One-and-a-Half Badges of Fraud

Citation data:

Coase-Sandor Working Paper Series in Law and Economics

Publication Year:
2014
Usage 503
Downloads 455
Abstract Views 48
Repository URL:
https://chicagounbound.uchicago.edu/law_and_economics/705
Author(s):
Baird, Douglas G.
Tags:
Law
artifact description
Lenders have long included savings clauses in loan documents as a way to minimize exposure to fraudulent conveyance at-tacks. This paper suggests that scope of operation of savings clauses is exceeding small. Those cases in which lenders find themselves exposed to fraudulent conveyance liability are only rarely ones in which a savings clause is of much use. Savings clauses are useful to guard against constructive fraudulent conveyance attacks, but only in environments in which actual intent fraudulent conveyances attacks are also possible and for these savings clauses do little good. Even when in environments in which they might protect a lender, uncertainties in how they operate may restrict their usefulness, especially in the context of guarantees.