BILL ANALYSIS

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

The small business community has raised concerns regarding reforms to the laws on superseding money judgments. Current law regarding these judgments, which require a cash bond of 50 percent of a business's net worth, can pose significant concerns for smaller businesses, especially those with assets primarily, if not exclusively, in non-liquid assets, such as real estate or personal property. For these businesses, withdrawing working capital from their primarily non-liquid operations could cripple their ability to sustain the business pending appeal of a judgment. And because they must post security or liquidate their income-producing assets, such as real estate, in order to pursue their right to appeal, these businesses may have no choice but to give up their right to appeal altogether. H.B. 4381 seeks to address these concerns by providing for a judgment debtor with a net worth of less than $10 million to post alternative security for a judgment.

H.B. 4381 amends current law relating to the suspension of a money judgment pending appeal in a civil action.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 52, Civil Practice and Remedies Code, by adding Section 52.007, as follows:

Sec. 52.007.  ALTERNATIVE SECURITY IN CERTAIN CASES.� (a) Provides that this section applies only to a judgment debtor with a net worth of less than $10 million.

(b) Requires the trial court, on a showing by the judgment debtor that posting security in the amount required under Section 52.006(a) (relating to certain amounts of security in a money judgement) or (b) (relating to prohibiting the amount of security in a money judgement from exceeding a certain amount) would require the judgment debtor to substantially liquidate the judgment debtor's interests in real or personal property necessary to the normal course of the judgment debtor's business, to allow the judgment debtor to post alternative security with a value sufficient to secure the judgment.

(c) Requires the judgment debtor during an appeal to continue to manage, use, and receive earnings from interests in real or personal property in the normal course of business.

(d)  Provides that if an appellate court reduces the amount of the judgment that the trial court used to set security, the judgment debtor is entitled, pending appeal of the judgment to a court of last resort, to a redetermination of the amount of security required to suspend enforcement of a judgment under Section 52.006 (Amount of Security for Money Judgment) or under Rule 24, Texas Rules of Appellate Procedure.

SECTION 2. Makes application of this Act prospective.

SECTION 3. Effective date: September 1, 2023.