(1) A debtor is insolvent if the sum of the debtor's debts is greater than all of the debtor's assets at a fair valuation.
(2) A debtor that is generally not paying their debts as they become due is presumed to be insolvent. The presumption imposes on the debtor the burden of proving that the nonexistence of insolvency is more probable than the existence of insolvency.
(3) A debtor that is insolvent as defined in 11 U.S.C. sec. 101 (32) of the federal bankruptcy code is insolvent.
(4) Assets under this section do not include property that has been transferred, concealed, or removed with intent to hinder, delay, or defraud creditors or that has been transferred in a manner making the transfer voidable under this article.
(5) Debts under this section do not include an obligation to the extent it is secured by a valid lien on property of the debtor not included as an asset.
Source: L. 91: Entire article added, p. 1684, § 1, effective July 1. L. 2025: (2) and (3) amended, (SB 25-133), ch. 57, p. 238, § 3, effective August 6.
Editor's note - Colorado legislative change: This section was numbered as section 2 in the uniform act. In subsection (3), the phrase "at a fair valuation" has been moved from immediately after "aggregate" to immediately after the first "assets".
ANNOTATION
The fair value balance sheet method for determining insolvency is essentially mandated for individuals. The Colorado Uniform Fraudulent Transfer Act method of determining insolvency mirrors the balance sheet test for insolvency under the federal bankruptcy code. The balance sheet test for insolvency requires that the court determine the fair value of the debtor's assets and the extent of its liabilities at the time of each contested transfer. In re Blair, 588 B.R. 605 (Bankr. D. Colo. 2018).
Subsection (2)'s presumption appears to be based only on a simple factual inquiry: At the time of the alleged fraudulent transfers, was the debtor paying its debts as they became due, or not? It is a factual question and not really the province for an expert analysis. No expert knowledge, skill, experience, training, or education seems needed to ascertain whether someone is paying their debts. In re Blair, 588 B.R. 605 (Bankr. D. Colo. 2018).