One-and-a-Half Badges of Fraud

21 Pages Posted: 3 Aug 2014

Date Written: August 1, 2014


Lenders have long included savings clauses in loan documents as a way to minimize exposure to fraudulent conveyance at-tacks. This paper suggests that scope of operation of savings clauses is exceeding small. Those cases in which lenders find themselves exposed to fraudulent conveyance liability are only rarely ones in which a savings clause is of much use. Savings clauses are useful to guard against constructive fraudulent conveyance attacks, but only in environments in which actual intent fraudulent conveyances attacks are also possible and for these savings clauses do little good. Even when in environments in which they might protect a lender, uncertainties in how they operate may restrict their usefulness, especially in the context of guarantees.

Suggested Citation

Baird, Douglas G., One-and-a-Half Badges of Fraud (August 1, 2014). University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 693, Available at SSRN: or

Douglas G. Baird (Contact Author)

University of Chicago Law School ( email )

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Chicago, IL 60637
United States
773-702-9571 (Phone)
773-702-0730 (Fax)

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