
13-02.1-05, 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 a 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.
3. A transfer is made for present value if the exchange between the debtor and the
transferee is intended by them to be contemporaneous and is in fact substantially
contemporaneous.
### § 13-02.1-04. Transfer or obligation voidable as to present or future creditor.

1. A transfer made or obligation incurred by a debtor is voidable as to a creditor, whether
the creditor's claim arose before or after the transfer was made or the obligation was
incurred, if the debtor made the transfer or incurred the obligation:
a. With actual intent to hinder, delay, or defraud any creditor of the debtor; or
b. Without receiving a reasonably equivalent value in exchange for the transfer or
obligation, and 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 or 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.
2. In determining actual intent under subdivision a of subsection 1, consideration may be
given, among other factors, to whether:
a. The transfer or obligation was to an insider;
b. The debtor retained possession or control of the property transferred after the
transfer;
c. The transfer or obligation was disclosed or concealed;
d. Before the transfer was made or obligation was incurred, the debtor had been
sued or threatened with suit;
e. The transfer was of substantially all the debtor's assets;
f. The debtor absconded;
g. The debtor removed or concealed assets;
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;
i. The debtor was insolvent or became insolvent shortly after the transfer was made
or the obligation was incurred;
j. The transfer occurred shortly before or shortly after a substantial debt was
incurred; and
k. The debtor transferred the essential assets of the business to a lienor that
transferred the assets to an insider of the debtor.
3. A creditor making a claim for relief under subsection 1 has the burden of proving the
elements of the claim for relief by a preponderance of the evidence.
### § 13-02.1-05. Transfer or obligation voidable as to present creditor.

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.
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.
3. Subject to subsection 2 of section 13-02.1-02, a creditor making a claim for relief
under subsection 1 or 2 has the burden of proving the elements of the claim for relief
by a preponderance of the evidence.
### § 13-02.1-06. When transfer is made or obligation is incurred.

For the purposes of this chapter:
1. A transfer is made 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 which applicable law permits the transfer to be perfected cannot
acquire an interest in the asset that is superior to the interest of the transferee. A
transfer is made 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. If applicable law permits the transfer to be perfected as provided in subsection 1 and
the transfer is not so perfected before the commencement of an action for relief under
this chapter, the transfer is deemed to have been made immediately before the
commencement of the action.
3. If applicable law does not permit the transfer to be perfected as provided in
subsection 1, the transfer is made when it becomes effective between the debtor and
the transferee.
4. A transfer is not made until the debtor has acquired rights in the asset transferred.
5. An oral obligation is incurred when it becomes effective between the parties. An
obligation evidenced by a record is incurred when the record signed by the obligor is
delivered to or for the benefit of the obligee.
### § 13-02.1-07. Remedies of creditor.

1. In an action for relief against a transfer or obligation under this chapter, a creditor,
subject to the limitations in section 13-02.1-08, may obtain:
a. Avoidance of the transfer or obligation to the extent necessary to satisfy the
creditor's claim;
b. Attachment or other provisional remedy against the asset transferred or other
property of the transferee if available under applicable law; or
c. Subject to applicable principles of equity and in accordance with applicable rules
of civil procedure:
(1) An injunction against further disposition by the debtor or a transferee, or
both, of the asset transferred or of other property;
(2) Appointment of a receiver to take charge of the asset transferred or of other
property of the transferee; or
(3) Any other relief the circumstances may require.
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.
### § 13-02.1-08. Defenses - Liability - Protection of transferee or obligee.

1. A transfer or obligation is not voidable under subdivision a of subsection 1 of section
value given the debtor or against any subsequent transferee or obligee.
2. To the extent a transfer is avoidable in an action by the creditor under subdivision a of
subsection 1 of section 13-02.1-07, the following rules apply:
a. Except as otherwise provided in this section, the creditor may recover 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:
(1) The first transferee of the asset or the person for whose benefit the transfer
was made; or
(2) An immediate or mediate transferee of the first transferee, other than:
(a) A good-faith transferee that took for value; or
(b) An immediate or mediate good-faith transferee of a person described
in subparagraph a.
b. Recovery pursuant to subdivision a of subsection 1 of section 13-02.1-07 or
subsection 2 of section 13-02.1-07 of or from the asset transferred or its
proceeds, by levy or otherwise, is available only against a person described in
paragraph 1 or 2 of subdivision a.
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 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:
a. A lien on or a right to retain an interest in the asset transferred;
b. Enforcement of an obligation incurred; or
c. A reduction in the amount of the liability on the judgment.
5. A transfer is not voidable under subdivision b of subsection 1 of section 13-02.1-04 or
section 13-02.1-05 if the transfer results from termination of a lease upon default by
the debtor when the termination is pursuant to the lease and applicable law or
enforcement of a security interest in compliance with chapter 41-09, other than
acceptance of collateral in full or partial satisfaction of the obligation it secures.
6. A transfer is not voidable under subsection 2 of section 13-02.1-05:
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; or
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 subdivision c or 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
subparagraph a or b of paragraph 2 of subdivision a of subsection 2.
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.
### § 13-02.1-09. Extinguishment of claim for relief.

A claim for relief with respect to a transfer or obligation under this chapter is extinguished
unless action is brought:
1. Under subdivision a of subsection 1 of section 13-02.1-04, not later than four years
after the transfer was made or the obligation was incurred or, if later, not later than one
year after the transfer or obligation was or could reasonably have been discovered by
the claimant;

2. Under subdivision b of subsection 1 of section 13-02.1-04 or subsection 1 of section
13-02.1-05, not later than four years after the transfer was made or the obligation was
incurred; or
3. Under subsection 2 of section 13-02.1-05, not later than one year after the transfer
was made.
### § 13-02.1-10. Supplementary provisions.

Unless displaced by the provisions of this chapter, the principles of law and equity, including
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 their provisions.
### § 13-02.1-11. Governing law.

1. In this section, the following rules determine a debtor's location:
a. A debtor who is an individual is located at the individual's principal residence.
b. A debtor that is an organization and has only one place of business is located at
its place of business.
c. A debtor that is an organization and has more than one place of business is
located at its chief executive office.
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.
### § 13-02.1-12. Application to series organization.

1. In this section:
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 subdivision b.
b. "Series organization" means an organization that, pursuant to the law under
which it is organized, has the following characteristics:
(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.
(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.
(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.
2. A series organization and each protected series of the organization is a separate
person for purposes of this chapter, even if for other purposes a protected series is not
a person separate from the organization or other protected series of the organization.
### § 13-02.1-13. Relation to Electronic Signatures in Global and National Commerce Act.

This chapter modified, limits, or supersedes the federal Electronic Signatures in Global and
National Commerce Act [Pub. L. 106-229; 114 Stat. 464; 15 U.S.C. 7001 et seq.], but does not
modify, limit, or supersede section 101(c) of that Act [15 U.S.C. 7001(c)], or authorize electronic
delivery of any of the notices described in section 103(b) of that Act [15 U.S.C. 7003(b)].
