Senate Commerce Committee Statement to Assembly, No. 3384 — State of New Jersey (January 21, 2021)

Summary

Statement of the Senate Commerce Committee, State of New Jersey, dated January 21, 2021, reporting favorably and with committee amendments Assembly Bill No. 3384. As amended, the bill revises the "Uniform Fraudulent Transfer Act" with changes recommended by the Uniform Law Commission and the New Jersey Law Revision Commission, renaming it the "Uniform Voidable Transactions Act." It recategorizes certain debtor transactions as "voidable" rather than "fraudulent" and gives the creditor the burden of proving a voidable transaction claim by a preponderance of the evidence. A debtor generally not paying debts as they become due, other than because of a bona fide dispute, is presumed to be insolvent. The statement says the bill is identical to Senate Bill No. 3171.

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SENATE COMMERCE COMMITTEE

STATEMENT TO

ASSEMBLY,
No. 3384

with
committee amendments

STATE
OF NEW JERSEY

DATED: JANUARY
21, 2021

The Senate Commerce Committee reports favorably and
with committee amendments Assembly Bill No. 3384.

As amended, this bill revises the “Uniform Fraudulent
Transfer Act” by making changes approved and recommended for enactment in all
states by the Uniform Law Commission, and in New Jersey by the New Jersey Law
Revision Commission. The bill provides that the “Uniform Fraudulent Transfer
Act” shall be known, on or after the bill’s effective date, as the “Uniform
Voidable Transactions Act.”

Generally, the bill recategorizes certain transactions
by debtors as “voidable” rather than “fraudulent” to more accurately reflect
the nature of the transactions.

The bill establishes a “preponderance of evidence”
standard, applicable to various provisions in the act, including providing that
a creditor has the burden of proving the elements of a voidable transaction
claim by a preponderance of the evidence.

The bill provides that a debtor that is generally not
paying debts as they become due, other than as a result of a bona fide dispute,
is presumed to be insolvent. The bill removes the requirement that the net
worth of a general partner must be included in determining the insolvency of a
partnership. The bill also makes certain revisions to provisions relating to
the defenses available to a transferee or debtors.

The bill also provides statutory rules for determining
a debtor’s location, and provides guidance to address conflict of law issues.

Moreover, the bill provides that the act generally
modifies, limits, and supersedes the “Electronic Signatures in Global and
National Commerce Act,” 15 U.S.C. s.7001 et seq., but with certain exceptions
as noted in the bill.

Finally, the bill replaces references to the “Uniform
Fraudulent Transfer Act” or the former “Uniform Fraudulent Conveyance Law” with
references to the “Uniform Voidable Transactions Act” and also repeals outdated
sections of the law concerning fraudulent conveyances.

As amended and reported, this bill is identical to
Senate Bill No. 3171, as amended and reported by the Senate Commerce Committee
on January 21, 2021.

COMMITTEE
AMENDMENTS:

The committee amended the bill to:

(1) replace a reference to the “Uniform Fraudulent
Transfer Act” with a reference to the “Uniform Voidable Transactions Act”; and

(2) repeal certain outdated provisions of law
concerning fraudulent conveyances.

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