Voidable Transfers Under New York's UVTA: How NYC Creditors Claw Back Assets Moved to Insiders Before Judgment
If a debtor company drained its accounts or shifted property to an owner, relative or new affiliate to avoid paying you, New York's UVTA lets you ask a court to undo those transfers and reach the assets where they landed. New York adopted the Uniform Voidable Transactions Act as Article 10 of the Debtor and Creditor Law, and it applies to transfers made on or after April 4, 2020. It targets two kinds of transfers: those made with actual intent to hinder, delay or defraud creditors, and those made for less than reasonably equivalent value while the debtor was in financial trouble. Most claims must be brought within four years, and the insiders who received the assets can be named as defendants.
Key takeaways
Start investigating as soon as payments stall, because every month of promises gives the debtor more time to move assets.
A transfer to an insider for little or no value while the debtor was struggling can be challenged without proving intent.
Most voidable transfer claims must be filed within four years, and claims over insider loan repayments within one year.
Name the people and entities that actually received the assets, and support each allegation with specific facts.
You don't need a judgment first, because a pending claim already makes you a creditor who can sue.
What should you do first when you suspect a debtor is moving assets?
Start investigating right away, before you file suit, because the transfers you can prove are usually the ones you find while the paper trail is fresh. You don't need a court's permission to search public records, review your own payment history or save every email the debtor sends.
In our practice, the biggest mistake we see is waiting too long. Business owners and homeowners get strung along by promises to pay, to come back and fix the work, or to deliver the materials. Those promises rarely come true, and the delay gives the other side time to move assets out of the company or out of their own name before a lawsuit begins.
Watch for these warning signs:
Customer payments or invoices suddenly routed to a different company name or bank account.
A new LLC with a nearly identical name, formed shortly after your dispute began.
A deed moving the owner's home or the company's building to a spouse, relative or trust.
Trucks, equipment or customer contracts that now appear under an affiliate's name.
For property in Manhattan, Brooklyn, Queens and the Bronx, the ACRIS system run by the NYC Department of Finance lets you search deeds and mortgages by name or address. Staten Island, Nassau and Suffolk deeds are recorded with their county clerks. The New York Department of State's business entity database shows when an LLC or corporation was formed, which is often the quickest way to spot a shell that appeared the same month your dispute did.
Which transfers can you undo under New York's UVTA?
You can undo two broad categories: transfers made with actual intent to hinder, delay or defraud any creditor, and transfers made without reasonably equivalent value while the debtor was in financial distress. Debtor and Creditor Law § 273 covers actual intent, along with transfers for less than reasonably equivalent value that left the debtor with unreasonably small assets or debts beyond its ability to pay. A companion provision in Article 10 protects existing creditors when the debtor was insolvent or became insolvent because of the transfer.
Actual intent, proven through the badges of fraud
Debtors rarely admit they moved money to beat a creditor, so the statute lets you prove intent through circumstantial “badges of fraud.” The factors a court may consider include these:
The transfer went to an insider, such as an owner, officer, relative or affiliate.
The debtor kept possession or control of the property afterward.
The transfer was concealed, or came after the debtor was sued or threatened with suit.
The transfer covered substantially all of the debtor's assets, or the value received wasn't reasonably equivalent.
The debtor was insolvent or became insolvent shortly after the transfer.
No single badge decides the case, and you don't need all of them. In Paley v. Curious Holdings, LLC, 2024 NY Slip Op 06544 (App. Div. 1st Dep't 2024), a CEO caused all of his company's assets, including its contracts, to be moved to two companies owned by his wife while the plaintiff was suing the company. The First Department found enough badges to establish intent to hinder and delay, observing that “These transfers were made in haste, with limited disclosure and, arguably, for inadequate consideration.”
Constructive fraud: no intent required
The second theory doesn't ask what the debtor was thinking. A debtor is insolvent when its debts exceed its assets at a fair valuation, and one that is generally not paying its debts as they come due (other than because of a bona fide dispute) is presumed insolvent. For a vendor holding a stack of unpaid invoices, that presumption does real work.
The leading recent example for NYC landlords is 245 E. 19 Realty LLC v. 245 E. 19th St. Parking LLC, 2024 NY Slip Op 00368 (App. Div. 1st Dep't 2024). A Manhattan garage tenant's affiliate allegedly swept all of the tenant's daily revenue into its own account, and the tenant then stopped paying rent. Applying the current § 273, the First Department sustained both constructive- and actual-fraud claims against the affiliate, noting the landlord alleged that the transfers “were made to an insider (Icon), were concealed from plaintiff, were of substantially all of Tenant's assets, were made without receiving reasonably equivalent value in exchange, and rendered Tenant insolvent.”
The “I was just repaying my loan” defense
Insiders often claim the transfer simply repaid a loan. In Parabit Realty, LLC v. Levine, 2026 NY Slip Op 02663 (App. Div. 2d Dep't 2026), a dissolved company transferred two trucks to its sole shareholder, who passed them on to his affiliates. Applying the prior statute's fair-consideration test, the Second Department held that even if the transfer repaid the shareholder's loan, a preferential repayment to the company's sole owner lacked the required good faith. The current law generally treats payment of a real debt as value, but it separately lets a creditor avoid an insider's repayment if the debtor was insolvent and the insider had reasonable cause to believe it.
A genuine debt can defeat one theory without defeating the other. In Pine Val. Ctr., LLC v. Jacobs, 2025 NY Slip Op 02358 (App. Div. 2d Dep't 2025), proof that the money paid an antecedent debt for real services defeated the constructive-fraud claim. The actual-intent claim survived for trial because the transferor and transferee were spouses, the transferor knew of the creditor's claim, she kept control of the funds, and a series of transactions followed the debt.
How long do you have, and does the 2020 law apply to your transfer?
For most claims under New York's UVTA, you have four years from the date of the transfer, and the statute applies only to transfers made on or after April 4, 2020. The deadlines vary by theory, and once they pass, the claim itself is extinguished:
Actual intent: four years after the transfer or, if later, one year after it was or reasonably could have been discovered.
Constructive fraud: four years after the transfer, with no discovery extension.
Insider preference (repaying an insider's debt while insolvent): one year after the transfer.
That one-year window is why we look at payments to owners early. A shareholder who repaid himself from company funds fourteen months before you found out may be beyond the insider-preference rule, leaving you to prove actual intent.
Older transfers are still litigated under the former statute, whose fair-consideration test sank the loan defense in Parabit. Courts have long required clear and convincing evidence of actual intent, a standard the Second Department noted in Pine Val., where it also reversed the creditor's own summary judgment on that claim. The current statute instead puts the burden on the creditor to prove its claim by a preponderance of the evidence.
The 2020 overhaul also changed the economics. The former statute let a creditor who proved actual intent recover attorney's fees, and courts still award them on older transfers, as the Second Department did in Parabit under former § 276-a. The current Article 10 doesn't carry that fee provision forward, so for newer transfers you'll generally bear your own legal costs unless a contract, lease or guaranty contains a fee clause.
Whom can you sue, and do you need a judgment first?
You can sue the debtor, the first transferee that received the asset, and the person for whose benefit the transfer was made, and you don't need a judgment to start. Article 10 treats anyone with a claim as a creditor, even if that claim is disputed, unliquidated or not yet reduced to judgment.
Insiders, affiliates and relatives
When the debtor is a business, its insiders include directors, officers and people in control, their relatives, and the debtor's affiliates. In Paley, the creditor won liability against the two transferee companies, and the wife was held liable as alter ego of a newly formed shell that existed only to receive the assets. She wasn't liable as alter ego of her established company, which had its own independent business, and the claims against the CEO were dismissed because he didn't own or control the transferees. Our guide to when New York courts pierce the corporate veil explains how alter ego liability works.
Reaching up the ownership chain takes more than suspicion. In 245 E. 19 Realty, claims against the parent private-equity investors were dismissed because the allegations against them were conclusory and made on information and belief. In SSC NY Corp. v. Computershare Inc., 2024 NY Slip Op 00991 (App. Div. 1st Dep't 2024), actual-fraud claims against an insider CEO and a stock-redemption payee failed. The creditor had no judgment and hadn't pursued its claim for years when the transfers occurred, its insider-payment allegations lacked detail, and its reliance on the company's later wind-down was “an allegation of insolvency by hindsight.” Courts commonly hold actual-intent claims to the particularity rule of CPLR § 3016(b), so read our post on how to plead fraud in New York business disputes before drafting.
Freezing assets before judgment
If assets are still moving, ask the court to stop them. Under CPLR § 6201(3), an order of attachment may be granted when the defendant, with intent to defraud creditors or frustrate enforcement of a judgment that might be rendered in your favor, has assigned, disposed of, encumbered or secreted property, removed it from the state, or is about to do any of those things. You'll need evidence of that intent and must post a bond, called an undertaking. Article 10 also lets courts enjoin further disposition of the transferred asset or appoint a receiver, and our post on preliminary injunctions in New York LLC disputes covers how emergency relief works in practice.
After judgment, how do you get the transferred assets back?
You can levy on the transferred asset or its proceeds, bring a turnover proceeding against the insider who holds it, or seek a money judgment against the transferee. The right route depends on what the asset is and where it sits.
Under CPLR § 5225(b), a judgment creditor may bring a special proceeding against someone holding money or personal property in which the debtor has an interest, or against a transferee of the debtor's money or personal property, when the debtor is entitled to the property or the creditor's rights are superior to the transferee's. In Matter of Schiffman v. Affordable Shoes, Ltd., 2025 NY Slip Op 02786 (App. Div. 2d Dep't 2025), a landlord held a judgment on a commercial lease and personal guaranty. The guarantor had moved his home into a trust he co-managed with his partner, and the Second Department set that transfer aside on summary judgment under both theories. The respondents' own answer admitted “that Brener continued to occupy and use the property with Krepkina,” a classic retained-use badge, and the court ordered turnover of a safe deposit box. Landlords relying on a guaranty should also read our post on Good Guy Guarantees in NYC commercial leases.
Where the asset has been sold or spent, Article 10 allows a money judgment against the first transferee, or the person the transfer benefited, for the lesser of the asset's value or the amount needed to satisfy your claim. A transferee who took in good faith and for reasonably equivalent value has a defense, but an insider who knew about your claim will struggle to show good faith.
Prove each transfer separately. In Parabit, the creditor won as to the two trucks, but the Second Department reversed the setting aside of every other transfer between the defendants, along with a veil-piercing money judgment, because the evidence didn't support them. Build a schedule listing each transfer's date, amount, recipient and badges. Where a transfer doesn't fit Article 10 cleanly, a constructive trust claim may sometimes fill the gap.
Frequently Asked Questions
Frequently Asked Questions
Can I sue to undo a transfer before I have a judgment?
Yes. Article 10 treats anyone with a claim, including a disputed or unliquidated one, as a creditor. You can bring the voidable transfer claim alongside your contract or rent claim, though attachment requires proof that the debtor intended to defraud creditors or frustrate a future judgment.
Does the four-year deadline start when I discover the transfer?
Only for actual-intent claims, which get four years from the transfer or one year from when it was or reasonably could have been discovered, whichever is later. Constructive-fraud claims run four years from the transfer, and insider-preference claims expire one year after it.
What if the money went to a relative's company instead of the owner?
You can name the company that received the assets, and if it's a shell formed just to hold them, the relative who controls it may be liable as its alter ego. In Paley, the First Department drew that line and refused to extend alter ego liability to an established company with its own independent business.
A debtor that moves money or property to insiders hasn't necessarily put it out of reach. New York's UVTA lets you follow those assets to the people who received them, as long as you act within the deadlines and prove each transfer with specific facts rather than suspicion.
If you or your business is owed money by a company that's been shifting assets to its owners, relatives or affiliates, the team at Yassi Law PC is ready to help. Call us today at 646-992-2138 for a consultation.
Written by Reza Yassi
Prior results do not guarantee a similar outcome.
This article is for informational purposes only and does not constitute legal advice. Although I am an attorney, I am not your attorney, and reading this article does not create an attorney-client relationship. Laws vary by jurisdiction and may have changed since the publication of this article. For advice specific to your situation, consult a qualified attorney.
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