§ 38-8-109 — Defenses, liability, and protection of transferee or obligee

Colorado § 38-8-109

• Jurisdiction: Colorado
• Title 38: Property -
• Art.: Fraudulent Transfers

Text

(1) A
transfer or obligation is not voidable under section 38-8-105 (1)(a) against a person
that took in good faith and for a reasonably equivalent value given to the debtor or
against a subsequent transferee or obligee.

(2) To the extent a transfer is voidable in an action by a creditor under
section 38-8-108 (1)(a), the following rules apply:

(a) Except as otherwise provided in this section, the creditor may recover
judgment for the value of the asset transferred, as adjusted under subsection (3) of
this section, or the amount necessary to satisfy the creditor's claim, whichever is
less. The judgment may be entered against:

(I) The first transferee of the asset or the person for whose benefit the
transfer was made; or

(II) A direct or indirect transferee of the first transferee, other than:

(A) A good faith transferee that took for value; or

(B) A direct or indirect good faith transferee of a person described in
subsection (2)(a)(II)(A) of this section.

(3) If the judgment under subsection (2) of this section is based upon the
value of the asset transferred, the judgment must be for an amount equal to the
value of the asset at the time of the transfer, subject to adjustment as the equities
may require.

(4) Notwithstanding voidability of a transfer or an obligation under this
article 8, a good faith transferee or obligee is entitled, to the extent of the value
given the debtor for the transfer or obligation, to:

(a) A lien on or a right to retain an interest in the asset transferred;

(b) Enforcement of an obligation incurred; or

(c) A reduction in the amount of the liability on the judgment.

(5) A transfer is not voidable under section 38-8-105 (1)(b) or 38-8-106 if the
transfer results from:

(a) Termination of a lease upon default by the debtor when the termination is
pursuant to the lease and applicable law; or

(b) Enforcement of a security interest in compliance with the Uniform
Commercial Code - Secured Transactions, article 9 of title 4, other than the
acceptance of collateral in full or partial satisfaction of the obligation it secures.

(6) A transfer is not voidable under section 38-8-106 (2):

(a) To the extent the insider gave new value to or for the benefit of the
debtor after the transfer was made unless the new value was secured by a valid
lien;

(b) If made in the ordinary course of business or financial affairs of the
debtor and the insider; or

(c) If made pursuant to a good-faith effort to rehabilitate the debtor and the
transfer secured present value given for that purpose as well as an antecedent
debt of the debtor.

(7) The burden of proving matters referred to in this section is determined
according to the following:

(a) A party that seeks to invoke subsection (1), (4), (5), or (6) of this section
has the burden of proving the applicability of that section;

(b) Except as provided in subsections (7)(c) and (7)(d) of this section, the
creditor has the burden of proving each applicable element of subsection (2) or (3)
of this section;

(c) The transferee has the burden of proving the applicability to the
transferee of subsection (2)(a)(II)(A) or (2)(a)(II)(B) of this section; and

(d) A party that seeks adjustment under subsection (3) of this section has the
burden of proving the adjustment.

(8) The standard of proof required to establish matters referred to in this
section is preponderance of the evidence.

Legislative History

Source: L. 91: Entire article added, p. 1687, � 1, effective July 1. L. 2025: (1), (2), IP(4), (4)(a), (4)(b), and (5)(b) amended and (7) and (8) added, (SB 25-133), ch. 57, p. 240, � 8, effective August 6.