§ 242.05

242.05 Transfer or obligation voidable as to present creditor. (1) A transfer made or obligation incurred by a debtor is voidable as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.(2) A transfer made by a debtor is voidable as to a creditor whose claim arose before the transfer was made if the transfer was made to an insider for an antecedent debt, the debtor was insolvent at that time and the insider had reasonable cause to believe that the debtor was insolvent.(3) Subject to s. 242.02 (3), a creditor making a claim for relief under sub. (1) or (2) has the burden of proving the elements of the claim for relief by a preponderance of the evidence.History: 1987 a. 192; 2023 a. 246.Unlike other provisions of the Uniform Fraudulent Transfer Act governing transfers made with fraudulent intent, this section deems certain transactions constructively fraudulent based on the

3 a. 246.Unlike other provisions of the Uniform Fraudulent Transfer Act governing transfers made with fraudulent intent, this section deems certain transactions constructively fraudulent based on the circumstances of the transfer. Proving fraudulent intent is not necessary under this section. Beck v. BidRX, LLC, 2018 WI App 61, 384 Wis. 2d 207, 918 N.W.2d 96, 17-2043.Sub. (2) addresses 'preferential transfers,' a novel category of fraudulent transaction based on bankruptcy principles that attacks a transfer by an insolvent debtor to pay an antecedent debt to a preferred insider. The provision is aimed at diminishing the sometimes unfair advantages insiders possess when they are familiar with the debtor’s financial status. A person attacking a transfer under sub. (2) must show that the debtor is improperly preferring insider creditors over others. Beck v. BidRX, LLC, 2018 WI App 61, 384 Wis. 2d 207, 918 N.W.2d 96, 17-2043.The evidence in this case was insufficient to prove a fraudulent transfer under sub. (2) because no evidence was introduced showing that the allegedly fraudulent transfers were made to satisfy an antecedent debt.

in this case was insufficient to prove a fraudulent transfer under sub. (2) because no evidence was introduced showing that the allegedly fraudulent transfers were made to satisfy an antecedent debt. The fact of a transfer to an insider is not enough; it is the preferential payment of prior debts to insiders to which sub. (2) is addressed. Beck v. BidRX, LLC, 2018 WI App 61, 384 Wis. 2d 207, 918 N.W.2d 96, 17-2043.Intent to defraud need not be proved under this section. DeWitt, Porter v. Kovalic, 991 F.2d 1243 (1993).NOTE: The above annotations relate to the Uniform Fraudulent Transfer Act as adopted in this chapter prior to the revision and renaming of that chapter to the Uniform Voidable Transactions Law by 2023 Wis. Act 246.