Alabama Fraudulent Transfer Act.

Ala. Code tit. 8, ch. 9A

in effect

Ala. Code § 8-9A-1 Definitions.

8-9A-1. Definitions. As used in this chapter: (1) AFFILIATE. a. A person who directly or indirectly owns, controls, or holds with power to vote, 20 percent or more of the outstanding voting securities of the debtor, other than a person who 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 exercised the power to vote; b. A corporation 20 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by the debtor or a person who directly or indirectly owns, controls, or holds, with power to vote, 20 percent or more of the outstanding voting securities of the debtor, other than a person who holds the securities, 1. As a fiduciary or agent without sole 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 who operates the debtor’s business under a lease or other agreement or controls substantially all of the debtor’s assets. (2) ASSET. Property of a debtor, but the term does not include: a. Property to the extent it is encumbered by a valid lien; b. Property to the extent it is generally exempt under nonbankruptcy law; or c. An interest in property held in tenancy in common for life with cross contingent remainder to the survivor in fee to the extent it is not subject to process by a creditor holding a claim against only one tenant. (3) CLAIM. 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, and specifically shall include the nonpayment of child support pursuant to a court order. (4) CREDITOR. A person who has a claim. (5) DEBT. Liability on a claim. (6) DEBTOR. A person who is liable on a claim. (7) INCLUDES. Is not a limiting term. (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 subparagraph 2; or 4. A corporation of which the debtor is a director, officer, 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 subparagraph 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, a general partner of, or 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 subparagraph 3; or 5. A person in control of the debtor. d. An affiliate, or an insider of an affiliate as if the affiliate were the debtor; and e. A managing agent of the debtor. (9) LIEN. 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 obtained by legal or equitable process or proceedings, a common law lien, or a statutory lien. (10) PERSON. An individual, partnership, corporation, association, organization, government, or governmental subdivision or agency, business trust, estate, trust, or any other legal or commercial entity. (11) PROPERTY. Both real and personal property, whether tangible or intangible, and any interest in property whether legal or equitable and includes anything that may be the subject of ownership. (12) RELATIVE. 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. (13) TRANSFER. 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, and creation of a lien or other encumbrance. (14) VALID LIEN. A lien that is effective against the holder of a judicial lien subsequently obtained by legal or equitable process or proceedings. (Acts 1989, No. 89-793, p. 1585, §1; Act 99-443, p. 1008, §1.)

Ala. Code § 8-9A-2 Insolvency.

8-9A-2. Insolvency. (a) A debtor is insolvent if the sum of the debtor’s debts is greater than all of the debtor’s assets at a fair valuation. (b) A debtor who is generally not paying his debts as they become due is presumed to be insolvent. (c) A partnership is insolvent under subsection (a) if the sum of the partnership’s debts is greater than the aggregate, at a fair valuation, of all of the partnership’s assets and the sum of the excess of the value of each general partner’s nonpartnership assets over the partner’s nonpartnership debts. (d) 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. (e) 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. (Acts 1989, No. 89-793, p. 1585, §2.)

Ala. Code § 8-9A-3 Value.

8-9A-3. Value. (a) Value is given for a transfer if, in exchange for the transfer, property is transferred or an antecedent debt is secured or satisfied, but value does not include an unperformed promise to furnish support to the debtor or another person made otherwise than in the ordinary course of the promisor’s business. (b) For the purposes of subsection (c) of Section 8-9A-4 and subsection (a) of Section 8-9A-5, 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. (c) 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. (Acts 1989, No. 89-793, p. 1585, §3.)

Ala. Code § 8-9A-4 Transfers Fraudulent as to Present and Future Creditors.

8-9A-4. Transfers Fraudulent as to Present and Future Creditors. (a) A transfer made by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made, if the debtor made the transfer with actual intent to hinder, delay, or defraud any creditor of the debtor. (b) In determining actual intent under subsection (a), consideration may be given, among other factors, to whether: (1) The transfer was to an insider; (2) The debtor retained possession or control of the property transferred after the transfer; (3) The transfer was disclosed or concealed; (4) Before the transfer was made the debtor had 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; (9) The debtor was insolvent or became insolvent shortly after the transfer was made; (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 transfer made by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made, if the debtor made the transfer without receiving a reasonably equivalent value in exchange for the transfer and the debtor: (1) 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 (2) Intended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they became due. (Acts 1989, No. 89-793, p. 1585, §4.)

Ala. Code § 8-9A-5 Transfers Fraudulent as to Present Creditors.

8-9A-5. Transfers Fraudulent as to Present Creditors. (a) A transfer made by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made if the debtor made the transfer without receiving a reasonably equivalent value in exchange for the transfer and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer. (b) A transfer made by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made if the transfer was made to an insider for an antecedent debt and the debtor was insolvent at that time and the insider had reasonable cause to believe that the debtor was insolvent. (Acts 1989, No. 89-793, p. 1585, §5.)

Ala. Code § 8-9A-6 When Transfer Is Made.

8-9A-6. When Transfer Is Made. For the purposes of this chapter: (1) A transfer is made: a. 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 whom applicable law permits the transfer to be perfected cannot acquire an interest in the asset that is superior to the interest of the transferee; and b. 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 subdivision (1) and the transfer is not so perfected before the commencement of an action for relief under this chapter, the transfer is deemed made immediately before the commencement of the action; (3) If applicable law does not permit the transfer to be perfected as provided in subdivision (1), the transfer is made when it becomes effective between the debtor and the transferee. (4) Except with respect to personal property and fixtures where a lender has perfected its security interest in such property in which event paragraph (1)a shall apply, a transfer is not made until the debtor has acquired rights in the asset transferred. (Acts 1989, No. 89-793, p. 1585, §6.)

Ala. Code § 8-9A-7 Remedies of Creditors.

8-9A-7. Remedies of Creditors. (a) In an action for relief against a transfer under this chapter, the remedies available to creditors, subject to the limitations in Section 8-9A-8, include: (1) Avoidance of the transfer to the extent necessary to satisfy the creditor’s claim; (2) An attachment or other provisional remedy against the asset transferred or other property of the transferee in accordance with the procedure prescribed by any applicable provision of any other statute or the Alabama Rules of Civil Procedure; (3) Subject to applicable principles of equity and in accordance with applicable rules of civil procedure, a. An injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property; b. Appointment of a receiver to take charge of the asset transferred or of other property of the transferee; or c. Any other relief the circumstances may require. (b) 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. (Acts 1989, No. 89-793, p. 1585, §7.)

Ala. Code § 8-9A-8 Defenses, Liability, and Protection of Transferee.

8-9A-8. Defenses, Liability, and Protection of Transferee. (a) A transfer is not voidable under Section 8-9A-4(a) against a person who took in good faith and for a reasonably equivalent value or against any subsequent transferee or obligee who took in good faith. (b) Except as otherwise provided in this section, to the extent a transfer is voidable in an action by a creditor under Section 8-9A-7(a)(1), the creditor may recover judgment for the value of the asset transferred, as adjusted under subsection (c), or the amount necessary to satisfy the creditor’s claim, whichever is less, or judgment for conveyance of the asset transferred. 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) Any subsequent transferee other than a good faith transferee who took for value or from any subsequent transferee. (c) If the judgment under subsection (b) 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. (d) Notwithstanding voidability of a transfer under this chapter, a good-faith transferee is entitled, to the extent of the value given the debtor for the transfer or to another person as a consequence of the debtor’s making such transfer, to (1) A lien on or a right to retain any interest in the asset transferred; or (2) A reduction in the amount of the liability on the judgment. (e) A transfer is not voidable under Section 8-9A-4(c) or Section 8-9A-5 if the transfer results from: (1) Termination of a lease upon default by the debtor when the termination is pursuant to the lease and applicable law; or (2) Enforcement of a security interest in compliance with Article 9 of Title 7 of the Uniform Commercial Code or a regularly conducted, noncollusive foreclosure sale or execution of a power of sale for the acquisition or disposition of the interest of the debtor under a mortgage or deed of trust. (f) A transfer is not voidable under Section 8-9A-5(b): (1) To the extent the insider gave new value to or for the benefit of the debtor after the transfer was made unless the new value was secured by a valid lien; (2) If made in the ordinary course of business or financial affairs of the debtor and the insider; or (3) 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 antecedent debt of the debtor. (Acts 1989, No. 89-793, p. 1585, §8.)

Ala. Code § 8-9A-9 Extinguishment of Claim for Relief.

8-9A-9. Extinguishment of Claim for Relief. A claim for relief with respect to a fraudulent transfer under this chapter is extinguished unless action is brought: (1) Under Section 8-9A-4(a) within 10 years after the transfer of real property was made. (2) Under Section 8-9A-4(a) within six years after the transfer of personal property was made. (3) Under Section 8-9A-4(c) or 8-9A-5(a), within four years after the transfer was made when the action is brought by a creditor whose claim arose before the transfer was made. (4) Under Section 8-9A-4(c), within one year after the transfer was made when the action is brought by a creditor whose claim arose after the transfer was made; or (5) Under Section 8-9A-5(b), within one year after the transfer was made. (Acts 1989, No. 89-793, p. 1585, §9.)

Ala. Code § 8-9A-10 Supplementary Provisions.

8-9A-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 its provisions. (Acts 1989, No. 89-793, p. 1585, §10.)

Ala. Code § 8-9A-11 Uniformity of Application and Construction.

8-9A-11. Uniformity of Application and Construction. This chapter shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this chapter among states enacting it. (Acts 1989, No. 89-793, p. 1585, §11.)

Ala. Code § 8-9A-12 Short Title.

8-9A-12. Short Title. This chapter may be cited as the “Alabama Uniform Fraudulent Transfer Act.” (Acts 1989, No. 89-793, p. 1585, §12.)

Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026