Third Circuit Rules That Transfer by Nondebtor Is Not Avoidable as Fraudulent Transfer Under Delaware UFTA

In Crystallex International Corp. v. Petróleos de Venezuela, S.A., 879 F.3d 79 (3d Cir. 2018), a divided U.S. Court of Appeals for the Third Circuit ruled that transfers by nondebtor subsidiary corporations to their ultimate parent corporation, which was alleged to be the Republic of Venezuela's alter ego, were not fraudulent transfers under the Delaware Uniform Fraudulent Transfer Act ("DUFTA"). The panel reversed a district court ruling declining to dismiss a cause of action to recover a judgment against Venezuela by avoiding transfers of funds out of the U.S. by entities allegedly controlled by the Venezuelan government. The Third Circuit ruled that the nondebtor transfers at issue could not be deemed fraudulent transfers under the language and structure of DUFTA.