More details to this question:
I am an interested 3rd party. A company that I used to work for had a lease for a venue under one corporation. The owners bought this company in April of 2011. In September, 2011, the transferred all the assets of this company into a new LLC. The following month, they stopped paying rent and claimed the landlord hadn't maintained the location. They then sued the landlord, but did not move out, staying in the venue until the lease expired in March 2012. They paid no rent. The original owner remained as guarantor on the lease, and the case is about to go to trial. With trial looming, the current owners are willing to settle, allowing the landlord to have a judgment against the empty shell company and the guarantor. To me, this sounds like they knew they weren't going to pay the rent, they never assigned the lease to the new company where they moved the assets, and I think they planned this outcome. Is there a fraud claim here?
2 ANSWERS
1 Award
In Nevada, fraudulent conveyances are governed by Nevada Revised Statutes Chapter 112. Based upon the limited facts presented in your query, it would appear that a fraudulent conveyance may have occurred if the LLC did not provide reasonable compensation to the Corporation for the transfer of assets. However, without knowing the rest of the facts, it is very difficult to provide a good answer to your question.
Answered on Mar 24th, 2014 at 3:35 PM
If the transfer of assets to the new llc was made with the intent of hindering, delaying, or defrauding creditors, it is fraudulent. While you seem to believe that the transfer was done intentionally to defraud the landlord, it will be difficult to prove.
Transfers can also be fraudulent, even without proving intent, if they are made without getting fair consideration in return, and either the transferor was insolvent (by a variety of definitions) or became insolvent as a result of the transfer. These are known as constructively fraudulent conveyances or transfers, and there are several fraudulent conveyance statutes governing htem. From what you've written, it appears that the transfer of assets to the llc may be constructively fraudulent. A constructively fraudulent transfer is generally easier to prove than an intentionally fraudulent transfer (although the statute of limitations on them is generally shorter.)
Answered on Mar 24th, 2014 at 3:18 PM