Effective January 1, 2016, SB 161 creates the California’s Uniform Voidable Transactions Act (UVTA) codified in California Civil Code § 3439 et. seq. The purpose of the UVTA is to make it easier for creditors to attach and reclaim assets transferred by a debtor to a third party while the debtor was “insolvent.” Under the prior law, creditors were often forced to prove by clear and convincing evidence that the debtor was trying to commit fraud. Under the new UVTA, to void a transfer that occurs after January 1, 2016, the creditor must now only show by a “preponderance” of the evidence” that: (1) the debtor was insolvent at the time of the transfer and that (2) the third party to whom the property was transferred paid less than its reasonable value.

Under UVTA, a creditor asserting a UVTA claim will also be able to obtain a pre-judgment attachment on a transferee’s assets generally, rather than just on the asset(s) transferred or its proceeds.