Does fraudulent conveyance only apply to bankruptcy?

Question

Say creditor has a judgement and before the judgment I transferred assets to someone else. Can the creditor go after the fraudulently conveyed assets? Or is that only for bankruptcy?

Answer 1

Almost every jurisdiction (even asset protection havens like the Cayman Islands) has a civil statute authorizing lawsuits to recover from fraudulent conveyances outside of bankruptcy. Often the exact details of the right outside of bankruptcy and in bankruptcy are not precisely the same, although often the non-bankruptcy law can be enforced in a bankruptcy case in addition to the bankruptcy specific law.

A fraudulent conveyance, per se, despite the name, is almost never a crime (although some conduct is both criminal fraud and also a fraudulent conveyance because it meets the independent elements to establish each legal theory). A fraudulent conveyance, per se, is generally merely conduct from which an injured party may seek relief in a non-criminal lawsuit.

For example, paying a valid debt of an insider without paying outsider debts with at least equal priority, is generally a fraudulent conveyance in suits outside of bankruptcy, but is not fraud (in bankruptcy in the U.S.A. this is called a "preference"). But, this is neither a crime, nor a common law fraud tort.

Usually, some kinds of fraudulent conveyances (there are several subtypes of them) can be established on a strict liability basis without any showing of intent to defraud, which is not possible in a criminal fraud prosecution or a common law fraud tort lawsuit.

For example, if a debtor makes a gift to his uncle inaccurately, reasonably and in good faith believing himself to be not insolvent, but the debtor is actually insolvent (perhaps because he has another large debt that he had genuinely forgotten existed, or was never told about in the first place), the gift is probably a fraudulent conveyance, but not a crime and not a basis for a civil lawsuit alleging common law fraud.