"Insider" and "Affiliate" Defined
§1(8) “Insider” includes:
JayNote: The use of the term "includes" means that the following list is non-exhaustive, and a person may be deemed to be an "insider" if they have a sufficiently close relationship with the debtor that they might be in collusion to assist the debtor in defeating the rights of creditors, even if they are not listed below, i.e., somebody under the debtor's control (CPA, financial adviser, or attorney, etc.) or somebody personally close to the debtor such as a boyfriend or girlfriend even if not legally entangled, or even a long-time neighbor. Stated differently, an "insider" is to be distinguished from a true outsider who has either no other relationship with the debtor whatsoever, or at most only a passing acquaintance with the debtor.
(i) if the debtor is an individual:
(B) a partnership in which the debtor is a general partner;
(C) a general partner in a partnership described in clause (B); or
(ii) if the debtor is a corporation:
(A) a director of the debtor;
(B) an officer of the debtor;
(D) a partnership in which the debtor is a general partner;
(E) a general partner in a partnership described in clause (D); or
(iii) if the debtor is a partnership:
(A) a general partner in the debtor;
(C) another partnership in which the debtor is a general partner;
(D) a general partner in a partnership described in clause (C); or
(iv) an affiliate, or an insider of an affiliate as if the affiliate were the debtor; and
JayNote: The definition of "insider" includes an "affiliate" under Section 1(1), and thus is dramatically expanded by that definition as well.
(v) a managing agent of the debtor.
Reporter's Comment: 8. The definition of “insider” is derived from Bankruptcy Code § 101(28) (1984). In this Act, as in the Bankruptcy Code, the definition states that the term “includes” certain listed persons; it does not state that the term “means” the listed persons. Hence the definition is not exclusive, and the statutory list is merely exemplary. See also Bankruptcy Code § 102(3) (1984). Accordingly, a person may be an “insider” of a debtor that is an individual, corporation or partnership even though the person is not designated as such by the statutory list. For example, a trust may be found to be an “insider” of a beneficiary. Similarly, a court may find a person living with an individual debtor for an extended time in the same household or as a permanent companion to have the kind of close relationship intended to be covered by the term “insider.” See also, e.g., Browning Interests v. Allison (In re Holloway), 955 F.2d 1008 (5th Cir.1992) (former spouse of debtor was an “insider” because of their close and continued personal relationship, even though they had long ago divorced and remarried others). Likewise, a person may be an “insider” of a debtor that is not an individual, corporation or partnership. See, e.g., In re Longview Aluminum, L.L.C., 657 F.3d 507 (7th Cir. 2011) (holding, under the Bankruptcy Code definition, that an individual serving on the Board of Managers of, and having a 12% membership interest in, a limited liability company was an “insider” of the company; the company’s organic documents vested management authority “in the Board of Managers and the Members”).
The differences between the definition in this Act and that in the Bankruptcy Code are slight. In this Act, the definition has been restricted in clauses (i)(C), (ii)(E), and (iii)(D) to make clear that a partner is not an insider of an individual, corporation, or partnership if any of these latter three persons is only a limited partner. The definition of “insider” in the Bankruptcy Code does not purport to make a limited partner an insider of the partners or of the partnership with which the limited partner is associated, but it is susceptible of a contrary interpretation and one which would extend unduly the scope of the defined relationship when the limited partner is not a person in control of the partnership. The definition of “insider” in this Act also omits the reference in Bankruptcy Code § 101(28)(D) (1984) to an elected official or relative of such an official as an insider of a municipality.
JayNote: Essentially, an "insider" includes a "relative" of the debtor as defined in Section 1(14), business entities that are closely associated with the debtor, and the debtor's nominees and agents under the definition of "affiliate".
§1(1) “Affiliate” means:
(i) a person that directly or indirectly owns, controls, or holds with power to vote, 20 percent or more of the outstanding voting securities of the debtor, other than a person that holds the securities:
(A) as a fiduciary or agent without sole discretionary power to vote the securities; or
(ii) a corporation 20 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by the debtor or a person that directly or indirectly owns, controls, or holds, with power to vote, 20 percent or more of the outstanding voting securities of the debtor, other than a person that holds the securities:
(A) as a fiduciary or agent without sole discretionary power to vote the securities; or
Reporter's Comment: 1. The definition of “affiliate” is derived from Bankruptcy Code § 101(2) (1984).
JayNote: The term "affiliate" is only used in the Act in relation to the definition of "insider" under Section 1(8), but substantially expands the definition of "insider".
JayNote: Section 1(iii) includes "a person substantially all of whose assets are controlled by the debtor", or, in other words, a nominee of the debtor.
UVTA - Logical Organization (Designed For Litigators)
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Step 1: Has A Voidable Transaction Occurred?
Step 2: Does the Transferee Have A Defense?
Step 3: What Remedies Are Available?
Other Helpful Provisions
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1 - Definitions
(1) Affiliate -- (2) Asset -- (3) Claim -- (4) Creditor -- (5) Debt -- (6) Debtor -- (7) Electronic -- (8) Insider -- (9) Lien -- (10) Organization -- (11) Person -- (12) Property -- (13) Record -- (14) Relative -- (15) Sign -- (16) Transfer -- (17) Valid Lien
2 - Insolvency
3 - Value
4 - Transfer Or Obligation Voidable As To Present Or Future Creditor
5 - Transfer or Obligation Voidable As To Present Creditor
8 - Defenses, Liability, And Protection Of Transferee Or Obligee
10 - Governing Law
15 - Short Title
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