Also known as fraudulent transfer. A transfer of a debtor's property made within two years before the filing of the bankruptcy petition (or other time limit set by state law) for which the debtor received little or no consideration while the debtor was (or was rendered) insolvent. Fraudulent conveyances also include transfers made with actual intent to hinder, delay, or defraud creditors. In this context, fraudulent does not refer to a criminal fraud, but rather means only that the transfer has placed the assets out of the reach of creditors. Fraudulent conveyances may be reversed by the bankruptcy court. This is a major concern of lenders who do not want payments from the borrower or a guarantor to be rescinded.

In addition to the Bankruptcy Code's fraudulent conveyance provision, each state also has a fraudulent conveyance law which applies both inside and outside of bankruptcy.

For further information, see Practice Notes, Fraudulent Conveyances in Bankruptcy: Overview and Fraudulent Conveyances: Issues and Strategies for Lenders and Private Equity Sponsors.