S.F. _____ Section 1. Section 684.1, Code 2016, is amended to read as 1 follows: 2 684.1 Definitions. 3 As used in this chapter : 4 1. “Affiliate” means any of the following: 5 a. A person who that directly or indirectly owns, controls, 6 or holds with power to vote, twenty percent or more of the 7 outstanding voting securities of the debtor, other than 8 a person who that holds the securities as either of the 9 following: 10 (1) As a fiduciary or agent without sole discretionary power 11 to vote the securities. 12 (2) Solely to secure a debt, if the person has not in fact 13 exercised the power to vote. 14 b. A corporation twenty percent or more of whose outstanding 15 voting securities are directly or indirectly owned, controlled, 16 or held with power to vote, by the debtor or a person who that 17 directly or indirectly owns, controls, or holds with power 18 to vote, twenty percent or more of the outstanding voting 19 securities of the debtor, other than a person who that holds 20 the securities as either of the following: 21 (1) As a fiduciary or agent without sole discretionary power 22 to vote the securities. 23 (2) Solely to secure a debt, if the person has not in fact 24 exercised the power to vote. 25 c. A person whose business is operated by the debtor under 26 a lease or other agreement, or a person substantially all of 27 whose assets are controlled by the debtor. 28 d. A person who that operates the debtor’s business under a 29 lease or other agreement or controls substantially all of the 30 debtor’s assets. 31 2. “Asset” means property of a debtor, but does not include 32 any of the following: 33 a. Property to the extent it is encumbered by a valid lien. 34 b. Property to the extent it is generally exempt under 35 -1- LSB 5320XC (5) 86 da/rj 1/ 14

S.F. _____ nonbankruptcy law. 1 c. An interest in property held in tenancy by the entireties 2 to the extent it is not subject to process by a creditor 3 holding a claim against only one tenant. 4 3. “Claim” , except as used in “claim for relief” , means 5 a right to payment, whether or not the right is reduced to 6 judgment, liquidated, unliquidated, fixed, contingent, matured, 7 unmatured, disputed, undisputed, legal, equitable, secured, or 8 unsecured. 9 4. “Creditor” means a person who that has a claim. 10 5. “Debt” means liability on a claim. 11 6. “Debtor” means a person who that is liable on a claim. 12 7. “Electronic” means relating to technology having 13 electrical, digital, magnetic, wireless, optical, 14 electromagnetic, or similar capabilities. 15 7. 8. “Insider” includes all of the following: 16 a. If the debtor is an individual, all of the following: 17 (1) A relative of the debtor or of a general partner of the 18 debtor. 19 (2) A partnership in which the debtor is a general partner. 20 (3) A general partner in a partnership described in 21 subparagraph (2). 22 (4) A corporation of which the debtor is a director, 23 officer, or person in control. 24 b. If the debtor is a corporation, all of the following: 25 (1) A director of the debtor. 26 (2) An officer of the debtor. 27 (3) A person in control of the debtor. 28 (4) A partnership in which the debtor is a general partner. 29 (5) A general partner in a partnership described in 30 subparagraph (4). 31 (6) A relative of a general partner, director, officer, or 32 person in control of the debtor. 33 c. If the debtor is a partnership, all of the following: 34 (1) A general partner in the debtor. 35 -2- LSB 5320XC (5) 86 da/rj 2/ 14

S.F. _____ (2) A relative of a general partner in, or a general partner 1 of, or a person in control of the debtor. 2 (3) Another partnership in which the debtor is a general 3 partner. 4 (4) A general partner in a partnership described in 5 subparagraph (3). 6 (5) A person in control of the debtor. 7 d. An affiliate, or an insider of an affiliate as if the 8 affiliate were the debtor. 9 e. A managing agent of the debtor. 10 8. 9. “Lien” means a charge against or an interest in 11 property to secure payment of a debt or performance of an 12 obligation, and includes a security interest created by 13 agreement, a judicial lien obtained by legal or equitable 14 process or proceedings, a common-law lien, or a statutory lien. 15 10. “Organization” means a person other than an individual. 16 11. “Person” means an individual, estate, business 17 or nonprofit entity, public corporation, government or 18 governmental subdivision, agency, or instrumentality, or other 19 legal entity. 20 9. 12. “Property” means anything that may be the subject 21 of ownership. 22 13. “Record” means information that is inscribed on a 23 tangible medium or that is stored in an electronic or other 24 medium and is retrievable in perceivable form. 25 10. 14. “Relative” means an individual related by 26 consanguinity within the third degree as determined by the 27 common law, a spouse, or an individual related to a spouse 28 within the third degree as so determined, and includes an 29 individual in an adoptive relationship within the third degree. 30 15. “Sign” means, with present intent to authenticate or 31 adopt a record to do either of the following: 32 a. Execute or adopt a tangible symbol. 33 b. Attach to or logically associate with the record an 34 electronic symbol, sound, or process. 35 -3- LSB 5320XC (5) 86 da/rj 3/ 14

S.F. _____ 11. 16. “Transfer” means every mode, direct or indirect, 1 absolute or conditional, voluntary or involuntary, of disposing 2 of or parting with an asset or an interest in an asset, and 3 includes payment of money, release, lease, license, and 4 creation of a lien or other encumbrance. 5 12. 17. “Valid lien” means a lien that is effective against 6 the holder of a judicial lien subsequently obtained by legal or 7 equitable process or proceedings. 8 Sec. 2. Section 684.2, Code 2016, is amended to read as 9 follows: 10 684.2 Insolvency. 11 1. A debtor is insolvent if , at a fair valuation, the sum of 12 the debtor’s debts is greater than all the sum of the debtor’s 13 assets , at a fair valuation . 14 2. A debtor who that is generally not paying the debtor’s 15 debts as they become due other than as a result of a bona fide 16 dispute is presumed to be insolvent. The presumption imposes 17 on the party against which the presumption is directed the 18 burden of proving that the nonexistence of insolvency is more 19 probable than its existence. 20 3. A partnership is insolvent under subsection 1 if the 21 sum of the partnership’s debts is greater than the aggregate, 22 at a fair valuation, of all of the partnership’s assets, and 23 the sum of the excess of the value of each general partner’s 24 nonpartnership assets over the partner’s nonpartnership debts. 25 4. 3. Assets under this section do not include property 26 that has been transferred, concealed, or removed with intent 27 to hinder, delay, or defraud creditors or that has been 28 transferred in a manner making the transfer voidable under this 29 chapter . 30 5. 4. Debts under this section do not include an obligation 31 to the extent it is secured by a valid lien on property of the 32 debtor not included as an asset. 33 Sec. 3. Section 684.4, Code 2016, is amended to read as 34 follows: 35 -4- LSB 5320XC (5) 86 da/rj 4/ 14

S.F. _____ 684.4 Transfers fraudulent Transfer or obligation voidable as 1 to present and or future creditors creditor . 2 1. A transfer made or obligation incurred by a debtor is 3 fraudulent voidable as to a creditor, whether the creditor’s 4 claim arose before or after the transfer was made or the 5 obligation was incurred, if the debtor made the transfer 6 or incurred the obligation under any of the following 7 circumstances: 8 a. With actual intent to hinder, delay, or defraud any 9 creditor of the debtor. 10 b. Without receiving a reasonably equivalent value in 11 exchange for the transfer or obligation, if either of the 12 following applies: 13 (1) The debtor was engaged or was about to engage in a 14 business or a transaction for which the remaining assets of the 15 debtor were unreasonably small in relation to the business or 16 transaction. 17 (2) The debtor intended to incur, or believed or reasonably 18 should have believed that the debtor would incur, debts beyond 19 the debtor’s ability to pay as they became due. 20 2. In determining actual intent under subsection 1 , 21 paragraph “a” , consideration may be given, among other factors, 22 to whether any or all of the following apply : 23 a. Whether the The transfer or obligation was to an insider. 24 b. Whether the The debtor retained possession or control of 25 the property transferred after the transfer. 26 c. Whether the The transfer or obligation was disclosed or 27 concealed. 28 d. Whether, before Before the transfer was made or 29 obligation was incurred, the debtor had been sued or threatened 30 with suit. 31 e. Whether the The transfer was of substantially all the 32 debtor’s assets. 33 f. Whether the The debtor absconded. 34 g. Whether the The debtor removed or concealed assets. 35 -5- LSB 5320XC (5) 86 da/rj 5/ 14

S.F. _____ h. Whether the The value of the consideration received by 1 the debtor was reasonably equivalent to the value of the asset 2 transferred or the amount of the obligation incurred. 3 i. Whether the The debtor was insolvent or became insolvent 4 shortly after the transfer was made or the obligation was 5 incurred. 6 j. Whether the The transfer occurred shortly before or 7 shortly after a substantial debt was incurred. 8 k. Whether the The debtor transferred the essential assets 9 of the business to a lienor who that transferred the assets to 10 an insider of the debtor. 11 3. A creditor making a claim for relief under subsection 1 12 has the burden of proving the elements of the claim for relief 13 by a preponderance of the evidence. 14 Sec. 4. Section 684.5, Code 2016, is amended to read as 15 follows: 16 684.5 Transfers fraudulent Transfer or obligation voidable as 17 to present creditors creditor . 18 1. A transfer made or obligation incurred by a debtor is 19 fraudulent voidable as to a creditor whose claim arose before 20 the transfer was made or the obligation was incurred if the 21 debtor made the transfer or incurred the obligation without 22 receiving a reasonably equivalent value in exchange for the 23 transfer or obligation and the debtor was insolvent at that 24 time or the debtor became insolvent as a result of the transfer 25 or obligation. 26 2. A transfer made by a debtor is fraudulent voidable as 27 to a creditor whose claim arose before the transfer was made 28 if the transfer was made to an insider for an antecedent debt, 29 the debtor was insolvent at that time, and the insider had 30 reasonable cause to believe that the debtor was insolvent. 31 3. Subject to section 684.2, subsection 2, a creditor making 32 a claim for relief under subsection 1 or 2 has the burden of 33 proving the elements of the claim for relief by a preponderance 34 of the evidence. 35 -6- LSB 5320XC (5) 86 da/rj 6/ 14

S.F. _____ Sec. 5. Section 684.6, subsection 1, paragraph a, Code 2016, 1 is amended to read as follows: 2 a. With respect to an asset that is real property other than 3 a fixture, but including the interest of a seller or purchaser 4 under a contract for the sale of the asset, when the transfer 5 is so far perfected that a good-faith purchaser of the asset 6 from the debtor against whom which applicable law permits the 7 transfer to be perfected cannot acquire an interest in the 8 asset that is superior to the interest of the transferee. 9 Sec. 6. Section 684.6, subsection 5, paragraph b, Code 2016, 10 is amended to read as follows: 11 b. If evidenced by a writing record , when the writing 12 executed record signed by the obligor is delivered to or for 13 the benefit of the obligee. 14 Sec. 7. Section 684.7, subsection 1, paragraph b, Code 2016, 15 is amended to read as follows: 16 b. A remedy by any special action available under this 17 subtitle, including An attachment or other provisional 18 remedy , against the asset transferred or other property of the 19 transferee if available under applicable law . 20 Sec. 8. Section 684.8, Code 2016, is amended to read as 21 follows: 22 684.8 Defenses, liability, and protection of transferee or 23 obligee . 24 1. A transfer or obligation is not voidable under section 25 684.7, subsection 1 , paragraph “a” , against a person who that 26 took in good faith and for a reasonably equivalent value given 27 the debtor or against any subsequent transferee or obligee. 28 2. To the extent a transfer is avoidable in an action by a 29 creditor under section 684.7, subsection 1, paragraph “a” , all 30 of the following apply: 31 a. Except as otherwise provided in this section , to the 32 extent a transfer is voidable in an action by a creditor under 33 section 684.7, subsection 1 , paragraph “a” , the creditor may 34 recover judgment for the value of the asset transferred, as 35 -7- LSB 5320XC (5) 86 da/rj 7/ 14

S.F. _____ adjusted under subsection 3 , or the amount necessary to satisfy 1 the creditor’s claim, whichever is less. The judgment may be 2 entered against either of the following: 3 a. (1) The first transferee of the asset or the person for 4 whose benefit the transfer was made. 5 b. (2) Any subsequent transferee An immediate or mediate 6 transferee of the first transferee, other than a any of the 7 following: 8 (a) A good-faith transferee or obligee who that took for 9 value or from any subsequent transferee or obligee . 10 (b) An immediate or mediate good-faith transferee of a 11 person described in subparagraph division (a). 12 b. Recovery pursuant to section 684.7, subsection 1, 13 paragraph “a” , or section 684.7, subsection 2, of or from the 14 asset transferred or its proceeds, by levy or otherwise, is 15 available only against a person described in paragraph “a” , 16 subparagraph (1) or (2). 17 3. If the judgment under subsection 2 is based upon the 18 value of the asset transferred, the judgment must be for an 19 amount equal to the value of the asset at the time of the 20 transfer, subject to adjustment as the equities may require. 21 4. Notwithstanding voidability of a transfer or an 22 obligation under this chapter , a good-faith transferee or 23 obligee is entitled, to the extent of the value given the 24 debtor for the transfer or obligation, to any of the following: 25 a. A lien on or a right to retain any an interest in the 26 asset transferred. 27 b. Enforcement of any an obligation incurred. 28 c. A reduction in the amount of the liability on the 29 judgment. 30 5. A transfer is not voidable under section 684.4, 31 subsection 1 , paragraph “b” , or section 684.5 if the transfer 32 results from either of the following: 33 a. Termination of a lease upon default by the debtor when 34 the termination is pursuant to the lease and applicable law. 35 -8- LSB 5320XC (5) 86 da/rj 8/ 14

S.F. _____ b. Enforcement of a security interest in compliance with 1 chapter 554, article 9 , other than acceptance of collateral in 2 full or partial satisfaction of the obligation it secures . 3 6. A transfer is not voidable under section 684.5, 4 subsection 2 , in any of the following circumstances: 5 a. To the extent the insider gave new value to or for the 6 benefit of the debtor after the transfer was made unless , 7 except to the extent the new value was secured by a valid lien. 8 b. If made in the ordinary course of business or financial 9 affairs of the debtor and the insider. 10 c. If made pursuant to a good-faith effort to rehabilitate 11 the debtor and the transfer secured present value given for 12 that purpose as well as an antecedent debt of the debtor. 13 7. The burden of proving matters referred to in this section 14 is determined according to the following: 15 a. A party that seeks to invoke subsection 1, 4, 5, or 6, 16 has the burden of proving the applicability of that subsection. 17 b. Except as otherwise provided in paragraphs “c” and “d” , 18 the creditor has the burden of proving each applicable element 19 of subsection 2 or 3. 20 c. The transferee has the burden of proving the 21 applicability to the transferee of subsection 2, paragraph “a” , 22 subparagraph (2), subparagraph division (a) or (b). 23 d. A party that seeks adjustment under subsection 3 has the 24 burden of proving the adjustment. 25 8. The standard of proof required to establish matters 26 referred to in this section is preponderance of the evidence. 27 Sec. 9. Section 684.9, Code 2016, is amended to read as 28 follows: 29 684.9 Extinguishment of cause of action claim for relief . 30 A cause of action claim for relief with respect to a 31 fraudulent transfer or obligation under this chapter is 32 extinguished unless action is brought as follows: 33 1. Under section 684.4, subsection 1 , paragraph “a” , within 34 five not later than four years after the transfer was made or 35 -9- LSB 5320XC (5) 86 da/rj 9/ 14

S.F. _____ the obligation was incurred or, if later, within not later 1 than one year after the transfer or obligation was or could 2 reasonably have been discovered by the claimant. 3 2. Under section 684.4, subsection 1 , paragraph “b” , 4 or section 684.5, subsection 1 , within five not later than 5 four years after the transfer was made or the obligation was 6 incurred. 7 3. Under section 684.5, subsection 2 , within not later than 8 one year after the transfer was made or the obligation was 9 incurred . 10 Sec. 10. NEW SECTION . 684.9A Governing law. 11 1. In this section, a debtor’s location is determined as 12 follows: 13 a. A debtor who is an individual is located at the 14 individual’s principal residence. 15 b. A debtor that is an organization and has only one place 16 of business is located at its place of business. 17 c. A debtor that is an organization and has more than one 18 place of business is located at its chief executive office. 19 2. A claim for relief in the nature of a claim for relief 20 under this chapter is governed by the local law of the 21 jurisdiction in which the debtor is located when the transfer 22 is made or the obligation is incurred. 23 Sec. 11. NEW SECTION . 684.9B Application to series 24 organization. 25 1. As used in this section: 26 a. “Protected series” means an arrangement, however 27 denominated, created by a series organization that, pursuant to 28 the law under which the series organization is organized, has 29 the characteristics set forth in paragraph “b” . 30 b. “Series organization” means an organization that, 31 pursuant to the law under which it is organized, has the 32 following characteristics: 33 (1) The organic record of the organization provides for 34 creation by the organization of one or more protected series, 35 -10- LSB 5320XC (5) 86 da/rj 10/ 14

S.F. _____ however denominated, with respect to specified property of 1 the organization, and for records to be maintained for each 2 protected series that identify the property of or associated 3 with the protected series. 4 (2) Debt incurred or existing with respect to the activities 5 of, or property of or associated with, a particular protected 6 series is enforceable against the property of or associated 7 with the protected series only, and not against the property of 8 or associated with the organization or other protected series 9 of the organization. 10 (3) Debt incurred or existing with respect to the activities 11 or property of the organization is enforceable against the 12 property of the organization only, and not against the property 13 of or associated with a protected series of the organization. 14 2. A series organization and each protected series of the 15 organization is a separate person for purposes of this chapter, 16 even if for other purposes a protected series is not a person 17 separate from the organization or other protected series of the 18 organization. 19 Sec. 12. NEW SECTION . 684.9C Relation to Electronic 20 Signatures in Global and National Commerce Act. 21 This chapter modifies, limits, or supersedes the Electronic 22 Signatures in Global and National Commerce Act, 15 U.S.C. §7001 23 et seq., but does not modify, limit, or supersede section 24 101(c) of that Act, 15 U.S.C. §7001(c), or authorize electronic 25 delivery of any of the notices described in section 103(b) of 26 that Act, 15 U.S.C. §7003(b). 27 Sec. 13. Section 684.12, Code 2016, is amended to read as 28 follows: 29 684.12 Short title. 30 This chapter may be cited , which was formerly cited as the 31 “Uniform Fraudulent Transfer Act.” Act” , may be cited as the 32 “Iowa Uniform Voidable Transactions Act” . 33 Sec. 14. CODE EDITOR DIRECTIVE. 34 1. The Code editor is directed to make the following 35 -11- LSB 5320XC (5) 86 da/rj 11/ 14

S.F. _____ transfers: 1 a. Section 684.9A, as enacted in this Act, to section 2 684.10. 3 b. Section 684.9B, as enacted in this Act, to section 4 684.11. 5 c. Section 684.9C, as enacted in this Act, to section 6 684.14. 7 d. Section 684.10 is transferred to section 684.12. 8 e. Section 684.11 is transferred to section 684.13. 9 f. Section 684.12, as amended in this Act, to section 10 684.15. 11 2. The Code editor is directed to correct internal 12 references in the Code and in any enacted legislation as 13 necessary due to the enactment of this section. 14 Sec. 15. APPLICABILITY. 15 1. a. This Act applies to a transfer made or an obligation 16 incurred on or after the effective date of this Act. 17 b. This Act does not apply to a transfer made or an 18 obligation incurred prior to the effective date of this Act. 19 2. For purposes of this section, a transfer is made and an 20 obligation is incurred at the time provided in section 684.6. 21 EXPLANATION 22 The inclusion of this explanation does not constitute agreement with 23 the explanation’s substance by the members of the general assembly. 24 GENERAL. This bill amends Code chapter 684 referred to 25 as the “Uniform Fraudulent Transfer Act” as approved by the 26 national conference of commissioners on uniform state laws. 27 The law concerns an avoidance action brought by a creditor 28 (plaintiff) to set aside (void) a transfer made or obligation 29 incurred by an insolvent debtor to a third-party transferee 30 (defendant) including as part of a bankruptcy proceeding. 31 Consequently, the creditor seeks that the value of the property 32 be returned to the debtor or the debtor’s bankruptcy estate. 33 MODEL ACT. The bill is based on revisions to that Act 34 approved by the commissioners in 2014. The bill replaces the 35 -12- LSB 5320XC (5) 86 da/rj 12/ 14

S.F. _____ term “fraudulent transfer” with the broader term “voidable 1 transaction” and changes the name of the Code chapter to the 2 “Iowa Uniform Voidable Transactions Act” (Code section 684.12). 3 EXTINGUISHING OF CLAIM. The bill changes a current Iowa 4 law that extinguishes a claim after five years (Code section 5 684.9). The bill adopts the model Act’s four-year limitation. 6 RECORDS. The bill replaces the term “writing” with “record” 7 and provides that a “record” may be in an electronic format 8 (Code section 684.1). Currently, an obligation is incurred 9 when it is made orally or if evidenced by a writing (Code 10 section 684.6). 11 INSOLVENCY. Generally, a debtor is insolvent if the sum 12 of the debtor’s debts is more than the sum of debtor’s assets 13 (Code section 684.2). The bill provides that such debts do 14 not include those subject to a bona fide dispute. It also 15 eliminates special treatment accorded to partnerships by 16 providing that the aggregate net worth of the general partners 17 is no longer to be added to the partnership’s assets. 18 UNIFORM COMMERCIAL CODE —— ARTICLE 9 TRANSACTIONS. The bill 19 provides that a transfer may be voidable even if the transferee 20 is also a secured creditor under Article 9 of the Uniform 21 Commercial Code (Code chapter 554). The secured creditor must 22 receive collateral for partial or full satisfaction of the 23 obligation and the transfer must occur without public sale or 24 judicial foreclosure (Code section 684.8). 25 ORGANIZATIONS AND SERIES. The bill adds the term 26 “organization” which is defined to mean a “person” other than 27 an individual (Code section 684.1). It also provides that an 28 organization and separate legal components of that organization 29 referred to as a “series” may each be treated as a separate 30 person unconnected to an avoidance action (new Code section 31 684.9B). In order to be considered a separate person, the 32 organization or series must be created in the same organic 33 record (e.g., articles of incorporation), and the debt must be 34 enforceable against the activities or property associated with 35 -13- LSB 5320XC (5) 86 da/rj 13/ 14

S.F. _____ the organization or series and not another component. 1 PROCEDURAL RULES. The bill provides that a rebuttable 2 presumption exists that a debtor is insolvent if the debtor 3 fails to pay debts as they become due. It also provides that 4 a creditor has the burden of proving the elements of a claim 5 (Code section 684.5) and a transferee has the burden of proving 6 the elements of a defense (Code section 684.8). The standard 7 of proof is a preponderance of the evidence. 8 CHOICE OF LAW. The bill provides that an avoidance action is 9 governed by the jurisdiction in which the debtor was located 10 when the transfer was made or obligation incurred (new Code 11 section 684.9A). If the debtor is an individual, the location 12 is the debtor’s principal residence and if the debtor is an 13 organization, the location is the debtor’s place of business or 14 chief executive office. 15 ELECTRONIC SIGNATURES AND GLOBAL AND NATIONAL COMMERCE ACT. 16 The bill provides that even though it modifies, limits, or 17 supersedes the federal Electronic Signatures in Global and 18 National Commerce Act, it does not affect federal law relating 19 to consumer disclosures through electronic means or exempt 20 certain judicial notices affecting consumer interests (new Code 21 section 684.9C). 22 CODE EDITOR DIRECTIVE. The bill directs the Code editor to 23 transfer existing, amended, and new Code sections within Code 24 chapter 684 in a manner that corresponds with the numbering 25 system approved by the national conference of commissioners on 26 uniform state laws. 27 APPLICABILITY. The bill applies to transfers and 28 obligations incurred on or after the effective date of the 29 bill. 30 -14- LSB 5320XC (5) 86 da/rj 14/ 14