Source: http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201520160SB161
Timestamp: 2020-08-09 20:56:56
Document Index: 413801450

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Bill Text - SB-161 Uniform Fraudulent Transfer Act.
PDF2 PDF |Add To My Favorites | Version: 07/02/15 - Chaptered 06/23/15 - Enrolled 04/14/15 - Amended Senate 02/03/15 - Introduced
SB-161 Uniform Fraudulent Transfer Act.(2015-2016)
SB161:v96#DOCUMENT
An act to amend Sections 3439, 3439.01, 3439.02, 3439.04, 3439.05, 3439.06, 3439.07, 3439.08, 3439.09, 3446, and 3447 of, to amend the heading of Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of, to amend the heading of Chapter 3 (commencing with Section 3445) of Title 2 of Part 2 of Division 4 of, to amend the heading of Title 2 (commencing with Section 3439) of Part 2 of Division 4 of, to amend and renumber Sections 3439.11 and 3439.12 of, and to amend, renumber, and add Section 3439.10 of, the Civil Code, to amend Sections 5420, 7420, 15905.02, 15911.27, 17704.03, 17711.08, and 18640 of the Corporations Code, to amend Sections 283 and 9653 of the Probate Code, and to amend Section 2104 of the Public Utilities Code, relating to civil law.
SB 161, Vidak. Uniform Fraudulent Transfer Act.
The Uniform Fraudulent Transfer Act, based in part on the model Uniform Fraudulent Transfer Act, generally establishes the conditions under which a transfer made or obligation incurred by a debtor is fraudulent as to a creditor, and sets forth the remedies of a creditor with respect to a fraudulent transfer or obligation, including, but not limited to, voiding the transfer. The act defines terms for its purposes.
This bill would rename the act the Uniform Voidable Transactions Act and would revise the act to adopt certain provisions proposed by the 2014 Uniform Voidable Transactions Act, which is based upon the Uniform Fraudulent Transfer Act, both of which were promulgated by the Uniform Law Commission. This bill would specify the burden of proof in making and defending a claim for relief and the basis for determining the governing law for a claim for relief under the act. This bill would modify definitions applicable to the act, would remove a definition of insolvency relating to a partnership debtor, and would add new definitions, including, but not limited to, definitions of “record” and “sign.” This bill would replace the term “fraudulent” with the term “voidable,” as specified. This bill would limit the applicability of the modifications to the act proposed by this bill to a right of action that accrued, transfer made, or obligation incurred on or after the effective date of this bill.
This bill would revise cross-references to the act and would make conforming changes to related provisions.
The heading of Title 2 (commencing with Section 3439) of Part 2 of Division 4 of the Civil Code is amended to read:
TITLE 2. VOID AND VOIDABLE TRANSFERS AND UNDERTAKINGS
The heading of Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code is amended to read:
CHAPTER 1. Uniform Voidable Transactions Act
Section 3439 of the Civil Code is amended to read:
Section 3439.01 of the Civil Code is amended to read:
Section 3439.02 of the Civil Code is amended to read:
Section 3439.04 of the Civil Code is amended to read:
Section 3439.05 of the Civil Code is amended to read:
Section 3439.06 of the Civil Code is amended to read:
Section 3439.07 of the Civil Code is amended to read:
Section 3439.08 of the Civil Code is amended to read:
Section 3439.09 of the Civil Code is amended to read:
Section 3439.10 of the Civil Code is amended and renumbered to read:
Section 3439.10 is added to the Civil Code, to read:
Section 3439.11 of the Civil Code is amended and renumbered to read:
Section 3439.12 of the Civil Code is amended and renumbered to read:
The heading of Chapter 3 (commencing with Section 3445) of Title 2 of Part 2 of Division 4 of the Civil Code is amended to read:
CHAPTER 3. Undertaking in Voidable Transfer Action
Section 3446 of the Civil Code is amended to read:
(a) In an action by a creditor for relief against a transfer or obligation under Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 on the ground that the transfer or obligation is voidable as to the creditor, the transferee may give an undertaking as provided in this chapter.
(b) If an undertaking is given as provided in this chapter, the transferee may sell, encumber, transfer, convey, mortgage, pledge, or otherwise dispose of the property or obligation, or a part thereof, and the purchaser, encumbrancer, transferee, mortgagee, grantee, or pledgee of the property or obligation takes, owns, holds, and possesses the property or obligation unaffected by the action and any judgment that is rendered in the action.
Section 3447 of the Civil Code is amended to read:
The undertaking shall be conditioned that, if it is determined in the action that the transfer or obligation was voidable as to the creditor, the transferee will pay to the creditor the lesser of the following amounts:
(a) The value of the property or obligation as estimated in the undertaking.
(b) The amount determined in the action to be due and owing to the creditor by the person who transferred the property or incurred the obligation.
Section 5420 of the Corporations Code is amended to read:
(a) Any person who receives any distribution is liable to the corporation for the amount so received by such person with interest thereon at the legal rate on judgments until paid.
(b) Suit may be brought in the name of a corporation by a creditor, a director, the Attorney General, or, subject to meeting the requirements of Section 5710, a member. In any such action in addition to the remedy provided in subdivision (a), the court may award punitive damages for the benefit of the corporation against any director, officer, member or other person who with intent to defraud the corporation caused, received or aided and abetted in the making of any distribution.
(c) Any person sued under this section may implead all other persons liable under this section and may in the absence of fraud by a moving party compel contribution, either in that action or in an independent action against persons not joined in the action.
(d) This section shall not affect any liability which any person may have under the Uniform Voidable Transactions Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code).
Section 7420 of the Corporations Code is amended to read:
(b) Any person who with knowledge of facts indicating the impropriety thereof receives any distribution, including a payment in redemption of a membership, prohibited by this chapter is liable to the corporation for the benefit of the head organization, or of all of the creditors entitled to institute an action under subdivision (c), for the amount so received by the person with interest thereon at the legal rate on judgments until paid, but not exceeding the obligations of the corporation owed to the head organization at the time of the violation, or the liabilities of the corporation owed to nonconsenting creditors at the time of the violation, as the case may be.
(c) Suit may be brought in the name of the corporation to enforce the liability (1) to creditors arising under subdivision (b) for a violation of Section 7411 or 7412 against any or all persons liable by any one or more creditors of the corporation whose debts or claims arose prior to the time of the distribution and who have not consented thereto, whether or not they have reduced their claims to judgment, or (2) to the head organization arising under subdivision (b) for a violation of Section 7413 against any or all persons liable by any head organization which pursuant to the corporation’s articles is entitled to a distribution of assets upon dissolution.
(e) Nothing contained in this section affects any liability which any person may have under the Uniform Voidable Transactions Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code).
Section 15905.02 of the Corporations Code is amended to read:
15905.02.
(a) A partner’s obligation to contribute money or other property or other benefit to, or to perform services for, a limited partnership is not excused by the partner’s death, disability, or other inability to perform personally.
(b) If a partner does not make a promised nonmonetary contribution, the partner is obligated at the option of the limited partnership to contribute money equal to the value of that portion, as stated in the required information, of the stated contribution which has not been made.
(c) The obligation of a partner to make a contribution or return money or other property paid or distributed in violation of this chapter may be compromised only by consent of all partners. A creditor of a limited partnership which extends credit or otherwise acts in reliance on an obligation described in subdivision (a), without notice of any compromise under this subdivision, may enforce the original obligation.
(d) A partnership agreement may provide that the interest of a partner who fails to make any contribution or other payment that the partner is required to make will be subject to specific remedies for, or specific consequences of, the failure. A provision shall be enforceable in accordance with its terms unless the partner seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the agreement was made. The specific remedies or consequences may include loss of voting, approval, or other rights, loss of the partner’s ability to actively participate in the management and operations of the partnership, liquidated damages, or a reduction of the defaulting partner’s economic rights. The reduction of the defaulting partner’s economic rights may include one or more of the following provisions:
(1) Diluting, reducing or eliminating the defaulting partner’s proportionate interest in the partnership.
(2) Subordinating the defaulting partner’s interest in the partnership to that of nondefaulting partners.
(3) Permitting a forced sale of the partnership interest.
(4) Permitting the lending or contribution by other partners of the amount necessary to meet the defaulting partner’s commitment.
(5) Adjusting the interest rates or other rates of return, preferred, priority, or otherwise, with respect to contributions by or capital accounts of the other partners.
(6) Fixing the value of the defaulting partner’s interest in the partnership by appraisal, formula and redemption, or sale of the defaulting partner’s interest in the partnership at a percentage of that value.
(7) Nothing in this section shall be construed to affect the rights of third-party creditors of the partnership to seek equitable remedies nor any rights existing under the Uniform Voidable Transactions Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code).
Section 15911.27 of the Corporations Code is amended to read:
Section 17704.03 of the Corporations Code is amended to read:
Section 17711.08 of the Corporations Code is amended to read:
17711.08.
To the extent that the payment to dissenting members of the fair market value of their dissenting interests would require the dissenting members to return payment or a portion of the payment by reason of Section 17711.09 or the Uniform Voidable Transactions Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code), then that payment or portion thereof shall not be made and the dissenting members shall become creditors of the limited liability company for the amount not paid, together with interest thereon at the legal rate on judgments until the date of payment, but subordinate to all other creditors in any proceeding relating to the winding up and dissolution of the limited liability company, such debt to be payable when permissible.
Section 18640 of the Corporations Code is amended to read:
Nothing in this chapter limits application of the Uniform Voidable Transactions Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code).
Section 283 of the Probate Code is amended to read:
A disclaimer is not a voidable transfer by the beneficiary under the Uniform Voidable Transactions Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code).
Section 9653 of the Probate Code is amended to read:
(a) On application of a creditor of the decedent or the estate, the personal representative shall commence and prosecute an action for the recovery of real or personal property of the decedent for the benefit of creditors if the personal representative has insufficient assets to pay creditors and the decedent during lifetime did any of the following with respect to the property:
(1) Made a conveyance of the property, or any right or interest in the property, that is voidable as to creditors under the Uniform Voidable Transactions Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code).
(2) Made a gift of the property in view of impending death.
(3) Made a direction to transfer a vehicle, undocumented vessel, manufactured home, mobilehome, commercial coach, truck camper, or floating home to a designated beneficiary on the decedent’s death pursuant to Section 18102.2 of the Health and Safety Code, or Section 5910.5 or 9916.5 of the Vehicle Code, and the property has been transferred as directed.
(b) A creditor making application under this section shall pay such part of the costs and expenses of the suit and attorney’s fees, or give an undertaking to the personal representative for that purpose, as the personal representative and the creditor agree, or, absent an agreement, as the court or judge orders.
(c) The property recovered under this section shall be sold for the payment of debts in the same manner as if the decedent had died seized or possessed of the property. The proceeds of the sale shall be applied first to payment of the costs and expenses of suit, including attorney’s fees, and then to payment of the debts of the decedent in the same manner as other property in possession of the personal representative. After all the debts of the decedent have been paid, the remainder of the proceeds shall be paid to the person from whom the property was recovered. The property may be sold in its entirety or in such portion as necessary to pay the debts.
Section 2104 of the Public Utilities Code is amended to read:
(a) Except as provided by Sections 2100 and 2107.5, actions to recover penalties under this part shall be brought in the name of the people of the State of California, in the superior court in and for the county, or city and county, in which the cause or some part thereof arose, or in which the corporation complained of has its principal place of business, or in which the person complained of resides. The action shall be commenced and prosecuted to final judgment by the attorney or agent of the commission. All fines and penalties may be sued for and recovered. The commission may enjoin the sale of a public utility’s or common carrier’s assets to satisfy unpaid fines and penalties. The commission may use any of the remedies afforded to a creditor under the Uniform Voidable Transactions Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code). Respondents who fraudulently transfer assets to avoid paying commission-imposed fines or penalties are subject to prosecution under Sections 154, 531, and 531a of the Penal Code. In all of these actions, the procedure and rules of evidence shall be the same as in ordinary civil actions, except for prosecutions under the Penal Code or as otherwise herein provided. All fines and penalties recovered by the state in any action, together with the costs thereof, shall be paid into the State Treasury to the credit of the General Fund. Any action may be compromised or discontinued on application of the commission upon the terms the court approves and orders.