Thursday, January 28, 2016
The Passing of Henry VIII
Today is the anniversary of the death, in 1547, of King Henry VIII. By coincidence, today is as well the anniversary of the birthday of his father, King Henry VII.
Although historians can and do dispute the issue, in many respects he was a lousy king. On two occasions he sent England to war in France; in both instances the gains were minimal while the costs were huge. He as well underwrote several campaigns, including those of Maxmillian, the Holy Roman Emperor, further depleting the quite healthy treasury left him by Henry VII (to suggest that Henry VII was in the later part of his reign, especially after the death of his wife, only miserly is to suggest to much frivolity). Meanwhile, England’s greatest military victory during his reign, the Battle of Flodden Field, was won by Thomas Howard, Earl of Surrey, thereby earning him the return of Dukedom of Norfolk lost after his family fought for the wrong side (i.e., that of Richard III) at the Battle of Bosworth. Henry VIII was not even in England when that victory was achieved.
Henry fancied that at least northern Europe was a tri-part division of power between England, France and the Holy Roman Emperor. While the Treaty of London, structured by Cardinal Wolsey, would reflect this division, the reflection was possible only because the Holy Roman Empire and France accommodated the fiction. In fact, there were two great powers in Europe, France and the Holy Roman Empire. England, while economically important, was not a significant diplomatic power.
Having condemned Luther as a heretic in his Defense of the Seven Sacraments, earning him from the Papacy the title Defender of the Faith, when it became convenient to do so in order to achieve the desired annulment of his marriage to Catherine of Aragon, Henry separated the English Church from communion with Rome. Unwilling to accept even silent dissent from his policies, he would procure the executions of numerous men of conscience including St. John Fisher and St. Thomas More.
While the now iconic portrait of Henry painted by Hans Holbein the Younger shows a man of dynamism and vigor (btw, what we have are copies; the original was lost when the Whitehall Palace burned), in many respects he was just not that great a king.
Wednesday, January 27, 2016
Arbitration Award set aside on the Grounds that the Right to Arbitrate had been Waived
In a decision delivered by the Kentucky Court of Appeals, it held that an arbitration award would be set aside because, prior to reference of the action to arbitration, the plaintiff had taken actions inconsistent with bringing a claim in arbitration, including filing an action in Circuit Court. Imhoff v Lexington Public Library Board of Trustees, No. 2014-CA-000385-MR, 2016 WL 192071 (Ky. App. Jan. 15, 2016).
Imhoff had been the executive director of the Lexington Public Library, a position she filled pursuant to a written employment agreement. The last of those agreements was entered into in June, 2007 for a period extending through June 30, 2011. It provided that the agreement could be terminated by either party at any time upon 30 days prior written notice. Eventually, the Board did give Imhoff 30 days’ notice of her termination, effective August 15, 2009. Her salary was paid for a further 30 days, after which time the Library Board advised Imhoff that all of its financial obligations to her had been satisfied. In response, Imhoff prepared a draft complaint and forwarded it to the Library Board, and they board engaged in an ultimately unsuccessful mediation. A gender discrimination claim was pursued through the EEOC, which issued a right to sue letter. Approximately a year after receiving notice of her termination, Imhoff filed suit against the Library Board, alleging it had breached the contract “by” failing to pay her salary and benefits through June 30, 2011, the employment agreement’s otherwise applicable termination date. She also filed claims for defamation and gender discrimination, ultimately seeking both a jury trial and damages of approximately $5 million. After the Library Board answered the complaint and sought dismissal of certain claims on grounds including sovereign immunity and failure to exhaust administrative remedies, Imhoff took part in additional court proceedings including a pretrial conference and the setting of a briefing schedule with respect to Library Board’s motion to dismiss.
Some six weeks later, Imhoff gave notice that she intended to submit the dispute to arbitration pursuant to the arbitration clause in her employment agreement. The Library Board argued against the referral of the dispute to arbitration, asserting that her conduct to date in the litigation constituted a waiver of her right to arbitrate. Still, the Fayette Circuit Court stayed the action pending its resolution through arbitration, reserving the question as to whether her defamation and discrimination claims were subject to the arbitration agreement. After ultimately dismissing the claim for defamation and granting summary judgment with respect to her allegation gender discrimination, only the claim for breach of contract was referred to arbitration by the Circuit Court. Finally, nearly 3 years after the effective date of her termination, Imhoff filed a demand for arbitration with the American Arbitration Association. Some seven months later, the arbitration panel would by majority decision hold that Imhoff’s employment agreement had a four-year term, and that the Library was obligated to pay her through the end of that term. It would ultimately determine she was owed $907,761.55 including lost salary and other benefits, prejudgment interest and consequential damages. The Library was also ordered to pay nearly $20,000 in arbitration costs.
Imhoff then filed a motion with the Fayette Circuit Court seeking to enforce the decision of the arbitration panel. More than eight months later, the Fayette Circuit Court would hold that because of sovereign immunity enjoyed by the Library Board, the arbitration panel lacked the capacity to award consequential damages or pre- or post-judgment interest, and on that basis vacated a portion of the arbitration award. It did, however, confirm $256,940.62 of the award, Imhoff’s unpaid salary for the remainder of the four-year term. Imhoff would appeal on the basis that the Circuit Court should not have set aside those portions of the arbitration decision favoring her, asserting, in effect, that the Circuit Court had no authority to review the substance of that decision. The Library Board in turn appealed, that the dispute should never have been referred to arbitration to begin with, arguing based on its sovereign immunity and Imhoff’s waiver of the right to arbitrate. Imhoff’s response alleged that the Library Board lacked the capacity to, at this late date, argue arbitration should not have taken place.
The Court of Appeals, as had the trial court, rejected the notion that the Library Board was late in appealing the referral of the case to arbitration. While the Library Board did not appeal the arbitration panel’s finding on breach of contract, the appeal of substantive arbitration awards being almost never permitted, it appealed the fact that the arbitration took place. In response to Imhoff’s argument that the appeal was untimely, the Court explained that while an order denying arbitration may be immediately appealed, an order granting arbitration may not be appealed until after the arbitration takes place, and after the trial court confirms the arbitration award, and reduces it to a judgment. Only then could the Library Board challenge the arbitrator’s decision, and as such, its appeal was timely.
From there the Court of Appeals would hold that Imhoff had waived the contractual right to arbitrate her termination, which it reaffirmed is a question of law to be resolved by the court. Slip op. at 10, citing American General Home Equity, Inc. v. Kestel, 253 S.W.3d 543 (Ky. 2008). Working from there, the Court of Appeals explained why Imhoff’s right to arbitrate had in this instance been waived:
Imhoff was terminated from her position with the library effective August 15, 2009. She was aware of the arbitration clause included in the employment agreement since the terms of that agreement lie at the very heart of this dispute. Nevertheless, Imhoff sought to pursue legal action against the library board. She forwarded a draft complaint to the library board shortly after her termination. And she pursued an administrative claim through the Equal Employment Opportunity Commission to secure the right-to-sue letter from the agency. On July 13, 2010, Imhoff did, in fact, commence the threatened legal action against the library board in Fayette Circuit Court. In her complaint, Imhoff did not refer to the arbitration provision contained in the contract. Instead, she demanded a trial by jury. Imhoff’s decision to invoke judicial process is clearly at odds with an intention to assert her arbitration rights. Slip op. at 11.
In effect, the claim for breach of contract will now be litigated as if the arbitration had never taken place:
It was incumbent upon the [circuit] court to set aside its earlier order compelling arbitration to avoid the arbitration proceedings in their entirety, and to proceed with the litigation of this case in the judicial forum that Imhoff herself had elected. Slip op. at 14.
This is the second decision in as many months in which the Court of Appeals has set aside proceedings that have, apparently, otherwise addressed the substance of the dispute between the parties. In the Adcomm case decided in December, 12 years of litigation was set aside on the basis that the initial lawsuit should not have been brought, as the plaintiff lacked authority to do so. In that case, the trial court was presented with the argument that the suit lacked authority, but it never ruled upon that motion. CLICK HERE FOR A LINK for my review of that decision. In this instance, while less egregious, the trial court’s failure to find waiver based upon the facts relied upon by the Court of Appeals drove both the plaintiffs and defendants to engage in a “wasted” exercise of arbitration.
No Fiduciary Obligations are Owed By General Partners to
Members of LLC that is a Limited Partner
A decision rendered yesterday by the Delaware Supreme Court, it answering a certified question from the 11th Circuit Court of Appeals, held that the general partners of a limited partnership did not owe fiduciary duties to the members of an LLC that was one of the limited partners. Culverhouse v. Paulson & Co, Inc., ___ A.3d ___. 2016 WL 304186 (Del. Jan. 26, 2016).
Culvershouse was a member in HedgeForum Paulson Advantage Plus, LLC (the “Feeder Fund”), which collected funds from its members and in turn invested those funds in Paulson Advantage Plus, L.P. (the “Investment Fund”). The Feeder Fund was a limited partner in the Investment Fund. As explained by the Court:
As its name implies, a feeder fund collects investors to invest in the feeder fund, which in turn “feeds” such funds into a master fund, where the investment managers direct the investments in the master fund portfolio. The feeder/master fund structure, common to large or exclusive hedge funds, allows investors who cannot or choose not to meet the direct investment minimum capital requirements of the master fund to aggregate their smaller investments and gain access to the master fund.
The Investment Fund had made an investment of some $800 million in Sino-Forest Corporation, an investment that was ultimately liquidated for a less of $460 million after it came to light that Sino-Forest had overstated its timber holdings and engaged in questionable related party transactions. Culverhouse then sought to bring suit against the Investment Fund’s general partners on grounds including breach of fiduciary duty and gross negligence. They responded (a) no fiduciary duty was owed Culverhouse, so there could be no breach of duty and (b) Culverhouse’s claims are derivative. The trial court dismissed the suit on the basis that Culverhouse lacked standing as the claims were derivative, never addressing whether the alleged fiduciary duty existed.
On appeal to the 11th Circuit, it determined that whether or not Culverhouse was the beneficiary of a fiduciary duty was a necessary determination; if there was a fiduciary duty, under the decision rendered in Anglo American Security Fund, LP v. S.R. Global International Fund, L.P., 829 A.2d 143 (Del. Ch. 2003). Alternatively, if no duty was owed, then the direct versus derivative test of Tooley v. Donaldson, Lufkin & Jenrette, 845 A.2d 1031 (Del. 2004), could be applied.
The Delaware Supreme Court found that no fiduciary duty was owed to Culverhouse by virtue of his position as a member of an LLC that is itself a limited partner, writing:
Applying the undisputed facts to the certification request, we find that Culverhouse fails to meet both parts of the Tooley test. To the extent not waived by the terms of the agreements specific to each fund, the Investment Fund Managers owe fiduciary duties to the investors who invested directly in the Investment Fund, including the Feeder Fund. But Culverhouse chose not to invest directly in the Investment Fund. Instead, Culverhouse invested in the Feeder Fund, which in turn invested in the Investment Fund. The alleged harm flowing from the Investment Fund’s losses would not in the first instance be suffered by Culverhouse. Culverhouse also would not in the first instance receive the benefit of any recovery. Under the Tooley test, Culverhouse’s claims are derivative.
The Court of Chancery’s decision in Anglo American is distinguishable based on its facts. In Anglo American, the limited partners did not invest through a feeder fund. They had a direct relationship with the investment fund and its manager. By contrast, Culverhouse and other Feeder Fund investors chose not to invest directly with the Investment Fund. Their legal relationship existed only with the Feeder Fund.
The separateness of the Feeder Fund and Investment Fund is not a detail to be disregarded simply because the Feeder Fund acts as a pass-through entity, and does not issue transferrable shares. “Delaware courts take the corporate form and corporate formalities very seriously....” Each fund has its own governing agreements spelling out the rights and obligations of the fund and its investors. To ignore these operative agreements would upset the contractual expectations of the investors and the managers of each fund. It would also unjustifiably call into question the vitality of the same type of foundational agreements in the established feeder/master fund investment model. Culverhouse and the class he purports to represent must look to the Feeder Fund and his contractual or fiduciary relationship with it and its managers, not the Investment Fund Managers, to address any dissatisfaction with investment losses by the Investment Fund.
Tuesday, January 26, 2016
An Amendment Too Far: Arbitration Provision Added to Amended Operating Agreement Not Be Enforced Against Objecting Members
An Amendment Too Far: Arbitration Provision Added to Amended Operating Agreement Not Be Enforced Against Objecting Members
One of the great questions with respect to operating agreements that may be amended with less than unanimity is the maximum degree to which either new obligations or waivers of rights may be imposed upon any objecting members. The recent decision out of Ohio held that, even if one of the members had the capacity to amend the operating agreement, they did not have the authority to impose on the other members an obligation to arbitrate disputes. Leight v. Osteosymbionics, L.L.C., No. 102869, 2016 WL 193511 (Ohio Ct. App. Jan. 14, 2016).
Osteosymbionics, L.L.C. was formed in 2006 by Cynthia Brogan, Troy Leight and John Nail. Brogan was the 55% member of the LLC. The operating agreement contemplated, with the exception of certain matters that could be approved by the board of managers, that the agreement could be amended by a member vote, and it was specifically provided that a majority vote of the members could affect an amendment of the operating agreement. Brogan, acting unilaterally, purported to adopt an amended and restated operating agreement that appointed her the sole manager of the company and requiring that all members arbitrate any disputes. Leight and Nail thereafter filed suit against the LLC and Brogan asserting a variety of claims including breach of fiduciary duty. Brogan would argue that those claims had to go to arbitration.
Focusing upon the question as to whether the parties had agreed to arbitrate their dispute, and qualifying their analysis to “Under the unique facts of the instant case,”, the court would ultimately answer “no”. Relying on the decision rendered in Maestle v. Best Buy Co., 2005-Ohio-4120, notwithstanding the fact that Brogan might have had the right to unilaterally amend the operating agreement, there was no meeting of the minds as to an agreement to arbitrate. Ultimately:
Interpreting the meaning and scope of § 9.2 of the OA is giving Brogan unfettered authority to amend the a amounts to the assumption the Leight and Nail agreed ahead of time to be bound by any change Brogan chose to make. This is particularly concerning because there is no procedural or notice provision in the OA that the majority Members - in this case, Brogan - must follow before amending the OA. See generally Badie v. Bank of AM., 79 Cal. Rptr. 2d 273, 281 (1998) (California cases “do not support the proposition that a party with the unilateral right to modify a contract has carte blanche to make any kind of change whatsoever as long as the specified procedure is followed.”)
It is hard to know how much further this case may be extended. Arbitration involves the waiver of the otherwise applicable constitutional right to access the courts, to appeal, etc., and is therefore markedly different from, for example, modifying decision making process or economic terms.
Cumulative Supplement to Kentucky LLC Treatise
With respect to my chapters in the UK/CLE treatise Limited Liability Companies in Kentucky, I have entirely revised and restated those chapters in the 2016-1 Cumulative Supplement to Chapters 5, 6, 7, 8, 9 & 9A, they being:
Basics of LLC Formation
Limited Liability Company Operations
Statutory Transactions: Conversion, Mergers and Share Exchange
Dissolution of a Limited Liability Company
Developments in the Law of Kentucky LLCs
Those restated chapters may be downloaded FROM THIS LINK.
Connecticut Court Applies the Law of a Purported Agent on Behalf of an Undisclosed Principal; the Agent is Liable on the Debt
Connecticut Court Applies the Law of a Purported Agent on Behalf of an Undisclosed Principal; the Agent is Liable on the Debt
In a recent decision from an appellate court in Connecticut, it applied the law of agency with respect to undisclosed principals and, finding there not been complete disclosure as to the principal, held the agent liable in the debt created. Pelletier Mechanical Services, LLC v. G&W Management, Inc., No. 36993, 162 Conn. App. 294 (Jan. 12, 2016).
G&W Management, Inc., a property manager, had entered into contracts with Pelletier Mechanical Services, LLC with respect to repairs at various properties it managed, including responding to emergencies. Ultimately Pelletier would issue invoices to G&W for more than $16,000. G&W asserted, in defense to liability of those invoices, that it was acting merely as an agent for the property owners, and in consequence that it had no liability on those debts.
Under the law of agency, when an agent acts on behalf of the principal, the agent is not liable on obligations to the third party. The condition for the application of this rule is that the agent disclose not only that there is a principal, but who is that principal. It is only with the knowledge of who is the principal that the third party is able to assess whether they are willing to extend credit with respect to the work performed.
G&W defended on the basis that it was known that it was a property management company. Ultimately, that was not sufficient. The Court of Appeals held, inter alia, that even if it was known by Pelletier that G&W was a property management company acting on behalf of the property managers, G&W had never disclosed who are the principals. Applying settled Connecticut law as well as comment (b) to section 6.02 of the Restatement (Third) of Agency, the court had little difficulty in finding G&W liable. Also, the Court reiterated the rule that it is the obligation of the agent to effect full disclosure to the third party; the third party does not have a duty of inquiry with respect to whether there is and who is the principal.
Wednesday, January 13, 2016
U of L Law School Slammed for “Social Justice” Branding
An article in today’s Courier-Journal slams U of L’s Law School for its “social justice / progressive” branding.
HERE IS A LINK to the article.
Why Are State Securities Laws Called “Blue Sky” Laws
Professor Ann Lipton, at the Business Law Prof Blog, has posted an interesting piece as to why the various state securities laws are named “Blue Sky” laws. CLICK HERE FOR A LINK to her posting.
The Last of the 2015 Charging Order Decisions
December 31, 2015 saw the issuance of two decisions involving charging orders. Unfortunately, neither is very illuminating.
In the first case, being a claim for legal malpractice, the plaintiff asserted, inter alia, that charging order protections were better than the bankruptcy filing that did take place. Dotlick v. Tucker Hester, LLC, No. 29A02-1503-CC-125, 2015 WL 9587528 (Ind. Ct. App. Dec. 31, 2015). The suit failed in that the malpractice claim was an asset of the bankruptcy estate.
The second decision, Steinberg v. Rand, No. 1807, 2015 WL 9590762 (Ct. Spec. App. Md. Dec. 31, 2015), involved the appropriate scope of a charging order and an exemption from its reach. It is in that respect, from the perspective of charging orders, that this decision could have been more interesting of the two decisions.
Rand, an attorney, retained Steinberg to represent Rand in an employment dispute. The relationship soured and Steinberg was terminated as counsel. Steinberg sued Rand for the unpaid fee, and Rand countersued for legal malpractice. Rand then filed for personal bankruptcy, and the bankruptcy court issued a non-dischargeable $40,000 judgment against Rand in favor of Steinberg.
Steinberg then sought a charging order against Rand’s SMLLC, McKernonRand, LLC, through which Rand practiced law. The requested charging order contained the following language:
ORDERED, that McKernonRand, LLC shall sequester and pay over to the Judgment Creditor all distributions of any kind whatsoever otherwise payable to the Judgment Debtor, Charles S. Rand, and to account for said payments to this Court and to the Judgment Creditor, until such time as the judgment, plus interest and costs, entered against the Judgment Debtor has been paid in full and satisfied; and it is further
ORDERED, that Defendant is enjoined from transferring, conveying, assigning, or otherwise disposing of any property owned by McKernonRand, LLC or Defendant’s interest in McKernonRand, LLC, subject to further order of this Court.
Rand objected that (a) he had not been served a copy of the requested charging order (b) the proposed order is too broad and could preclude payout of operating expenses. Rand also objected that the order needed to allow for a “salary” to himself. Ultimately the court entered a “charging order” that allowed $2000 per month to Rand, but did not actually require the LLC to pay any amounts to Steinberg. Steinberg then appealed.
The interesting questions are (i) is a charging order that does not direct the diversion to the judgment-creditor of payouts that would otherwise have gone to the judgment-debtor sufficient and (ii) is a “salary” set-aside in an SMLLC permissible?
Sadly, neither question was answered. Rather, the Court of Appeals held that the entered order is interlocutory and not subject to appeal.
Ultimately, December 31, 2015 was a bust for new guidance on charging orders.
Tuesday, January 12, 2016
Sixth Circuit Affirms Dismissal of Suit Based Upon Delayed Wire Transfer
The Sixth Circuit has affirmed the dismissal of the suit premised upon the bank’s delay in completing a wire transfer. The wire was in the amount of $9,167.08; the damages sought were $3 million. Wright v. Citizens Bank of East Tennessee, No. 15-5406 (Sixth Cir. Jan. 8, 2016).
Mr. and Mrs. Wright maintained margin accounts at several institutions. They opened an account at Citizens Bank after confirming that it had wire transfer capabilities. On at least one prior instance, on behalf of the Wrights, Citizens Bank made a wire transfer on their behalf.
In 2008, Deutsche Bank advised the Wrights of a margin call in order to maintain the required ratios in a margin account. The notice of the need to make that margin call was sent on October 3 with a deadline of October 9. On October 9, the deadline date, Mrs. Wright visited a Citizens Bank branch to initiate a wire transfer. The form that was completed with respect to the wire transfer contained an inaccuracy and, while it was initiated on October 9, the error was not corrected, and the wire was not completed, until October 10. However, by then, Deutsche Bank's stock clearinghouse had already sold between $50,000 and $80,000 worth of stock owned by the Wrights, the value in the account having in the meantime fallen further. While not discussed in the opinion, October, 2008 was a particularly bad time for the stock market. For example, it was on October 8 that the Fed announced it would loan AIG an addition $37.8 billion to save it from bankruptcy.
As recited in the Complaint, the Wrights alleged a litany of consequences following from the delayed wire and the stock selloff to meet the margin, including “additional margin call, lost assets through stock sales, were subject to unexpected capital-gains tax, were forced to sell valuable assets for less than they were worth, and were denied refinancing of their mortgage.” Slip op. at 4. This suit alleged claims based upon negligent or intentional misrepresentation as to Citizens training of its employees to execute wire transfers, violation of the Federal Electronic Funds Transfer Act (“EFTA”), fraud with respect to the wire transfer as ultimately completed on October 10 and as well as claim for punitive damages.
The complaint was dismissed by the District Court on summary judgment, which grant of summary judgment would ultimately be upheld by the Court of Appeals.
With respect to the claimed violation of EFTA, in that the wire transfer was done through the Fed wire system, and as Fed wire transfers are exempt from EFTA, it was confirmed that it is simply inapplicable.
With respect to the allegations of fraud in the execution of the wire transfers, which claims were brought under common law, it was found that those claims are displaced by and governed by Article 4A of the Uniform Commercial Code. Essentially, irrespective of what the law may have otherwise been with respect to those counts, they are now exclusively governed by Article 4A of the UCC. With this ruling, the Sixth Circuit joined a number of other Circuits in finding these state law claims to be preempted by the statute. In that Article 4A of the UCC provides strict limits as to the liability of the bank with respect to errors in the execution of a wire transfer, and precludes other damages, these claims failed.
With respect to the allegation that the bank's employees had not been sufficiently trained in the execution of wire transfers, the Sixth Circuit found that the Wrights had not made the required showing that the training was outside of industry norms. As to this point, it was noted that the teller who met with Mrs. Wright on October 9 had previously completed a wire transfer on behalf of Mr. Wright, which indicated that the teller had been properly trained, and a simple mistake had been made on October 9.
Wednesday, January 6, 2016
More on Liberty Rehabilitation v. Waide
In late December, I reported on the jury verdict in Liberty Rehabilitation v Waide, wherein a jury determined that the majority shareholder of a corporation had breached his fiduciary duties by using company assets for personal obligations, including (in violation of the Campaign-Finance Rules) financing his own re-election bid to the Kentucky General Assembly. HERE IS A LINK to that posting.
When I wrote that initial posting, I was unaware whether an appeal had been filed. I have since learned that (a) no appeal was filed and (b) the defendant Waide, undoubtedly in an effort to avoid having to satisfy the judgment, has filed for personal bankruptcy.
One question will now be whether a breach of fiduciary duty such as was here found to have taken place will constitute such a defalcation of fiduciary duties to preclude discharge in bankruptcy.
Monday, January 4, 2016
The Kentucky Uniform Voidable Transactions Act Is Now In Effect
The 2015 Kentucky General Assembly approved the Kentucky Uniform Voidable Transactions Act, and it is now in effect. HERE IS A LINK to the new statute.
This Uniform Act, itself updating the Uniform Fraudulent Transactions Act, brings Kentucky law into sync with the other states that enact this Act. Also, based upon the significant similarities between this Act and the predecessor Uniform Fraudulent Transfers Act, greater consistency will be achieved with the other states. In addition, in that the UVTA is meant to conform to modern bankruptcy law, Kentucky law and that federal law will now be more consistent.
Kentucky's now former statute on fraudulent transfers was written in 1855 and was itself based upon the Statute of 13 Elizabeth, a statute composed during the reign of Elizabeth I (i.e., the daughter of Henry VIII and Anne Boleyn). To say the least the statute is archaic. Further, it is significantly out of step with the fraudulent conveyance laws of most states and, likely of greater import, with the Bankruptcy Code. The only comprehensive review of this statute is an article written by Professor Doug Michael of the University of Kentucky College of Law. See Douglas C. Michael, The Past and Future of Kentucky's Fraudulent Transfer and Preference Laws, 86 Kentucky Law Journal 937 (1997-98). Therein he wrote:
Kentucky has a unique and antique collection of laws governing fraudulent transfers and preferences.
With this new statute in effect, Kentucky is no longer unique – in this case, that’s a good thing.