The Uniform Fraudulent Transfer Act (UFTA) prevents debtors from transferring assets in an effort to frustrate creditors' collection of debts. But the UFTA requires claimants to act promptly, imposing a strict statute of repose that requires claimants to bring claims for fraudulent transfer within four years after the transfer was made, or in certain circumstances within one year after the transfer was discovered or could reasonably have been discovered by the claimant. This short limitations period can pose a significant hurdle to recovery, particularly for claimants dealing with environmental liabilities.
Under CERCLA, responsible parties are jointly and severally liable for cleanup costs. To ameliorate the potential unfairness of joint and several liability, a right of contribution to ensure equitable sharing is provided. However, the amount of time for CERCLA contribution claims to mature can be significantly longer than the limitations periods imposed by the UFTA.
Clients faced with liability for legacy environmental harms must make a critical assessment of their exposure and potential recovery from other parties, and be aware in the very early stages of their evaluation that claims for fraudulent transfer have a short fuse. While a full-blown asset search on all potentially responsible parties is unnecessary, clients should be mindful of facts and circumstances that may trigger their duty to investigate and discover potentially fraudulent transfers. The UFTA can be a powerful and effective tool, but only for those who act promptly to preserve their rights.
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Originally published by Today's General Counsel
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