Senate Commerce Committee Statement to Senate, No. 3171 — State of New Jersey (January 21, 2021)

Summary

A Senate Commerce Committee statement to the Senate on Senate Bill No. 3171, State of New Jersey, dated January 21, 2021, reporting the bill favorably with committee amendments. As amended, the bill renames the "Uniform Fraudulent Transfer Act" the "Uniform Voidable Transactions Act," making changes recommended by the Uniform Law Commission and the New Jersey Law Revision Commission and recategorizing certain debtor transactions as "voidable" rather than "fraudulent." A creditor must prove a voidable transaction claim by a preponderance of the evidence, and a debtor generally not paying debts as they become due is presumed insolvent. The bill also sets rules for a debtor's location and addresses the "Electronic Signatures in Global and National Commerce Act," 15 U.S.C. s.7001 et seq.; it is identical to Assembly Bill No. 3384.

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SENATE COMMERCE COMMITTEE

STATEMENT TO

SENATE, No.
3171

with
committee amendments

STATE
OF NEW JERSEY

DATED: JANUARY
21, 2021

The Senate Commerce Committee reports favorably and
with committee amendments Senate Bill No. 3171.

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
Assembly Bill No. 3384, 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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