The Debtor Deeded the Property to a Family LLC. A Michigan Court Just Undid It.

You won your case. You have a judgment in hand. Then you go to collect and discover the debtor no longer seems to own anything. The building is now titled to a limited liability company controlled by his relatives. The equipment was sold to a cousin. On paper, the person who owes you money looks broke.

For a creditor, that is a familiar and frustrating moment. It is also one that Michigan law anticipates. A recent published decision from the Michigan Court of Appeals, Schubiner v Can IV Packard Square, LLC, decided July 17, 2026, is a useful reminder that a transfer made while a debtor is insolvent, without the debtor receiving reasonably equivalent value, can be unwound even without proof that the debtor intended to defraud the creditor.

A note on scope: Our firm represents creditors. The discussion below is written from the creditor side, for businesses and lenders trying to collect what they are owed. It is not advice for debtors seeking to shield assets, and the same statute that helps a creditor can create real exposure for a debtor who transfers property the wrong way.

What happened in the Schubiner case

The dispute grew out of a roughly $54 million construction loan. When the project failed, the lender foreclosed and later obtained a judgment of about $14 million against the individual guarantor on his personal guaranty. That guarantor is the debtor in the collection fight that followed.

While the creditor was trying to collect, the debtor transferred two Birmingham properties back and forth as part of a refinancing. The properties were held by an LLC, 305 Associates, that was owned by three irrevocable trusts whose beneficiaries included the debtor, his mother, his daughter, his brothers, and his nephews, and of which the debtor was a member, resident agent, and manager. In January 2020, the debtor deeded the properties into his own name to refinance them, then deeded them back to the LLC four days later. He testified that the LLC paid him nothing for the transfer back, and he acknowledged that one reason the LLC was created was to keep assets away from creditors, though there were no creditors at the time it was formed.

The creditor asked the trial court to void the transfer as a voidable transaction. After several rounds of appeal, the trial court found that the debtor had made a fraudulent transfer and voided the deed, and the Court of Appeals affirmed. The takeaway is not that every transfer to a family entity is improper. It is that a transfer for which the debtor receives no reasonably equivalent value, made when the creditor’s claim already exists and the debtor is insolvent, is exactly what the constructive-fraud statute is designed to reach.

Michigan’s Uniform Voidable Transactions Act

The relevant law is the Uniform Voidable Transactions Act, MCL 566.31 and following. Michigan adopted it in place of the older Uniform Fraudulent Transfer Act, and courts still sometimes refer to the older name. The act was, as the Court of Appeals put it, designed to prevent debtors from transferring their property in bad faith before creditors can reach it. It gives a creditor two distinct routes to challenge a transfer, and they are worth understanding separately because they carry different proof burdens.

Route one: actual intent to hinder, delay, or defraud

Under MCL 566.34(1)(a), a transfer is voidable if the debtor made it with actual intent to hinder, delay, or defraud a creditor. This route reaches transfers whether the creditor’s claim arose before or after the transfer. Because direct proof of intent is rare, the statute lists factors, often called the badges of fraud, that a court may weigh. Under MCL 566.34(2) those factors include whether:

• the transfer was to an insider, such as a relative or an entity the debtor controls;
• the debtor kept possession or control of the property after the transfer;
• the transfer was concealed rather than disclosed;
• the debtor had been sued or threatened with suit before the transfer;
• the transfer was of substantially all of the debtor’s assets;
• the debtor absconded;
• the debtor removed or concealed assets;
• the debtor received value reasonably equivalent to what was transferred;
• the debtor was insolvent or became insolvent shortly after the transfer;
• the transfer occurred shortly before or shortly after a substantial debt was incurred; and
• the debtor transferred the essential assets of a business to a lienor who then transferred them to an insider.

No single factor decides the question. Courts look at how many are present and how strongly. But the Schubiner court did not rest its decision on actual intent at all. It affirmed under the constructive-fraud route described below, where intent is beside the point.

Route two: constructive fraud, where intent does not matter

The second route, and the one the court relied on, does not require proving intent at all. Under MCL 566.35(1), a transfer is voidable as to a creditor whose claim arose before the transfer if the debtor did not receive reasonably equivalent value in exchange and the debtor was insolvent at the time or became insolvent as a result. A creditor pursuing this route must prove three elements by a preponderance of the evidence: that the claim predated the transfer, that the debtor was or became insolvent, and that the debtor did not receive reasonably equivalent value.

Insolvency has a specific meaning here. Under MCL 566.32, a debtor is insolvent when, at a fair valuation, total debts exceed total assets. In Schubiner that test was easy to satisfy, because the roughly $14 million judgment by itself swamped the debtor’s net worth, which the trial court had previously found to be about $4.5 million. The court also concluded the debtor received nothing of equivalent value for the transaction, since he took on loan liability while the family LLC had its own obligation erased and gave him nothing in return. That combination, a claim that predated the transfer, insolvency, and no reasonably equivalent value, is the heart of a constructive-fraud claim.

What a creditor can actually get

Winning a voidable-transaction claim is not just a moral victory. MCL 566.37 gives the court a menu of remedies, and a creditor can seek more than one. They include:

• avoidance of the transfer to the extent needed to satisfy the creditor’s claim, which is what happened in Schubiner when the court voided the deed;
• attachment or another provisional remedy against the transferred asset or other property of the transferee;
• an injunction stopping the debtor or the transferee from further disposing of the asset or other property;
• appointment of a receiver to take charge of the transferred asset; and
• once the creditor holds a judgment, an order permitting execution, or levy, on the transferred asset or its proceeds.

In practice, avoidance plus the ability to then execute against the recovered asset is the outcome most creditors are after. The provisional remedies matter too, because they can freeze an asset in place while the case is litigated, before the debtor can move it again.

Timing is not unlimited

A voidable-transaction claim does not stay available forever. For the principal claims discussed above, MCL 566.39 generally incorporates the six-year period in MCL 600.5813 and the fraudulent-concealment rule in MCL 600.5855, although other claims under the act and certain qualified dispositions are subject to different deadlines. Because the exact deadline can turn on the type of claim and, in concealment situations, on when the transfer reasonably could have been discovered, the practical point for a creditor is simple: do not sit on a suspicious transfer. Investigate and, if warranted, act, because delay can cost you the remedy entirely.

Practical steps for creditors

If you suspect a debtor is moving assets out of reach, a few disciplined steps matter:

• Document the timeline. When did your claim arise, and when did the transfer happen? A claim that predates the transfer is central to the constructive-fraud route.
• Identify the transferee. Transfers to relatives, family trusts, and entities the debtor controls are insider transfers and draw closer scrutiny.
• Ask what the debtor got in return. A transfer for a nominal sum, or for nothing, is a strong signal. Reasonably equivalent value is the pivotal question.
• Assess solvency. Gather what you can about the debtor’s debts and assets at the time of the transfer, including any judgments already entered.
• Move promptly and consider provisional relief. An injunction or receiver can prevent a second round of asset shuffling while the claim is decided.
• Preserve evidence. Records showing the debtor’s finances and the exact terms of the transfer are often decisive, so identify and preserve them early.

Frequently asked questions

Can a transfer to a family member or family LLC really be undone?

Yes, it can, but not automatically. The transfer has to meet the statute’s requirements, either actual intent to hinder or defraud a creditor under MCL 566.34, or the constructive-fraud test under MCL 566.35. Transfers to insiders, including relatives and entities the debtor controls, receive closer scrutiny, but the creditor still has to prove the elements.

Do I have to prove the debtor intended to cheat me?

Not necessarily. That is the significance of the constructive-fraud route. If your claim predated the transfer, the debtor was insolvent, and the debtor did not receive reasonably equivalent value, the transfer can be voided regardless of intent. Intent matters for the separate route under MCL 566.34.

The debtor says it was just a refinancing in the ordinary course. Does that defeat the claim?

It can be a defense, but it is not a magic phrase. In Schubiner the debtor argued the transfers were routine refinancing steps, yet the courts still found a voidable transfer because he ended up carrying the debt while the family entity received the benefit and gave nothing in return. What matters is the substance of who paid what and who received value, not the label.

How long do I have to bring this kind of claim?

There are deadlines, and missing them can extinguish the claim. Under MCL 566.39 the timing is tied to periods in the Revised Judicature Act, and the exact deadline depends on the type of claim and the facts, including when a concealed transfer reasonably could have been discovered. Because the analysis is fact-specific, it is worth reviewing timing early rather than assuming you have years to act.

Related reading: what to do when a customer files for bankruptcy and living trusts and creditor exposure at death, plus the firm’s creditor representation and commercial collections practice.

Please note: This article is provided for general educational and informational purposes only and does not constitute legal advice. Reading it does not create an attorney-client relationship between you and the Law Offices of Maynard F. Newman, P.L.L.C. Schubiner v Can IV Packard Square, LLC is a published Court of Appeals opinion that remains subject to revision until final publication, and every collection situation turns on its own facts. You should consult a qualified attorney about your specific circumstances. This content may also be considered attorney advertising.

Primary sources: Schubiner v Can IV Packard Square, LLC, Mich Ct App, July 17, 2026 (Docket Nos. 371134 and 377133); and Michigan’s Uniform Voidable Transactions Act, MCL 566.32 (insolvency), 566.34 (actual intent and badges of fraud), 566.35 (constructive fraud), 566.37 (remedies), and 566.39 (time to bring a claim).