Bill Text: FL S1316 | 2018 | Regular Session | Introduced
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Bill Title: Uniform Voidable Transactions Act
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2018-03-10 - Died on Calendar [S1316 Detail]
Download: Florida-2018-S1316-Introduced.html
Bill Title: Uniform Voidable Transactions Act
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2018-03-10 - Died on Calendar [S1316 Detail]
Download: Florida-2018-S1316-Introduced.html
Florida Senate - 2018 SB 1316 By Senator Simmons 9-00986A-18 20181316__ 1 A bill to be entitled 2 An act relating to the Uniform Voidable Transactions 3 Act; providing a directive to the Division of Law 4 Revision and Information; amending s. 726.101, F.S.; 5 revising a short title; amending s. 726.102, F.S.; 6 revising and defining terms; amending s. 726.103, 7 F.S.; removing conditions under which a partnership is 8 insolvent; imposing upon certain debtors the burden of 9 proving insolvency; amending ss. 726.105 and 726.106, 10 F.S.; imposing upon certain creditors the burden of 11 proving elements of a claim for relief; amending s. 12 726.107, F.S.; conforming provisions to changes made 13 by the act; amending s. 726.108, F.S.; providing 14 conditions under which attachments or other 15 provisional remedies are available to creditors; 16 amending s. 726.109, F.S.; revising the parties 17 subject to judgments for recovery of a creditor’s 18 claim; revising conditions under which a transfer is 19 not voidable; imposing upon specified persons the 20 burden of proving certain applicability, claim 21 elements, and adjustments; providing requirements for 22 standard of proof; amending ss. 726.110, 726.111, and 23 726.112, F.S.; conforming provisions to changes made 24 by the act; creating s. 726.113, F.S.; providing that 25 claims for relief are governed by specified claims 26 law; creating s. 726.114, F.S.; defining terms; 27 providing applicability of specified provisions for 28 series organizations and the protected series of such 29 organizations; creating s. 726.115, F.S.; providing 30 applicability of a specified federal act; providing an 31 effective date. 32 33 Be It Enacted by the Legislature of the State of Florida: 34 35 Section 1. The Division of Law Revision and Information is 36 directed to rename chapter 726, Florida Statutes, entitled 37 “FRAUDULENT TRANSFERS,” as “VOIDABLE TRANSACTIONS.” 38 Section 2. Section 726.101, Florida Statutes, is amended to 39 read: 40 726.101 Short title.—This act may be cited as the “Uniform 41 Voidable TransactionsFraudulent TransferAct.” 42 Section 3. Section 726.102, Florida Statutes, is amended to 43 read: 44 726.102 Definitions.—As used in this chapterss. 726.10145726.112: 46 (1) “Affiliate” means: 47 (a) A person thatwhodirectly or indirectly owns, 48 controls, or holds with power to vote, 20 percent or more of the 49 outstanding voting securities of the debtor, other than a person 50 thatwhoholds the securities: 51 1. As a fiduciary or agent without sole discretionary power 52 to vote the securities; or 53 2. Solely to secure a debt, if the person has not in fact 54 exercised the power to vote;.55 (b) A corporation 20 percent or more of whose outstanding 56 voting securities are directly or indirectly owned, controlled, 57 or held with power to vote, by the debtor or a person thatwho58 directly or indirectly owns, controls, or holds, with power to 59 vote, 20 percent or more of the outstanding voting securities of 60 the debtor, other than a person thatwhoholds the securities: 61 1. As a fiduciary or agent without sole discretionary power 62 to vote the securities; or 63 2. Solely to secure a debt, if the person has not in fact 64 exercised the power to vote;.65 (c) A person whose business is operated by the debtor under 66 a lease or other agreement, or a person substantially all of 67 whose assets are controlled by the debtor; or 68 (d) A person thatwhooperates the debtor’s business under 69 a lease or other agreement or controls substantially all of the 70 debtor’s assets. 71 (2) “Asset” means property of a debtor, but the term does 72 not include: 73 (a) Property to the extent it is encumbered by a valid 74 lien; 75 (b) Property to the extent it is generally exempt under 76 nonbankruptcy law; or 77 (c) An interest in property held in tenancy by the 78 entireties to the extent it is not subject to process by a 79 creditor holding a claim against only one tenant. 80 (3) “Charitable contribution” means a charitable 81 contribution as that term is defined in s. 170(c) of the 82 Internal Revenue Code of 1986, if that contribution consists of: 83 (a) A financial instrument as defined in s. 731(c)(2)(C) of 84 the Internal Revenue Code of 1986; or 85 (b) Cash. 86 (4) “Claim,” except as used in “claim for relief,” means a 87 right to payment, whether or not the right is reduced to 88 judgment, liquidated, unliquidated, fixed, contingent, matured, 89 unmatured, disputed, undisputed, legal, equitable, secured, or 90 unsecured. 91 (5) “Claims law” means fraudulent conveyance, fraudulent 92 transfer, or voidable transfer laws or other laws of similar 93 effect. 94 (6)(5)“Creditor” means a person thatwhohas a claim. 95 (7)(6)“Debt” means liability on a claim. 96 (8)(7)“Debtor” means a person thatwhois liable on a 97 claim. 98 (9) “Electronic” means technology having electrical, 99 digital, magnetic, wireless, optical, electromagnetic, or 100 similar capabilities. 101 (10)(8)“Insider” includes: 102 (a) If the debtor is an individual: 103 1. A relative of the debtor or of a general partner of the 104 debtor; 105 2. A partnership in which the debtor is a general partner; 106 3. A general partner in a partnership described in 107 subparagraph 2.; or 108 4. A corporation of which the debtor is a director, 109 officer, or person in control; 110 (b) If the debtor is a corporation: 111 1. A director of the debtor; 112 2. An officer of the debtor; 113 3. A person in control of the debtor; 114 4. A partnership in which the debtor is a general partner; 115 5. A general partner in a partnership described in 116 subparagraph 4.; or 117 6. A relative of a general partner, director, officer, or 118 person in control of the debtor;.119 (c) If the debtor is a partnership: 120 1. A general partner in the debtor; 121 2. A relative of a general partner in, a general partner 122 of, or a person in control of the debtor; 123 3. Another partnership in which the debtor is a general 124 partner; 125 4. A general partner in a partnership described in this 126 paragraphsubparagraph 3.; or 127 5. A person in control of the debtor;.128 (d) An affiliate, or an insider of an affiliate as if the 129 affiliate were the debtor; and.130 (e) A managing agent of the debtor. 131 (11)(9)“Lien” means a charge against or an interest in 132 property to secure payment of a debt or performance of an 133 obligation, and includes a security interest created by 134 agreement, a judicial lien obtained by legal or equitable 135 process or proceedings, a common-law lien, or a statutory lien. 136 (12) “Organization” means a person other than an 137 individual. 138 (13)(10)“Person” means an individual;,partnership; 139 limited partnership; business corporation; nonprofit business 140 corporation; public,corporation;,limited liability company; 141 limited cooperative association; unincorporated nonprofit 142 association;,organization,government or governmental 143 subdivision, instrumentality, or agency;,business trust; common 144 law business trust; statutory trust;,estate;,trust;,145 association; joint venture; or any other legal or commercial 146 entity. 147 (14)(11)“Property” means anything that may be the subject 148 of ownership. 149 (15)(12)“Qualified religious or charitable entity or 150 organization” means: 151 (a) An entity described in s. 170(c)(1) of the Internal 152 Revenue Code of 1986; or 153 (b) An entity or organization described in s. 170(c)(2) of 154 the Internal Revenue Code of 1986. 155 (16) “Record” means information that is inscribed on a 156 tangible medium or that is stored in an electronic or other 157 medium and is retrievable in perceivable form. 158 (17)(13)“Relative” means an individual related by 159 consanguinity within the third degree as determined by the 160 common law, a spouse, or an individual related to a spouse 161 within the third degree as so determined, and includes an 162 individual in an adoptive relationship within the third degree. 163 (18) “Sign” or “signed” means, with present intent to 164 authenticate or adopt a record: 165 (a) To execute or adopt a tangible symbol; or 166 (b) To attach to or logically associate with the record an 167 electronic symbol, sound, or process. 168 (19)(14)“Transfer” means every mode, direct or indirect, 169 absolute or conditional, voluntary or involuntary, of disposing 170 of or parting with an asset or an interest in an asset, and 171 includes payment of money, release, lease, license, and creation 172 of a lien or other encumbrance. 173 (20)(15)“Valid lien” means a lien that is effective 174 against the holder of a judicial lien subsequently obtained by 175 legal or equitable process or proceedings. 176 Section 4. Section 726.103, Florida Statutes, is amended to 177 read: 178 726.103 Insolvency.— 179 (1) A debtor is insolvent if, at a fair valuation, the sum 180 of the debtor’s debts is greater than the sumallof the 181 debtor’s assetsat a fair valuation. 182 (2) A debtor thatwhois generally not paying itshis or183herdebts as they become due, for reasons other than as a result 184 of a bona fide dispute, is presumed to be insolvent. The party 185 against which the presumption is directed has the burden of 186 proving that the nonexistence of insolvency is more probable 187 than its existence. 188(3)A partnership is insolvent under subsection (1) if the189sum of the partnership’s debts is greater than the aggregate, at190a fair valuation, of all of the partnership’s assets and the sum191of the excess of the value of each general partner’s192nonpartnership assets over the partner’s nonpartnership debts.193 (3)(4)Assets under this section do not include property 194 that has been transferred, concealed, or removed with intent to 195 hinder, delay, or defraud creditors or that has been transferred 196 in a manner making the transfer voidable under this chapterss.197726.101-726.112. 198 (4)(5)Debts under this section do not include an 199 obligation to the extent it is secured by a valid lien on 200 property of the debtor not included as an asset. 201 Section 5. Section 726.105, Florida Statutes, is amended to 202 read: 203 726.105 Transfers or obligations voidablefraudulentas to 204 present and future creditors.— 205 (1) A transfer made or obligation incurred by a debtor is 206 voidablefraudulentas to a creditor, whether the creditor’s 207 claim arose before or after the transfer was made or the 208 obligation was incurred, if the debtor made the transfer or 209 incurred the obligation: 210 (a) With actual intent to hinder, delay, or defraud any 211 creditor of the debtor; or 212 (b) Without receiving a reasonably equivalent value in 213 exchange for the transfer or obligation, and the debtor: 214 1. Was engaged or was about to engage in a business or a 215 transaction for which the remaining assets of the debtor were 216 unreasonably small in relation to the business or transaction; 217 or 218 2. Intended to incur, or believed or reasonably should have 219 believed that the debtorhe or shewould incur, debts beyond the 220 debtor’shis or herability to pay as they became due. 221 (2) In determining actual intent under paragraph (1)(a), 222 consideration may be given, among other factors, to whether: 223 (a) The transfer or obligation was to an insider. 224 (b) The debtor retained possession or control of the 225 property transferred after the transfer. 226 (c) The transfer or obligation was disclosed or concealed. 227 (d) Before the transfer was made or obligation was 228 incurred, the debtor had been sued or threatened with suit. 229 (e) The transfer was of substantially all the debtor’s 230 assets. 231 (f) The debtor absconded. 232 (g) The debtor removed or concealed assets. 233 (h) The value of the consideration received by the debtor 234 was reasonably equivalent to the value of the asset transferred 235 or the amount of the obligation incurred. 236 (i) The debtor was insolvent or became insolvent shortly 237 after the transfer was made or the obligation was incurred. 238 (j) The transfer occurred shortly before or shortly after a 239 substantial debt was incurred. 240 (k) The debtor transferred the essential assets of the 241 business to a lienor thatwhotransferred the assets to an 242 insider of the debtor. 243 (3) A creditor making a claim for relief under subsection 244 (1) has the burden of proving the elements of the claim for 245 relief by a preponderance of the evidence. 246 Section 6. Section 726.106, Florida Statutes, is amended to 247 read: 248 726.106 Transfers or obligations voidablefraudulentas to 249 present creditors.— 250 (1) A transfer made or obligation incurred by a debtor is 251 voidablefraudulentas to a creditor whose claim arose before 252 the transfer was made or the obligation was incurred if the 253 debtor made the transfer or incurred the obligation without 254 receiving a reasonably equivalent value in exchange for the 255 transfer or obligation and the debtor was insolvent at that time 256 or the debtor became insolvent as a result of the transfer or 257 obligation. 258 (2) A transfer made by a debtor is voidablefraudulentas 259 to a creditor whose claim arose before the transfer was made if 260 the transfer was made to an insider for an antecedent debt, the 261 debtor was insolvent at that time, and the insider had 262 reasonable cause to believe that the debtor was insolvent. 263 (3) Subject to s. 726.103(2), a creditor making a claim for 264 relief under subsection (1) or subsection (2) has the burden of 265 proving the elements of the claim for relief by a preponderance 266 of the evidence. 267 Section 7. Section 726.107, Florida Statutes, is amended to 268 read: 269 726.107 When transfer made or obligation incurred.—For the 270 purposes of this chapterss. 726.101-726.112: 271 (1) A transfer is made: 272 (a) With respect to an asset that is real property other 273 than a fixture, but including the interest of a seller or 274 purchaser under a contract for the sale of the asset, when the 275 transfer is so far perfected that a good faith purchaser of the 276 asset from the debtor against whichwhomapplicable law permits 277 the transfer to be perfected cannot acquire an interest in the 278 asset that is superior to the interest of the transferee. 279 (b) With respect to an asset that is not real property or 280 that is a fixture, when the transfer is so far perfected that a 281 creditor on a simple contract cannot acquire a judicial lien 282 otherwise than under this chapterss. 726.101-726.112that is 283 superior to the interest of the transferee. 284 (2) If applicable law permits the transfer to be perfected 285 as provided in subsection (1) and the transfer is not so 286 perfected before the commencement of an action for relief under 287 this chapterss. 726.101-726.112, the transfer is deemed made 288 immediately before the commencement of the action. 289 (3) If applicable law does not permit the transfer to be 290 perfected as provided in subsection (1), the transfer is made 291 when it becomes effective between the debtor and the transferee. 292 (4) A transfer is not made until the debtor has acquired 293 rights in the asset transferred. 294 (5) An obligation is incurred: 295 (a) If oral, when it becomes effective between the parties; 296 or 297 (b) If evidenced by a recordwriting, when the record 298 signedwriting executedby the obligor is delivered to or for 299 the benefit of the obligee. 300 Section 8. Section 726.108, Florida Statutes, is amended to 301 read: 302 726.108 Remedies of creditors.— 303 (1) In an action for relief against a transfer or 304 obligation under this chapterss. 726.101-726.112, a creditor, 305 subject to the limitations in s. 726.109, may obtain: 306 (a) Avoidance of the transfer or obligation to the extent 307 necessary to satisfy the creditor’s claim; 308 (b) An attachment or other provisional remedy against the 309 asset transferred or other property of the transferee if and to 310 the extent available underin accordance withapplicable law; or 311 (c) Subject to applicable principles of equity and in 312 accordance with applicable rules of civil procedure: 313 1. An injunction against further disposition by the debtor 314 or a transferee, or both, of the asset transferred or of other 315 property; 316 2. Appointment of a receiver to take charge of the asset 317 transferred or of other property of the transferee; or 318 3. Any other relief the circumstances may require. 319 (2) If a creditor has obtained a judgment on a claim 320 against the debtor, the creditor, if the court so orders, may 321 levy execution on the asset transferred or its proceeds. 322 Section 9. Section 726.109, Florida Statutes, is amended to 323 read: 324 726.109 Defenses, liability, and protection of transferee 325 or obligee.— 326 (1) A transfer or obligation is not voidable under s. 327 726.105(1)(a) against a person thatwhotook in good faith and 328 for a reasonably equivalent value given the debtor or against 329 any subsequent transferee or obligee. 330 (2)(a) Except as otherwise provided in this section, to the 331 extent a transfer is voidable in an action by a creditor under 332 s. 726.108(1)(a), the creditor may recover judgment for the 333 value of the asset transferred, as adjusted under subsection 334 (3), or the amount necessary to satisfy the creditor’s claim, 335 whichever is less. The judgment may be entered against: 336 1.(a)The first transferee of the asset or the person for 337 whose benefit the transfer was made; or 338 2.(b)An immediate or mediate transferee of the firstAny339subsequenttransferee other than: 340 a. A good faith transferee thatwhotook for value; or 341 b. An immediate or mediate good faith transferee of a 342 person described in sub-subparagraph afrom any subsequent343transferee. 344 (b) Recovery pursuant to s. 726.108(1)(a) or (2) of or from 345 the asset transferred or its proceeds, by levy or otherwise, is 346 available only against a person described in subparagraph (a)1. 347 or subparagraph (a)2. 348 (3) If the judgment under subsection (2) is based upon the 349 value of the asset transferred, the judgment must be for an 350 amount equal to the value of the asset at the time of the 351 transfer, subject to adjustment as the equities may require. 352 (4) Notwithstanding voidability of a transfer or an 353 obligation under this chapterss. 726.101-726.112, a good faith 354 transferee or obligee is entitled, to the extent of the value 355 given the debtor for the transfer or obligation, to: 356 (a) A lien on or a right to retain ananyinterest in the 357 asset transferred; 358 (b) Enforcement of ananyobligation incurred; or 359 (c) A reduction in the amount of the liability on the 360 judgment. 361 (5) A transfer is not voidable under s. 726.105(1)(b) or s. 362 726.106 if the transfer results from: 363 (a) Termination of a lease upon default by the debtor when 364 the termination is pursuant to the lease and applicable law; or 365 (b) Enforcement of a security interest in compliance with 366 Article 9 of the Uniform Commercial Code other than acceptance 367 of collateral in full or partial satisfaction of the obligation 368 it secures. 369 (6) A transfer is not voidable under s. 726.106(2): 370 (a) To the extent the insider gave new value to or for the 371 benefit of the debtor after the transfer was made, except to the 372 extentunlessthe new value was secured by a valid lien; 373 (b) If made in the ordinary course of business or financial 374 affairs of the debtor and the insider; or 375 (c) If made pursuant to a good faith effort to rehabilitate 376 the debtor and the transfer secured present value given for that 377 purpose as well as an antecedent debt of the debtor. 378 (7)(a) The transfer of a charitable contribution that is 379 received in good faith by a qualified religious or charitable 380 entity or organization is not a fraudulent transfer under s. 381 726.105(1)(b) or s. 726.106(1). 382 (b) However, a charitable contribution from a natural 383 person is a fraudulent transfer if the transfer was received on, 384 or within 2 years before, the earlier of the date of 385 commencement of an action under this chapter, the filing of a 386 petition under the federal Bankruptcy Code, or the commencement 387 of insolvency proceedings by or against the debtor under any 388 state or federal law, including the filing of an assignment for 389 the benefit of creditors or the appointment of a receiver, 390 unless: 391 1. The transfer was consistent with the practices of the 392 debtor in making the charitable contribution; or 393 2. The transfer was received in good faith and the amount 394 of the charitable contribution did not exceed 15 percent of the 395 gross annual income of the debtor for the year in which the 396 transfer of the charitable contribution was made. 397 (8)(a) A party that seeks to invoke subsection (1), 398 subsection (4), subsection (5), or subsection (6) has the burden 399 of proving the applicability of that subsection. 400 (b) Except as otherwise provided in paragraphs (c) and (d), 401 the creditor has the burden of proving each applicable element 402 of subsection (2) or subsection (3). 403 (c) The transferee has the burden of proving the 404 applicability to the transferee under subparagraph (2)(a)2. 405 (d) A party that seeks adjustment under subsection (3) has 406 the burden of proving the adjustment. 407 (9) The standard of proof required to establish matters 408 referred to in this section is a preponderance of the evidence. 409 (10) The creditor has the burden of proving the requisite 410 elements of any claim under this chapter, as set forth in ss. 411 726.105(3) and 726.106(3). 412 Section 10. Section 726.110, Florida Statutes, is amended 413 to read: 414 726.110 Extinguishment of claim for reliefcause of415action.—A claim for reliefcause of actionwith respect to a 416fraudulenttransfer or obligation under this chapterss.417726.101-726.112is extinguished unless action is brought: 418 (1) Under s. 726.105(1)(a), within 4 years after the 419 transfer was made or the obligation was incurred or, if later, 420 within 1 year after the transfer or obligation and its wrongful 421 nature was or could reasonably have been discovered by the 422 claimant; 423 (2) Under s. 726.105(1)(b) or s. 726.106(1), within 4 years 424 after the transfer was made or the obligation was incurred; or 425 (3) Under s. 726.106(2), within 1 year after the transfer 426 was made or the obligation was incurred. 427 Section 11. Section 726.111, Florida Statutes, is amended 428 to read: 429 726.111 Supplementary provisions.—Unless displaced by the 430 provisions of this chapterss. 726.101-726.112, the principles 431 of law and equity, including the law merchant and the law 432 relating to principal and agent, estoppel, laches, fraud, 433 misrepresentation, duress, coercion, mistake, insolvency, or 434 other validating or invalidating cause, supplement those 435 provisions. 436 Section 12. Section 726.112, Florida Statutes, is amended 437 to read: 438 726.112 Uniformity of application and construction.—Chapter 439 87-79, Laws of Florida, shall be applied and construed to 440 effectuate its general purpose to make uniform the law with 441 respect to the subject of the law among states enacting the law 442it. 443 Section 13. Section 726.113, Florida Statutes, is created 444 to read: 445 726.113 Governing law.— 446 (1) For the purposes of this section, the following 447 provisions determine a debtor’s physical location: 448 (a) A debtor that is an individual is located at his or her 449 principal residence. 450 (b) A debtor that is an organization and has only one place 451 of business is located at its place of business. 452 (c) A debtor that is an organization and has more than one 453 place of business is located at its chief executive office. 454 (2) A claim for relief in the nature of a claim for relief 455 under this chapter is governed by the claims law of the 456 jurisdiction in which the debtor is located when the transfer is 457 made or the obligation is incurred. 458 (3) This section does not affect the governing law for any 459 other claims or issues between the parties arising outside of 460 this chapter or other claims law. If this section requires the 461 application of the claims law of a foreign jurisdiction, such a 462 determination does not affect which jurisdiction’s exemption 463 laws apply, the availability of exemptions under applicable law, 464 or the debtor’s entitlement to any protections afforded to the 465 debtor’s homestead under the Florida Constitution. 466 Section 14. Section 726.114, Florida Statutes, is created 467 to read: 468 726.114 Application to series organization.— 469 (1) As used in this section, the term: 470 (a) “Protected series” means an arrangement, however 471 denominated, created by a series organization that, pursuant to 472 the law under which the series organization is organized, meets 473 the criteria set forth in paragraph (b). 474 (b) “Series organization” means an organization that, 475 pursuant to the law under which it is organized, has the 476 following characteristics: 477 1. The organic record of the organization provides for 478 creation by the organization of one or more protected series, 479 however denominated, with respect to specified property of the 480 organization, and for records to be maintained for each 481 protected series that identify the property of, or associated 482 with, the protected series. 483 2. Debt incurred or existing with respect to the activities 484 of, or property of or associated with, a particular protected 485 series is enforceable against the property of, or associated 486 with, the protected series only, and not against the property 487 of, or associated with, the organization or other protected 488 series of the organization. 489 3. Debt incurred or existing with respect to the activities 490 or property of the organization is enforceable against the 491 property of the organization only, and not against the property 492 of, or associated with, a protected series of the organization. 493 (2) A series organization and each protected series of the 494 organization is a separate person for purposes of this chapter, 495 even if for other purposes a protected series is not a person 496 separate from the organization or other protected series of the 497 organization. Provisions of law other than this chapter 498 determine whether and to what extent a series organization and 499 each protected series of the organization is a separate person 500 for purposes other than the purposes of this chapter. 501 Section 15. Section 726.115, Florida Statutes, is created 502 to read: 503 726.115 Relation to Electronic Signatures in Global and 504 National Commerce Act.—This chapter modifies, limits, and 505 supersedes the federal Electronic Signatures in Global and 506 National Commerce Act, 15 U.S.C. ss. 7001, et seq., but does not 507 modify, limit, or supersede s. 101(c) of that act, 15 U.S.C. s. 508 7001(c), or authorize electronic delivery of any of the notices 509 described in s. 103(b) of that act, 15 U.S.C. s. 7003(b). 510 Section 16. This act shall take effect July 1, 2018.