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§ 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 credi-
tors pursuant to the Maryland Fraudulent Conveyance Act. MD. CODE
ANN., COM. LAW II §§ 15-201 through 15-214 (Repl. Vol. 2000 & Supp.
2003). Conveyances made without fair consideration while a debtor is insol-
vent or which render the debtor insolvent are also fraudulent and may be set
aside, regardless 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 unliqui-
dated, absolute, fixed, or contingent." MD. CODE ANN., COM. LAW IT
§ 15-201(d) (Repl. Vol. 2000 & Supp. 2003). A conveyance is not fraudu-
lent 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 prohib-
ited from transferring assets without fair consideration ifthe conveyance will
render the debtor insolvent, or if the debtor intends or believes that the con-
veyance 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 remain-
ing 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 suc-
cessor corporation if the transaction is entered into fraudulently to escape lia-
bility 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).

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