Definition - What does Fraudulent Conveyance mean?
Fraudulent conveyance refers to the illegal transfer of assets by a debtor out of the estate to a third party that unfairly takes those assets out of the reach of creditors. The civil action of fraudulent conveyance is usually brought by the Trustee overseeing the bankruptcy proceedings.
Justipedia explains Fraudulent Conveyance
Although fraudulent conveyance is mostly a cause of action in bankruptcy cases, it is also sometimes a cause of action in civil cases especially those related to property or assets. A transaction is classified as fraudulent conveyance if it was done with intent to defraud, delay, or hinder a creditor. Fraudulent conveyance is divided into two major categories: constructive fraud and actual fraud. If an individual or entity transferred assets with the intent to defraud his or her creditors, it is regarded as actual fraud. In regards to constructive fraud, the underlying economics (instead of the intent) behind the transfer transaction play a crucial role; for example, a transaction that was made at a price lower than the prevalent market rate at the time of the transaction.