Interrogatories in Section 544(b) Avoidance Action
(Plaintiff to Transferee)

Summary

This interrogatories template is for use by a plaintiff who is seeking discovery in a state law fraudulent transfer action under Section 544(b) of the Bankruptcy Code that is commenced as an adversary proceeding against a transferee/defendant. This template includes practical guidance, drafting notes, and alternate and optional clauses. Section 544(b) of the Bankruptcy Code gives the trustee (or debtor-in-possession or other party with standing to bring a state law fraudulent transfer action) the rights under state law to avoid fraudulent transfers. The overwhelming majority of state laws are modeled after the Uniform Voidable Transactions Act (UVTA), Uniform Fraudulent Transfer Act (UFTA), or Uniform Fraudulent Conveyance Act (UFCA). Generally, the UVTA, UFTA, and UFCA provide that a transfer is avoidable if it is either (1) actually fraudulent or (2) constructively fraudulent. Under state law, a conveyance is constructively fraudulent when (1) the conveyance was made for less than reasonably equivalent value or fair consideration and (2) the transferor (a) was insolvent or rendered insolvent; (b) intended to incur or believed it would incur debts beyond the transferor's ability to pay as they matured; or (c) was engaged in business or a transaction, or was about to engage in business or a transaction, for which any property remaining with the transferor had an unreasonably small value. Under state law, both the terms "transfer" and "conveyance" typically include the granting of liens or the incurrence of debt and the payment of money. Section 550 of the Bankruptcy Code authorizes the trustee or other plaintiff to recover the transferred property subject to avoidance under Section 544(b) or its value from the initial transferee (or any immediate or mediate transferee of the initial transferee) post-petition. Section 502(d) requires a court to disallow a creditor's claim if the estate is entitled to recover property from that creditor, including as a result of a voidable transfer under Section 544(b), and if such creditor has failed to first transfer the property back to the estate. Interrogatories are a frequently used discovery device, consisting of written questions propounded by one party to another. Interrogatories may relate to any matter, not privileged, relevant to the claims and defenses of any party, and proportional to the needs of the case. The responding party must either answer the interrogatories in writing and under oath or object to them. The answers are admissions of a party and are otherwise admissible at trial to the extent permitted by the rules of evidence. Fed. R. Civ. P. 33(b) requires that you serve written objections and/or responses within 30 days of being served with interrogatories. There is a duty to provide information known by the client and counsel in response to the interrogatory. This template may be used by counsel for a plaintiff in a situation involving actual or constructive fraud under state law, although counsel should consider using only interrogatories that are relevant, for instance, based on the specific claims set forth in the plaintiff's complaint and the defenses provided in the defendant's answer. Note that the interrogatories provided below are modeled after the elements and defenses set forth under New York state fraudulent transfer statutes (which are based on the UVTA) but include concepts provided under the UFTA and UFCA. Counsel should carefully review applicable state law and modify these interrogatories in conformance therewith. For a full listing of key content on important topics when litigating disputes in bankruptcy cases, see Bankruptcy Litigation Resource Kit. For a full listing of key content on fraud in bankruptcy cases, see Fraud in Bankruptcy Resource Kit. For more information on state law fraudulent transfer actions, see Fraudulent Transfers, Fraudulent Conveyances versus Preference Actions, Uniform Voidable Transactions Act (NY), and Avoidance Issues in Individual Bankruptcy Cases Checklist. For related templates, see Complaint to Avoid and Recover Fraudulent Transfers and Settlement Agreement for Avoidance Actions (Bankruptcy Rule 9019). For more information on interrogatories, see Interrogatories: Drafting and Serving Interrogatories (Federal) and Interrogatories: Responding to Interrogatories (Federal).