The Hunting Party's Over

Yesterday, New York State Attorney General Andrew Cuomo sent a letter to AIG. Cuomo is annoyed that at the same time AIG was asking to be bailed out by the federal government it was sending its executives to England to hunt partridges on the company jet (and how they got on the company jet ...). Cuomo tells AIG to recover the money, or he will.

His purported weapon is section 274 of the NY Debtor and Creditor law. Briefly, s. 274 says that a conveyance is a fraud on creditors if it (1) is made without fair consideration and (2) left the transferor without sufficient capital. There are similar provisions in most state laws, the Uniform Fraudulent Transfers Act and the federal bankruptcy code. For a good treatment see FLETCHER-CYC s. 7412 and 7405 and NY Jur 2d Creditors Rights s. 363.

Presumably, Cuomo is brandishing 274 instead of the Martin Act (NY BCL s. 352c and 353) because the Martin Act requires proof of fraud. Under 274, the determination is made without regard to actual intent. Even with that lowered threshold, Business Law Prof calls it "a stretch."