UFTA provides a defense to a fraudulent-transfer action for transferees who take in good faith and for value. Although the statute does not define “good faith,” most courts use a “knew or should have known” test. Thus, if the transferee knows of sufficient facts that would cause a reasonable person to inquire as to the debtor’s insolvency or fraudulent intent, the transferee does not act in good faith unless it conducted a diligent inquiry into the circumstances of the transfer that did not discover the fraud or insolvency. Alternatively, some courts hold, a transferee on inquiry notice can establish good faith by showing that a diligent inquiry would have been futile — thus, the futility exception.

The Statute
Section 170 of the DGCL vests the corporation’s board of directors with the exclusive power to declare dividends. However, that power is not without limit. With limited exception, a corporation may only issue a dividend out of its surplus. Likewise, a corporation may not purchase or redeem its own shares if its capital is impaired. “Surplus” is “[t]he excess, if any, at any given time of the net assets of the corporation over the amount … determined to be capital.” “Net assets means the amount by which total assets exceed total liabilities.”