March 17, 2009, Introduced by Senator CLARKE and referred to the Committee on Judiciary.
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.
(c) "Claim" means 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.
(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.
(C) A general partner in a partnership described in sub-
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.
(C) A person in control 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.
(C) Another partnership in which the debtor is a general
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
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 creation of a trust by an individual if all of the
following apply:
(A) The individual created the trust for the benefit of the
individual's spouse.
(B) The trust is treated as qualified terminable interest
property under section 2523(f) of the internal revenue code, 26 USC
2523.
(C) The individual retains a beneficial interest in the trust
income, trust principal, or both, which beneficial interest follows
the termination of the individual's spouse's prior beneficial
interest in the trust.
(iii) 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.
(C) The trustee has the discretionary authority to reimburse
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 does not take effect
unless Senate Bill No. 387
of the 95th Legislature is enacted into law.