The plaintiffs were required to show, inter alia, that they suffered an “injury in fact,” despite having received all they were due to date.⁹ The Court of Chancery, in Genworth Financial, Inc., held an injury in fact requires finding a “concrete injury,” but does not necessarily require a “tangible injury.”¹⁰ Indeed, the Court noted an “intangible injury” may be a concrete injury.¹¹ Further, where, as here, a statutory violation presents a “material risk of harm,” that risk will confer standing even where the risk would not otherwise confer standing in the absence of the statute.¹²

The Court of Chancery granted the defendants’ motion to dismiss in part and denied it in part, holding (i) any challenge to the $395 million in dividends Genworth Life paid from 2012 to 2014 was untimely; and (ii) the plaintiffs had standing to bring this lawsuit.¹³ The Court found the defendants’ intentional transfer of substantial assets to avoid an obligation to pay the plaintiffs equated to a “material risk of harm.”¹⁴ Indeed, the Court explained this is the exact type of harm the General Assembly sought to mitigate when enacting DUFTA.¹⁵

The Court of Chancery’s decision in Genworth Financial, Inc. makes clear DUFTA was designed to protect creditors, regardless of whether their claims were contingent or unmatured.¹⁶ Indeed, the Court noted “[c]reditors are not required to stand by helplessly until a distant maturity date arrives while his debtor is fraudulently depleted of all assets.”¹⁷

DUFTA does not protect creditors who have alleged a mere harmless or “technical” violation.¹⁸ However, based on Genworth Financial, Inc., DUFTA does provide a right of action to creditors “threatened” by fraudulent transfers, even if the fraudulent transfers have not yet had the full effect of dissipating debtor assets.¹⁹ Any decision to the contrary would contradict the plain language of DUFTA.²⁰

Key takeaways

• DUFTA seeks to discourage debtors from intentionally hindering a creditor’s right to collect. 
• Creditors with “contingent” or “unmatured” claims can sue to enforce their rights under the plain language of DUFTA.
• Even where a debtor has not yet failed to honor its commitments, creditors have standing to sue if they can allege a violation amounting to a “material risk of harm” (as opposed to a merely harmless or technical violation).
• Consistent with the intention of the General Assembly and the plain language of DUFTA, creditors should not suffer while their debtors intentionally move assets in a scheme to defraud them. 

1. See 2020 WL 507938 (Del. Ch. Jan. 31, 2020).
2. Id. at *7-8, *10; see also 6 Del. C. section 1304 (protecting creditors from fraudulent transfers).
3. See 6 Del. C. section 1301(a)(3).
4. Id. at section 1301(a)(4).
5. See Genworth Fin., Inc., 2020 WL 507938, at *6 (“Despite (or perhaps because of) the DUFTA’s clear language, the question presented here – whether a creditor with an unmatured and contingent claim has standing to bring a claim under the DUFTA when her contractual right to payment is not yet mature – has not been addressed by Delaware courts.”).
6. Id. at *1, *7 (claiming those in control of Genworth Life caused it to declare over $410 million in dividends and terminated contracts providing Genworth Life with financial support).
7. Id. at *1.
8. Id. at *3 (noting the complaint did not allege Genworth Life ever defaulted on any obligation to pay an insurance commission or payment to plaintiffs).
9. Id. at *6 (explaining plaintiffs were required to demonstrate they suffered an injury in fact, there was a causal connection between the injury and the conduct complaint of, and the injury would be redressed by a favorable decision).
10. Id. (quoting Ritchie CT Opps, LLC v. Huizenga Managers Fund, LLC, 2019 WL 2319284, at *9 (Del. Ch. May 30, 2019) (“While a ‘concrete’ injury does mean an ‘actual injury,’ it does not necessarily mean tangible.”).
11. See Genworth Fin., Inc., 2020 WL 507938, at *6 (noting judgment of the General Assembly plays an important role in determining whether an intangible harm constitutes an injury in fact in the context of a statutory claim because “it is well positioned to identify intangible harms that meet minimum standing requirements”). 
12. Id. at *7 (“While the General Assembly can influence the law of standing, Plaintiffs must always allege an actual, concrete injury.”).
13. Id. at *6.
14. Id. at *8.
15. Id. at *1, *9 (“I am satisfied our General Assembly intended to provide a right of action to those who are threatened by fraudulent transfers before the transfers have had the full effect of dissipating protected assets.”).
16. See, e.g., JPMorgan Chase Bank, N.A. v. Ballard, 213 A.3d 1211, 1226 (Del. Ch. 2019) (“DUFTA [is] designed to protect creditors of a corporation from distributions of corporate funds viewed as inappropriate because they undermine the ability of the corporation to repay its debts.”); In re Mobilactive Media, LLC, 2013 WL 297950, at *31 (Del. Ch. Jan. 25, 2013) (“[A creditor’s] unliquidated, contingent, disputed, unsecured right to payment in this case is nevertheless a claim for purposes of DUFTA.”).
17. See Genworth Fin., Inc., 2020 WL 507938, at *8.
18. Id. at *7 (citing Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1149-50 (2016)).
19. See 2020 WL 507938, at *1.
20. Id. at *8.