Bill Text: CA SB161 | 2015-2016 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Uniform Fraudulent Transfer Act.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2015-07-02 - Chaptered by Secretary of State. Chapter 44, Statutes of 2015. [SB161 Detail]
Download: California-2015-SB161-Introduced.html
Bill Title: Uniform Fraudulent Transfer Act.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2015-07-02 - Chaptered by Secretary of State. Chapter 44, Statutes of 2015. [SB161 Detail]
Download: California-2015-SB161-Introduced.html
BILL NUMBER: SB 161 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Vidak
FEBRUARY 3, 2015
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 Section 3439.12 of,
and to amend, renumber, and add Sections 3439.10 and 3439.11 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.
LEGISLATIVE COUNSEL'S DIGEST
SB 161, as introduced, 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
provide that each "protected series" of a "series organization," as
those terms are defined, is treated as a person for purposes of the
act. 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.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. 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. FRAUDULENT INSTRUMENTS AND
VOID AND VOIDABLE TRANSFERS AND UNDERTAKINGS
SEC. 2. 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 FRAUDULENT TRANSFER
VOIDABLE TRANSACTIONS ACT
SEC. 3. Section 3439 of the Civil Code is amended to read:
3439. This chapter may be cited as the Uniform
Fraudulent Transfer Voidable Transactions Act.
SEC. 4. Section 3439.01 of the Civil Code is amended to read:
3439.01. As used in this chapter the following definitions are
applicable:
(a) "Asset" means property of a debtor, but the term does not
include, include the following:
(1) Property to the extent it is encumbered by a valid lien.
(2) Property to the extent it is generally exempt under
nonbankruptcy law.
(3) An interest in property held in tenancy by the entireties to
the extent it is not subject to process by a creditor holding a claim
against only one tenant.
(b) "Claim" "Claim," except as used in
"claim for relief," means a right to payment, whether or not
the right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal,
equitable, secured, or unsecured.
(c) "Creditor" means a person who that
has a claim, and includes an assignee of a general assignment
for the benefit of creditors, as defined in Section 493.010 of the
Code of Civil Procedure, of a debtor.
(d) "Debt" means liability on a claim.
(e) "Debtor" means a person who that
is liable on a claim.
(f) "Electronic" means relating to technology having electrical,
digital, magnetic, wireless, optical, electromagnetic, or similar
capabilities.
(f)
(g) "Lien" means a charge against or an interest in
property to secure payment of a debt or performance of an obligation,
and includes a security interest created by agreement, a judicial
lien obtained by legal or equitable process or proceedings, a
common-law lien, or a statutory lien.
(h) "Organization" means a person other than an individual.
(g)
(i) "Person" means an individual, partnership,
corporation, limited liability company, association,
organization, government or governmental subdivision ,
instrumentality or agency, business trust, estate, trust,
or any business or nonprofit entity, or
other legal or commercial entity.
(h)
(j) "Property" means anything that may be the subject
of ownership.
(k) "Record" means information that is inscribed on a tangible
medium or that is stored in an electronic or other medium and is
retrievable in perceivable form.
(l) "Sign" means, with present intent to authenticate or adopt a
record, to either (1) execute or adopt a tangible symbol, or (2)
attach to or logically associate with the record an electronic
symbol, sound, or process.
(i)
(m) "Transfer" means every mode, direct or indirect,
absolute or conditional, voluntary or involuntary, of disposing of or
parting with an asset or an interest in an asset, and includes
payment of money, release, lease, license, and creation of
a lien or other encumbrance.
(j)
(n) "Valid lien" means a lien that is effective against
the holder of a judicial lien subsequently obtained by legal or
equitable process or proceedings.
SEC. 5. Section 3439.02 of the Civil Code is amended to read:
3439.02. (a) A debtor is insolvent if, at a fair
valuations, valuation, the sum of the
debtor's debts is greater than all the sum
of the debtor's assets.
(b) A debtor which is a partnership is insolvent if, at fair
valuations, the sum of the partnership's debts is greater than the
aggregate of all of the partnership's assets and the sum of the
excess of the value of each general partner's nonpartnership assets
over the partner's nonpartnership debts.
(c)
(b) A debtor who that is
generally not paying his or her the debtor's
debts as they become due other than as a result of a bona
fide dispute is presumed to be insolvent. The presumption
imposes on the party against which the presumption is directed the
burden of proving that the nonexistence of insolvency is
more probable than its existence.
(d)
(c) Assets under this section do not include property
that has been transferred, concealed, or removed with intent to
hinder, delay, or defraud creditors or that has been transferred in a
manner making the transfer voidable under this chapter.
(e)
(d) Debts under this section do not include an
obligation to the extent it is secured by a valid lien on property of
the debtor not included as an asset.
SEC. 6. Section 3439.04 of the Civil Code is amended to read:
3439.04. (a) A transfer made or obligation incurred by a debtor
is fraudulent voidable as to a
creditor, whether the creditor's claim arose before or after the
transfer was made or the obligation was incurred, if the debtor made
the transfer or incurred the obligation as follows:
(1) With actual intent to hinder, delay, or defraud any creditor
of the debtor.
(2) Without receiving a reasonably equivalent value in exchange
for the transfer or obligation, and the debtor either:
(A) Was engaged or was about to engage in a business or a
transaction for which the remaining assets of the debtor were
unreasonably small in relation to the business or transaction.
(B) Intended to incur, or believed or reasonably should have
believed that he or she the debtor
would incur, debts beyond his or her the
debtor's ability to pay as they became due.
(b) In determining actual intent under paragraph (1) of
subdivision (a), consideration may be given, among other factors, to
any or all of the following:
(1) Whether the transfer or obligation was to an insider.
(2) Whether the debtor retained possession or control of the
property transferred after the transfer.
(3) Whether the transfer or obligation was disclosed or concealed.
(4) Whether before the transfer was made or obligation was
incurred, the debtor had been sued or threatened with suit.
(5) Whether the transfer was of substantially all the debtor's
assets.
(6) Whether the debtor absconded.
(7) Whether the debtor removed or concealed assets.
(8) Whether the value of the consideration received by the debtor
was reasonably equivalent to the value of the asset transferred or
the amount of the obligation incurred.
(9) Whether the debtor was insolvent or became insolvent shortly
after the transfer was made or the obligation was incurred.
(10) Whether the transfer occurred shortly before or shortly after
a substantial debt was incurred.
(11) Whether the debtor transferred the essential assets of the
business to a lienholder who lienor that
transferred the assets to an insider of the debtor.
(c) The amendment to this section made during the 2004 portion of
the 2003-04 Regular Session of the Legislature, set forth in
subdivision (b), does not constitute a change in, but is declaratory
of, existing law, and is not intended to affect any judicial
decisions that have interpreted this chapter.
(c) A creditor making a claim for relief under subdivision (a) has
the burden of proving the elements of the claim for relief by a
preponderance of the evidence.
SEC. 7. Section 3439.05 of the Civil Code is amended to read:
3439.05. (a) A transfer made or obligation
incurred by a debtor is fraudulent voidable
as to a creditor whose claim arose before the transfer was made
or the obligation was incurred if the debtor made the transfer or
incurred the obligation without receiving a reasonably equivalent
value in exchange for the transfer or obligation and the debtor was
insolvent at that time or the debtor became insolvent as a result of
the transfer or obligation.
(b) A creditor making a claim for relief under subdivision (a) has
the burden of proving the elements of the claim for relief by a
preponderance of the evidence.
SEC. 8. Section 3439.06 of the Civil Code is amended to read:
3439.06. For the purposes of this chapter:
(a) A transfer is made:
(1) With respect to an asset that is real property other than a
fixture, but including the interest of a seller or purchaser under a
contract for the sale of the asset, when the transfer is so far
perfected that a good faith purchaser of the asset from the debtor
against whom which applicable law
permits the transfer to be perfected cannot acquire an interest in
the asset that is superior to the interest of the transferee; and
(2) With respect to an asset that is not real property or that is
a fixture, when the transfer is so far perfected that a creditor on a
simple contract cannot acquire a judicial lien otherwise than under
this chapter that is superior to the interest of the transferee.
(b) If applicable law permits the transfer to be perfected as
provided in subdivision (a) and the transfer is not so perfected
before the commencement of an action for relief under this chapter,
the transfer is deemed made immediately before the commencement of
the action.
(c) If applicable law does not permit the transfer to be perfected
as provided in subdivision (a), the transfer is made when it becomes
effective between the debtor and the transferee.
(d) A transfer is not made until the debtor has acquired rights in
the asset transferred.
(e) An obligation is incurred:
(1) If oral, when it becomes effective between the parties; or
(2) If evidenced by a writing, record,
when the writing executed record signed
by the obligor is delivered to or for the benefit of the
obligee.
SEC. 9. Section 3439.07 of the Civil Code is amended to read:
3439.07. (a) In an action for relief against a transfer or
obligation under this chapter, a creditor, subject to the limitations
in Section 3439.08, may obtain:
(1) Avoidance of the transfer or obligation to the extent
necessary to satisfy the creditor's claim.
(2) An attachment or other provisional remedy against the asset
transferred or its proceeds other property of
the transferee in accordance with the procedures described in
Title 6.5 (commencing with Section 481.010) of Part 2 of the Code of
Civil Procedure. Procedure, or as may
otherwise be available under applicable law.
(3) Subject to applicable principles of equity and in accordance
with applicable rules of civil procedure, the following:
(A) An injunction against further disposition by the debtor or a
transferee, or both, of the asset transferred or its
proceeds. other property of the transferee.
(B) Appointment of a receiver to take charge of the asset
transferred or its proceeds. other property
of the transferee.
(C) Any other relief the circumstances may require.
(b) If a creditor has commenced an action on a claim against the
debtor, the creditor may attach the asset transferred or its
proceeds other property of the transferee if the
remedy of attachment is available in the action under applicable law
and the property is subject to attachment in the hands of the
transferee under applicable law.
(c) If a creditor has obtained a judgment on a claim against the
debtor, the creditor may levy execution on the asset transferred or
its proceeds.
(d) A creditor who is an assignee of a general assignment for the
benefit of creditors, as defined in Section 493.010 of the Code of
Civil Procedure, may exercise any and all of the rights and remedies
specified in this section if they are available to any one or more
creditors of the assignor who are beneficiaries of the assignment,
and, in that event (1) only to the extent the rights or remedies are
so available and (2) only for the benefit of those creditors whose
rights are asserted by the assignee.
SEC. 10. Section 3439.08 of the Civil Code is amended to read:
3439.08. (a) A transfer or an obligation is
not voidable under paragraph (1) of subdivision (a) of Section
3439.04, against a person who that took
in good faith and for a reasonably equivalent value given the
debtor or against any subsequent transferee or obligee.
(b) Except as otherwise provided in this section, to
To the extent a transfer is
voidable avoidable in an action by a creditor
under paragraph (1) of subdivision (a) of Section 3439.07,
the creditor may recover judgment for the value of the asset
transferred, as adjusted under subdivision (c), or the amount
necessary to satisfy the creditor's claim, whichever is less. The
judgment may be entered against the following: the
following rules apply:
(1) Except as otherwise provided in this section, the creditor may
recover judgment for the value of the asset transferred, as adjusted
under subdivision (c), or the amount necessary to satisfy the
creditor's claim, whichever is less. The judgment may be entered
against the following:
(1)
(A) The first transferee of the asset or the person for
whose benefit the transfer was made.
(2) Any subsequent transferee other than a good faith transferee
who took for value or from any subsequent transferee.
(B) An immediate or mediate transferee of the first transferee,
other than either of the following:
(i) A good-faith transferee that took for value.
(ii) An immediate or mediate good-faith transferee of a person
described in clause (i).
(2) Recovery pursuant to paragraph (1) of subdivision (a) or
subdivision (b) of Section 3439.07 of or from the asset transferred
or its proceeds, by levy or otherwise, is available only against a
person described in subparagraph (A) or (B) of paragraph (1).
(c) If the judgment under subdivision (b) is based upon the value
of the asset transferred, the judgment shall be for an amount equal
to the value of the asset at the time of the transfer, subject to
adjustment as the equities may require.
(d) Notwithstanding voidability of a transfer or an obligation
under this chapter, a good faith transferee or obligee is entitled,
to the extent of the value given the debtor for the transfer or
obligation, to the following:
(1) A lien on or a right to retain any an
interest in the asset transferred.
(2) Enforcement of any an obligation
incurred.
(3) A reduction in the amount of the liability on the judgment.
(e) A transfer is not voidable under paragraph (2) of subdivision
(a) of Section 3439.04 or Section 3439.05 if the transfer results
from either of the following:
(1) Termination of a lease upon default by the debtor when the
termination is pursuant to the lease and applicable law.
(2) Enforcement of a lien in a noncollusive manner and in
compliance with applicable law, including Division 9 (commencing with
Section 9101) of the Commercial Code, other than a retention of
collateral under Sections 9620 and 9621 of the Commercial Code and
other than a voluntary transfer of the collateral by the debtor to
the lienor in satisfaction of all or part of the secured obligation.
(f) The following rules determine the burden of proving matters
referred to in this section:
(1) A party that seeks to invoke subdivision (a), (d), or (e) has
the burden of proving the applicability of that subdivision.
(2) Except as otherwise provided in paragraph (3) or (4), the
creditor has the burden of proving each applicable element of
subdivision (b) or (c).
(3) The transferee has the burden of proving the applicability to
the transferee of subparagraph (B) of paragraph (1) of subdivision
(b).
(4) A party that seeks adjustment under subdivision (c) has the
burden of proving the adjustment.
(g) The standard of proof required to establish matters referred
to in this section is preponderance of the evidence.
SEC. 11. Section 3439.09 of the Civil Code is amended to read:
3439.09. A cause of action with respect to a fraudulent
transfer or obligation under this chapter is extinguished
unless action is brought pursuant to subdivision (a) of Section
3439.07 or levy made as provided in subdivision (b) or (c) of Section
3439.07:
(a) Under paragraph (1) of subdivision (a) of Section 3439.04,
within not later than four years after
the transfer was made or the obligation was incurred or, if later,
within not later than one year after
the transfer or obligation was or could reasonably have been
discovered by the claimant.
(b) Under paragraph (2) of subdivision (a) of Section 3439.04 or
Section 3439.05, within not later than
four years after the transfer was made or the obligation was
incurred.
(c) Notwithstanding any other provision of law, a cause of action
under this chapter with respect to a fraudulent
transfer or obligation is extinguished if no action is
brought or levy made within seven years after the transfer was made
or the obligation was incurred.
SEC. 12. Section 3439.10 of the Civil Code is amended and
renumbered to read:
3439.10. 3439.12. Unless displaced
by the provisions of this chapter, the principles of law and equity,
including the law merchant and the law relating to principal and
agent, estoppel, laches, fraud, misrepresentation, duress, coercion,
mistake, insolvency, or other validating or invalidating cause,
supplement its provisions.
SEC. 13. Section 3439.10 is added to the Civil Code, to read:
3439.10. (a) In this section, the following rules determine a
debtor's location:
(1) A debtor who is an individual is located at the individual's
principal residence.
(2) A debtor that is an organization and has only one place of
business is located at its place of business.
(3) A debtor that is an organization and has more than one place
of business is located at its chief executive office.
(b) A claim in the nature of a claim under this chapter is
governed by the local law of the jurisdiction in which the debtor is
located when the transfer is made or the obligation is incurred.
SEC. 14. Section 3439.11 of the Civil Code is amended and
renumbered to read:
3439.11. 3439.13. This chapter
shall be applied and construed to effectuate its general purpose to
make uniform the law with respect to the subject of this chapter
among states enacting it.
SEC. 15. Section 3439.11 is added to the Civil Code, to read:
3439.11. (a) For purposes of this section, the following
definitions apply:
(1) "Protected series" means an arrangement, however denominated,
created by a series organization that, pursuant to the law under
which the series organization is organized, has the characteristics
set forth in paragraph (2).
(2) "Series organization" means an organization that, pursuant to
the law under which it is organized, has the following
characteristics:
(A) The organic record of the organization provides for creation
by the organization of one or more protected series, however
denominated, with respect to specified property of the organization,
and for records to be maintained for each protected series that
identify the property of or associated with the protected series.
(B) Debt incurred or existing with respect to the activities of,
or property of, or associated with, a particular protected series is
enforceable against the property of or associated with the protected
series only, and not against the property of or associated with the
organization or other protected series of the organization.
(C) Debt incurred or existing with respect to the activities or
property of the organization is enforceable against the property of
the organization only, and not against the property of or associated
with a protected series of the organization.
(b) A series organization and each protected series of the
organization is a separate person for purposes of this chapter, even
if for other purposes a protected series is not a person separate
from the organization or other protected series of the organization.
SEC. 16. Section 3439.12 of the Civil Code is amended and
renumbered to read:
3439.12. 3439.14. (a) The
changes to this chapter made by the act adding this subdivision apply
only to a right of action that accrued, transfer made, or obligation
incurred, on or after the effective date of that act.
(b) This chapter, and the other changes in
the law made by Chapter 383 of the Statutes of 1986, apply only to
transfers made or obligations incurred before the effective date
of the act that added subdivision (a) and on or after January
1, 1987; and, as 1987. As to transfers
made or obligations incurred prior to that date,
January 1, 1987, the law in effect at the time the
transfer was made or the obligation was incurred shall apply.
The provisions of this chapter, insofar as they are
substantially the same as the provisions of Chapter 1 (commencing
with Section 3439) of Title 2 of Part 2 of Division 4, which was
repealed by Chapter 383 of the Statutes of 1986, shall be construed
as restatements and continuations, and not as new enactments.
(c) Section 3439.06 shall determine the date that a transfer was
made or obligation incurred.
(d) The provisions of this chapter, insofar as they are
substantially the same as the provisions of this chapter in effect on
the effective date as the act adding subdivision (a), shall be
construed as restatements and continuations, and not as new
enactments.
SEC. 17. 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 FRAUDULENT
VOIDABLE TRANSFER ACTION
SEC. 18. Section 3446 of the Civil Code is amended to read:
3446. (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 fraudulent 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.
SEC. 19. Section 3447 of the Civil Code is amended to read:
3447. The undertaking shall be conditioned that, if it is
determined in the action that the transfer or obligation was
fraudulent 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.
SEC. 20. Section 5420 of the Corporations Code is amended to read:
5420. (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
such a moving party compel
contribution, either in that action or in an independent action
against persons not joined in the action.
(d) Nothing contained in this This
section affects shall not affect any
liability which any person may have under Sections 3439 to
3439.12, inclusive, of the Civil Code. the Uniform
Voidable Transactions Act (Chapter 1 (commencing with Section 3439)
of Title 2 of Part 2 of Division 4 of the Civil Code).
SEC. 21. Section 7420 of the Corporations Code is amended to read:
7420. (a) 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 amount so received by the person with
interest thereon at the legal rate on judgments until paid.
(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.
(d) Any person sued under subdivision (b) may implead all other
persons liable under subdivision (b) and may in the absence of fraud
by the moving party compel contribution, either in that action or in
an independent action against persons not joined in that action.
(e) Nothing contained in this section affects any liability which
any person may have under Sections 3439 to 3439.12,
inclusive, of the Civil Code. the Uniform Voidable
Transactions Act (Chapter 1 (commencing with Section 3439) of Title 2
of Part 2 of Division 4 of the Civil Code).
SEC. 22. 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
Fraudulent Transfer Voidable Transactions Act
(Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of
Division 4 of the Civil Code).
SEC. 23. Section 15911.27 of the Corporations Code is amended to
read:
15911.27. To the extent that the payment to dissenting limited
partners of the fair market value of their dissenting interests would
require the dissenting limited partners to return such payment or a
portion thereof by reason of Section 15905.09 or the Uniform
Fraudulent Transfer 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 limited partners shall become
creditors of the limited partnership 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
partnership, such debt to be payable when permissible.
SEC. 24. Section 17704.03 of the Corporations Code is amended to
read:
17704.03. (a) A person's obligation to make a contribution to a
limited liability company is not excused by the person's death,
disability, or other inability to perform personally. If a person
does not make a required contribution, the person or the person's
estate is obligated to contribute money equal to the value of the
part of the contribution that has not been made, at the option of the
limited liability company.
(b) The obligation of a member to make a contribution to a limited
liability company may be compromised only by consent of all the
members. A conditional obligation of a member to make a contribution
to a limited liability company shall not be enforced unless the
conditions of the obligation have been satisfied or waived as to or
by that member. Conditional obligations include contributions payable
upon a discretionary call of a limited liability company before the
time the call occurs.
(c) A creditor of a limited liability company that extends credit
or otherwise acts in reliance on an obligation described in
subdivision (a) may enforce the obligation.
(d) Nothing in this section shall be construed to affect the
rights of third-party creditors of the limited liability company to
seek equitable remedies or any rights existing under the Uniform
Fraudulent Transfer Voidable Transactions
Act (Chapter 1 (commencing with Section 3439) of Title 2 of
Part 2 of Division 4 of the Civil Code).
SEC. 25. 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 Fraudulent
Transfer 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.
SEC. 26. Section 18640 of the Corporations Code is amended to
read:
18640. Nothing in this chapter limits application of the Uniform
Fraudulent Transfer Voidable Transactions
Act (Chapter 1 (commencing with Section 3439) of Title 2 of
Part 2 of Division 4 of the Civil Code).
SEC. 27. Section 283 of the Probate Code is amended to read:
283. A disclaimer is not a fraudulent
voidable transfer by the beneficiary under Chapter
the Uniform Voidable Transactions Act (Chapter 1
(commencing with Section 3439) of Title 2 of Part 2 of Division 4 of
the Civil Code. Code).
SEC. 28. Section 9653 of the Probate Code is amended to read:
9653. (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 fraudulent voidable
as to creditors under the Uniform Fraudulent Transfer
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.
SEC. 29. Section 2104 of the Public Utilities Code is amended to
read:
2104. (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 Fraudulent
Transfer 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.
(b) This section shall become operative on January 1, 2014.
