§ 8.3 / ACCOUNTING, RECEIVERSHIP, FRAUDULENT CONVEYANCE AND LENDER LIABILITY COMMENT Fraudulent conveyances are transfers of assets made by a debtor with the intent to defraud creditors, and these transfers may be nullified by creditors pursuant to the Maryland Fraudulent Conveyance Act. MD. CODE ANN., COM. LAW I I §§ 15-201 through 15-214 (Repl. Vol. 2000 & Supp. 2003). Conveyances made without fair consideration while a debtor is insolvent or which render the debtor insolvent are also fraudulent and may be set aside, regardles s of intent. Creditors may also attach the transferred property or obtain a money judgment against the transferee. MD. CODE ANN., COM. LAW II § 15-209 (Repl. Vol. 2000 & Supp. 2003); National Mortgage Warehouse, LLC v. Trikeriotis, 201 F. Supp. 2d 499 (D. Md. 2002); Damazo v. Wahby, 269 Md. 252, 305 A.2d 138 (1973). "Creditors" include persons having "any claim, whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or contingent." MD. CODE ANN., COM. LAW I T § 15-201(d) (Repl. Vol. 2000 & Supp. 2003). A conveyance is not fraudulent as to a creditor if the conveyance results from: (1) A foreclosure sale; (2) A sale to enforce a statutory lien; (3) A judicial sale; or (4) A sale of property under levy. MD. CODE ANN., COM. LAW II § 15-210.1 (Repl. Vol. 2000 & Supp. 2003). The Act prohibits conveyances made with the actual intent to "hinder, delay or defraud present or future creditors," MD. CODE ANN., COM. LAW IT § 15-207; (Repl. Vol. 2000 & Supp. 2003). Additionally, a debtor is prohibited from transferring assets without fair consideration if the conveyance will render the debtor insolvent, or if the debtor intends or believes that the conveyance will cause the debtor to incur debts beyond his or her ability to pay as they mature. MD. CODE ANN., COM. LAW II §§ 15-204 & 15-206 (Repl. Vol. 2000 & Supp. 2003). The Act also prohibits a debtor from transferring assets without fair consideration regardless of actual intent if he or she is engaged or is about to engage in a transaction for which the property remaining in the debtor's hands after the conveyance is unreasonably small capital. MD. CODE ANN., COM. LAW II § 15-205 (Repl. Vol. 2000 & Supp. 2003). Maryland follows an exception to the general rule of non-liability of a successor corporation if the transaction is entered into fraudulently to escape liability for debts. Smith v. Navistar Int'l Transp. Corp., 737 F. Supp. 1446 (D. Md. 1988); Nissen Corp. v. Miller, 323 Md. 613, 594 A.2d 564 (1991). 532

Fraudulent Conveyance

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§ 8.3 / ACCOUNTING, RECEIVERSHIP, FRAUDULENT CONVEYANCEAND LENDER LIABILITY

COMMENT

Fraudulent conveyances are transfers of assets made by a debtor withthe intent to defraud creditors, and these transfers may be nullified by creditors pursuant to the Maryland Fraudulent Conveyance Act. MD. CODEANN., COM. LAW II §§ 15-201 through 15-214 (Repl. Vol. 2000 & Supp.2003). Conveyances made without fair consideration while a debtor is insolvent or which render the debtor insolvent are also fraudulent and may be setaside, regardless of intent. Creditors may also attach the transferred propertyor obtain a money judgment against the transferee. MD. CODE ANN., COM.LAW II § 15-209 (Repl. Vol. 2000 & Supp. 2003); National MortgageWarehouse, LLC v. Trikeriotis, 201 F. Supp. 2d 499 (D. Md. 2002); Damazov. Wahby, 269 Md. 252, 305 A.2d 138 (1973). "Creditors" include personshaving "any claim, whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or contingent." MD. CODE ANN., COM. LAW IT§ 15-201(d) (Repl. Vol. 2000 & Supp. 2003). A conveyance is not fraudulent as to a creditor if the conveyance results from:

(1) A foreclosure sale;

(2) A sale to enforce a statutory lien;

(3) A judicial sale; or

(4) A sale ofproperty under levy.

MD. CODE ANN., COM. LAW II § 15-210.1 (Repl. Vol. 2000 & Supp. 2003).

The Act prohibits conveyances made with the actual intent to "hinder,delay or defraud present or future creditors," MD. CODE ANN., COM. LAW IT§ 15-207; (Repl. Vol. 2000 & Supp. 2003). Additionally, a debtor is prohibited from transferring assets without fair consideration ifthe conveyance willrender the debtor insolvent, or if the debtor intends or believes that the conveyance will cause the debtor to incur debts beyond his or her ability to payas they mature. MD. CODE ANN., COM. LAW II §§ 15-204 & 15-206 (Repl.Vol. 2000 & Supp. 2003). The Act also prohibits a debtor from transferringassets without fair consideration regardless of actual intent if he or she isengaged or is about to engage in a transaction for which the property remaining in the debtor's hands after the conveyance is unreasonably small capital.MD. CODE ANN., COM. LAW II § 15-205 (Repl. Vol. 2000 & Supp. 2003).Maryland follows an exception to the general rule of non-liability of a successor corporation if the transaction is entered into fraudulently to escape liability for debts. Smith v. Navistar Int'l Transp. Corp., 737 F. Supp. 1446 (D.Md. 1988); Nissen Corp. v. Miller, 323 Md. 613, 594 A.2d 564 (1991).

532