SB-0385, As Passed House, June 3, 2009

SUBSTITUTE FOR

SENATE BILL NO. 385

A bill to amend 1998 PA 434, entitled

"Uniform fraudulent transfer act,"

by amending section 1 (MCL 566.31).

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 1. As used in this act:

(a) "Affiliate" means 1 or more of the following:

(i) A person who directly or indirectly owns, controls, or

holds with power to vote 20% or more of the outstanding voting

securities of the debtor, other than a person who holds the

securities in either of the following circumstances:

(A) As a fiduciary or agent without sole discretionary power

to vote the securities.

(B) Solely to secure a debt, if the person has not exercised

the power to vote.

(ii) A corporation 20% 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% or

more of the outstanding voting securities of the debtor, other than

a person who holds the securities in either of the following

circumstances:

(A) As a fiduciary or agent without sole power to vote the

securities.

(B) Solely to secure a debt, if the person has not in fact

exercised the power to vote.

(iii) 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.

(iv) A person who operates the debtor's business under a lease

or other agreement or controls substantially all of the debtor's

assets.

(b) "Asset" means property of a debtor, but the term does not

include any of the following:

(i) Property to the extent it is encumbered by a valid lien.

(ii) Property to the extent it is generally exempt under

nonbankruptcy law.

(iii) An interest in property held in tenancy by the entireties

to the extent it is not subject to process by a creditor holding a

claim against only 1 tenant.

is reduced to judgment, liquidated, unliquidated, fixed,

contingent, matured, unmatured, disputed, undisputed, legal,

equitable, secured, or unsecured.

(d) "Creditor" means a person who has a claim.

(e) "Debt" means liability on a claim.

(f) "Debtor" means a person who is liable on a claim.

(g) "Insider" includes all of the following:

(i) If the debtor is an individual, all of the following:

(A) A relative of the debtor or of a general partner of the

debtor.

(B) A partnership in which the debtor is a general partner.

subparagraph (B).

(D) A corporation of which the debtor is a director, officer,

or person in control.

(ii) If the debtor is a corporation, all of the following:

(A) A director of the debtor.

(B) An officer of the debtor.

(D) A partnership in which the debtor is a general partner.

(E) A general partner in a partnership described in sub-

subparagraph (D).

(F) A relative of a general partner, director, officer, or

person in control of the debtor.

(iii) If the debtor is a partnership, all of the following:

(A) A general partner in the debtor.

(B) A relative of a general partner in, a general partner of,

or a person in control of the debtor.

partner.

(D) A general partner in a partnership described in sub-

subparagraph (C).

(E) A person in control of the debtor.

(iv) An affiliate, or an insider of an affiliate as if the

affiliate were the debtor.

(v) A managing agent of the debtor.

(h) "Lien" means 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.

(i) "Person" means an individual, partnership, corporation,

association, organization, government or governmental subdivision

or agency, business trust, estate, trust, or any other legal or

commercial entity.

(j) "Property" means anything that may be the subject of

ownership.

(k) "Relative" means 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.

(l) "Transfer" means 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~~ Transfer

includes payment of money, release, lease, and creation of a lien

Senate Bill No. 385 (S-3) as amended June 3, 2009

or other encumbrance. Transfer does not include any of the

following:

(i) The lapse, release, waiver, or disclaimer of a power of

appointment given to a donee by a third party. As used in this

subparagraph, "donee" means that term as defined in section 2 of

the powers of appointment act of 1967, 1967 PA 224, MCL 556.112.

(ii) The disposing of or parting with an asset or interest in

an asset held in trust to the person who created the trust if all

of the following apply:

(A) The trust is an irrevocable trust for the benefit of third

parties.

(B) The trust is a grantor trust with regard to the person for

income tax purposes pursuant to sections 671 to 679 of the internal

revenue code, 26 USC 671 to 679.

or advance trust property to the person for taxes concerning income

attributable to the trust property.

(D) The disposing of or parting with the asset or interest in

the asset is the exercise by the trustee of the discretionary

authority described in sub-subparagraph (C).

(m) "Valid lien" means a lien that is effective against the

holder of a judicial lien subsequently obtained by legal or

equitable process or proceedings.

[Enacting section 1. This amendatory act takes effect April 1, 2010.]

Enacting section [2]. This amendatory act does not take effect

unless Senate Bill No. 387 of the 95th Legislature is enacted into

law.