A. 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:
(1) with actual intent to hinder, delay or defraud any creditor of the debtor; or
(2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
(a) 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
(b) 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.
B. In determining actual intent under Paragraph (1) of Subsection A of this section, consideration may be given, among other factors, to whether:
(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 disclosed or concealed;
(4) before the transfer was made or obligation was incurred, the debtor has 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.
C. A creditor making a claim for relief under Subsection A of this section has the burden of proving the elements of the claim for relief by a preponderance of the evidence.
History: Laws 1989, ch. 382, § 5; 2015, ch. 54, § 13.
ANNOTATIONSThe 2015 amendment, effective January 1, 2016, changed "fraudulent" transfers to "voidable" transfers, as used in the Voidable Transactions Act; in the catchline, changed "Transfers fraudulent as to present and future creditors" to "Transfer or obligation voidable as to present or future creditor"; in Subsection A, after "debtor is", deleted "fraudulent" and added "voidable"; in Subsection A, Paragraph (2)(b), after "that", deleted "he" and added "the debtor", and after "beyond", deleted "his" and added "the debtor's"; and added Subsection C.
Burden of proof. — The creditor bears the burden of proof to establish that the transferee did not pay reasonably equivalent value to the debtor in exchange for the transfer of property to the transferee. Ellen Equip. Corp. v. C.V. Consultants & Assocs., 2008-NMCA-057, 144 N.M. 55, 183 P.3d 940.
No intent to hinder, delay or defraud. — Where the transferee guaranteed a loan so that the debtor could purchase and develop property; the debtor transferred the property to the transferee when the debtor could not pay the loan; the debtor was released from liability on the loan; and the transferee gave a mortgage on the property to the bank to secure his obligation to pay the loan, substantial evidence supported the finding that the debtor did not transfer the property to the transferee with the intent to hinder, delay or defraud the creditor. Ellen Equip. Corp. v. C.V. Consultants & Assocs., 2008-NMCA-057, 144 N.M. 55, 183 P.3d 940.
Setting aside conveyance of radio license subject to FCC approval. — In an action to set aside the transfer of a radio license as a fraudulent conveyance, the trial court's order that the conveyance be set aside subject to FCC approval did not infringe FCC jurisdiction to make radio license determinations. Beagles v. Espinoza, 1990-NMCA-121, 111 N.M. 206, 803 P.2d 1111.
Factors in determining voidable transfers. — The noninclusive enumeration of factors contained in this section and 56-10-19 NMSA 1978 are to be considered when determining whether the funds that ordinarily would be exempt from attachment under 42-10-2 and 42-10-3 NMSA 1978 should be set aside as the result of a voidable transfer. Dona Ana Sav. & Loan Ass'n v. Dofflemeyer, 1993-NMSC-031, 115 N.M. 590, 855 P.2d 1054.
Bankruptcy trustee met burden as to actual fraud. Mazer v. Jones, 184 Bankr. 377 (Bankr. D.N.M. 1995).