Colorado Uniform Fraudulent Transfer Act Claims in Colorado

A Colorado Uniform Fraudulent Transfer Act (“CUFTA”) claim is an equitable claim and is the culmination of centuries of fraud prevention and correction. Bertoiav. Denver Gateway, LLC,539 P.3d 156 (Colo. App. 2023).  CUFTA's purpose is to protect a debtor's estate from certain depletions that prejudice the debtor's unsecured creditors. See LeverageLeasing Co. v. Smith, 143P.3d 1164, 1167 (Colo. App. 2006). Because it is not possible to anticipate all manners of fraudulent schemes, CUFTA is drafted and construed expansively to serve its broad remedial purpose. Wilson v. Pauling,457 F. Supp. 3d 965,974 (D. Colo. 2020).

ACUFTA claim springs into play when a debtor depletes his estate bytransferring assets away from the grasp of unsecured creditors.  Thistype of transaction involve a sophisticated debtor avoiding liabilityand taking the approach of “catch me if you can.”

As CUFTA is in derogation of common law fraud, the critical element ofactual intent in a common lawfraud claim is not a factor for CUFTA and recognizes that there is seldom directevidence of actual intent to defraud.  CUFTA claims involve the useof constructive fraud which allows the Court to impute actual intentto delay, hinder or defraud by finding badges of fraud.

The badges of fraud are set forth in C.R.S. §38-8-101 et seq. The list of 11 badges of fraud are not exclusive or exhaustive and nor does a Plaintiff have to prove all of the badges to establish a CUFTA violation. A combination of any of badges of fraud can result in a CUFTA violation. Perhaps one of the key badges is the solvency of the debtor at the time of the transfer.  If the badges of fraud (or combination