§3307 Defenses, Liability, and Protection of Trans­feree

Summary

Protects people who get property or a promise in good faith and who paid fair value. If someone received the asset in good faith and for fair value, the transfer generally cannot be undone against them or against anyone who later gets the asset from them. If the United States can undo a transfer in a lawsuit, it can win a money judgment for the asset’s value at the time of the transfer, but not more than the debt. That judgment can be entered against the first person who got the asset or the person who benefited, or against later recipients except good-faith buyers who paid value and those who received from them. The asset’s value is measured at the transfer time and can be adjusted for fairness. A good-faith recipient who paid value has a lien or the right to keep what they got up to the value they gave, can enforce any promise they took on, or can have the judgment reduced by that amount. A transfer is not undoable when it comes from ending a lease for debtor default under the lease and law, or from enforcing a security interest under UCC Article 9 (or similar state law). Transfers by insiders are also protected to the extent the insider gave new value after the transfer unless that new value is secured, or if the transfer was in the normal course of business, or if it was a good-faith effort to rehabilitate the debtor that covered current value and an earlier debt.