Opinion ID: 2067865
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Heading: INNK's Status as an Existing Creditor.

Text: Defendants urge that many of the challenged transfers occurred prior to the time that INNK was a creditor of the transferors. This circumstance, they contend, should preclude INNK's efforts to void the transfers. This argument is premised on the theory that, although the transfers were made without the transferors receiving valuable consideration, they were not intended to defraud any creditor of Raymond or Evelyn. Our cases recognize that, in challenging the transfer of a debtor's assets, those creditors whose claims arose after the transfer face a much greater burden than those creditors existing at the time the challenged transfers were made. As to existing creditors, any transfer of property, by an insolvent, not made on a consideration deemed valuable in law is prima facie void. Benson v. Richardson, 537 N.W.2d 748, 756 (Iowa 1995); Knabe v. Kirchner, 228 Iowa 1156, 1166, 293 N.W. 433, 438 (1940); Grimes Sav. Bank v. McHarg, 224 Iowa 644, 646-47, 276 N.W. 781, 783-84 (1937). It is not necessary in such instances to establish an actual fraudulent intent. First Nat'l Bank v. Frescoln Farms, Ltd., 430 N.W.2d 432, 436 (Iowa 1988). As to subsequent creditors, a transfer of the debtor's assets may not be successfully challenged unless it appears that the conveyance was executed with an actual intent on the grantor's part to defraud subsequent creditors. Production Credit Ass'n v. Shirley, 485 N.W.2d 469, 472-73 (Iowa 1992); Harvey v. Phillips, 193 Iowa 231, 235, 186 N.W. 910, 912 (1922). Applying these principles to the facts of this case leads to the conclusion that INNK enjoyed the status of an existing creditor with respect to all of the asset transfers set aside by the district court. That status arose at the time of Kenkels' stock subscription agreement made at the inception of the incorporation process. All of the voided transfers occurred after that time. Because this case was tried in equity, our review is de novo. Iowa R.App.P. 4. Although we give weight to the findings of the district court, we are not bound by them. Iowa R.App.P. 14(f)(7). In reviewing the evidence, we are in complete agreement with the district court's findings concerning the absence of legal consideration. Those findings are sufficient to support the setting aside of the challenged transfers. In order to sustain the personal judgments entered against the two corporations, it was necessary to show that they were controlled by Raymond and Evelyn. Benson, 537 N.W.2d at 761-62. The district court found that they were, and on our review of the record, we agree with those findings. In order to sustain the personal judgment entered against defendant Thomas Kenkel, it was necessary to show that he actively participated in the efforts to impede the collection of INNK's claims. Shirley, 485 N.W.2d at 475. The district court found that Thomas was aware of the fact that the transferors intended to place these assets beyond INNK's reach. Once again we agree with the district court's finding.