The Court of Chancery recently addressed claims for fraudulent conveyance, and relief available for such claims, in Duffield Associates, Inc. v. Lockwood Brothers, LLC, C.A. No. 9067-VCMR (Del. Ch. July 11, 2017). Court of Chancery Rule 9(b) requires that averments of fraud or mistake shall be stated with particularity, as compared to other claims which may be averred generally.
The court described the elements of Section 1304 of the Delaware Uniform Fraudulent Transfer Act, and referred to remedies available to creditors defrauded by debtors who transfer assets improperly. In this case, there was no genuine issue of material fact as to insolvency. This opinion has practical application in its description of the prerequisites for establishing a fraudulent transfer under the statute and for providing a reminder that any court of equity has “broad latitude” in crafting a remedy appropriate to the circumstances of a fraudulent transfer. Those remedies are cumulative and non-exclusive.
In this case, the court granted the remedies sought of constructive trust, a full accounting of the proceeds of distributions, and a disgorgement of any profits or proceeds from the transfers.