Senate Bill No. 161

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.  begin delete FRAUDULENT INSTRUMENTS AND end delete begin insert VOID AND
VOIDABLE end insert TRANSFERS begin insert AND UNDERTAKINGS end insert

 

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 begin delete Fraudulent Transfer end delete begin insert Voidable
Transactions end insert Act

 

SEC. 3.  

Section 3439 of the Civil Code is amended to read:

3439.  

This chapter may be cited as the Uniform begin delete Fraudulent
Transfer end delete begin insert Voidable Transactions end insert 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
begin delete include, end delete begin insert include end insert 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)  begin delete “Claim” end delete begin insert “Claim,” except as used in “claim for relief,” end insert
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 begin delete who end delete begin insert that end insert 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 begin delete who end delete begin insert that end insert is liable on a claim.

begin insert

(f) “Electronic” means relating to technology having electrical,
digital, magnetic, wireless, optical, electromagnetic, or similar
capabilities.

end insert begin delete

(f)

end delete

begin insert (g) end insert  “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.

begin insert

(h) “Organization” means a person other than an individual.

end insert begin delete

(g)

end delete

begin insert (i) end insert  “Person” means an individual, partnership, corporation,
limited liability company, association, begin delete organization, end delete government
or governmental subdivision begin insert , instrumentality end insert or agency, business
trust, estate, trust, begin delete or any end delete begin insert business or nonprofit entity, or end insert other legal
begin delete or commercial end delete entity.

begin delete

(h)

end delete

begin insert (j) end insert  “Property” means anything that may be the subject of
ownership.

begin insert

(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.

end insert begin insert

(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.

end insert begin delete

(i)

end delete

begin insert (m) end insert  “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, begin insert license, end insert and creation of a lien or other
encumbrance.

begin delete

(j)

end delete

begin insert (n) end insert  “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 begin insert a end insert fair begin delete valuations, end delete
begin insert valuation, end insert the sum of the debtor’s debts is greater than begin delete all end delete begin insert the sum end insert
of the debtor’s assets.

begin delete

(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.

end delete begin delete

(c)

end delete

begin insert (b) end insert  A debtor begin delete who end delete begin insert that end insert is generally not paying begin delete his or her end delete begin insert the
debtor’s end insert debts as they become due begin insert other than as a result of a bona
fide dispute end insert is presumed to be insolvent. begin insert 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. end insert

begin delete

(d)

end delete

begin insert (c) end insert  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.

begin delete

(e)

end delete

begin insert (d) end insert  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 begin delete fraudulent end delete begin insert voidable end insert 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 begin delete he or she end delete begin insert the debtor end insert would incur, debts beyond begin delete his
or her end delete begin insert the debtor’s end insert 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 begin delete lienholder who end delete begin insert lienor that end insert transferred the assets to
an insider of the debtor.

begin delete

(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.

end delete begin insert

(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.

end insert

SEC. 7.  

Section 3439.05 of the Civil Code is amended to read:

3439.05.  

begin insert (a) end insert begin insert   end insert A transfer made or obligation incurred by a debtor
is begin delete fraudulent end delete begin insert voidable end insert 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.

begin insert

(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.

end insert

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 begin delete whom end delete begin insert which end insert 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 begin delete writing, end delete begin insert record, end insert when the begin delete writing executed end delete
begin insert record signed end insert 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 begin delete its proceeds end delete begin insert other property of the transferee end insert in
accordance with the procedures described in Title 6.5 (commencing
with Section 481.010) of Part 2 of the Code of Civil begin delete Procedure. end delete
begin insert Procedure, or as may otherwise be available under applicable
law. end insert

(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 begin delete its proceeds. end delete begin insert other
property of the transferee. end insert

(B) Appointment of a receiver to take charge of the asset
transferred or begin delete its proceeds. end delete begin insert other property of the transferee. end insert

(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 begin delete its
proceeds end delete begin insert other property of the transferee end insert 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 begin delete an end delete obligation is not voidable under
paragraph (1) of subdivision (a) of Section 3439.04, against a
person begin delete who end delete begin insert that end insert took in good faith and for a reasonably equivalent
value begin insert given the debtor end insert or against any subsequent transferee or
obligee.

(b)  begin delete Except as otherwise provided in this section, to end delete begin insert To end insert the extent
a transfer is begin delete voidable end delete begin insert avoidable end insert in an action by a creditor under
paragraph (1) of subdivision (a) of Section 3439.07, begin delete 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: end delete begin insert the following rules apply: end insert

begin insert

(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:

end insert begin delete

(1)

end delete

begin insert (A) end insert  The first transferee of the asset or the person for whose
benefit the transfer was made.

begin delete

(2) Any subsequent transferee other than a good faith transferee
who took for value or from any subsequent transferee.

end delete begin insert

(B) An immediate or mediate transferee of the first transferee,
other than either of the following:

end insert begin insert

(i) A good-faith transferee that took for value.

end insert begin insert

(ii) An immediate or mediate good-faith transferee of a person
described in clause (i).

end insert begin insert

(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).

end insert

(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 begin delete any end delete begin insert an end insert interest in the asset
transferred.

(2) Enforcement of begin delete any end delete begin insert an end insert 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 begin insert either of end insert 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.

begin insert

(f) The following rules determine the burden of proving matters
referred to in this section:

end insert begin insert

(1) A party that seeks to invoke subdivision (a), (d), or (e) has
the burden of proving the applicability of that subdivision.

end insert begin insert

(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).

end insert begin insert

(3) The transferee has the burden of proving the applicability
to the transferee of subparagraph (B) of paragraph (1) of
subdivision (b).

end insert begin insert

(4) A party that seeks adjustment under subdivision (c) has the
burden of proving the adjustment.

end insert begin insert

(g) The standard of proof required to establish matters referred
to in this section is preponderance of the evidence.

end insert

SEC. 11.  

Section 3439.09 of the Civil Code is amended to
read:

3439.09.  

A cause of action with respect to a begin delete fraudulent end delete 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,
begin delete within end delete begin insert not later than end insert four years after the transfer was made or the
obligation was incurred or, if later, begin delete within end delete begin insert not later than end insert 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, begin delete within end delete begin insert not later than end insert four years after the
transfer was made or the obligation was incurred.

(c) Notwithstanding any other provision of law, a cause of action
begin insert under this chapter end insert with respect to a begin delete fraudulent end delete 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:

begin delete 3439.10. end delete
begin insert 3439.12. end insert   

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:

begin delete 3439.11. end delete
begin insert 3439.13. end insert   

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:

begin delete 3439.12. end delete
begin insert 3439.14. end insert   

begin insert

(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.

end insert

begin insert (b) end insert begin insert   end insert 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 begin insert before the effective date of the act that
added subdivision (a) and end insert on or after January 1, begin delete 1987; and, as end delete
begin insert 1987. As end insert to transfers made or obligations incurred prior to begin delete that
date, end delete begin insert January 1, 1987, end insert the law in effect at the time the transfer was
made or the obligation was incurred shall apply. begin delete 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. end delete

begin insert

(c) Section 3439.06 shall determine the date that a transfer was
made or obligation incurred.

end insert begin insert

(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.

end insert

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 begin delete Fraudulent end delete begin insert Voidable end insert
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 begin delete fraudulent end delete begin insert voidable end insert 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
begin delete fraudulent end delete begin insert voidable end insert 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 begin delete such end delete begin insert a end insert moving party compel contribution, either in that action
or in an independent action against persons not joined in the action.

(d)  begin delete Nothing contained in this end delete begin insert This end insert section begin delete affects end delete begin insert shall not affect end insert
any liability which any person may have under begin delete Sections 3439 to
3439.12, inclusive, of the Civil Code. end delete begin insert the Uniform Voidable
Transactions Act (Chapter 1 (commencing with Section 3439) of
Title 2 of Part 2 of Division 4 of the Civil Code). end insert

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 begin delete Sections 3439 to 3439.12, inclusive,
of the Civil Code. end delete begin insert the Uniform Voidable Transactions Act (Chapter
1 (commencing with Section 3439) of Title 2 of Part 2 of Division
4 of the Civil Code). end insert

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 begin delete Fraudulent Transfer end delete
begin insert Voidable Transactions end insert 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
begin delete Fraudulent Transfer end delete begin insert Voidable Transactions end insert 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
begin delete Fraudulent Transfer end delete begin insert Voidable Transactions end insert 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 begin delete Fraudulent
Transfer end delete begin insert Voidable Transactions end insert 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
begin delete Fraudulent Transfer end delete begin insert Voidable Transactions end insert 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 begin delete fraudulent end delete begin insert voidable end insert transfer by the
beneficiary under begin delete Chapter end delete begin insert the Uniform Voidable Transactions Act
(Chapter end insert 1 (commencing with Section 3439) of Title 2 of Part 2
of Division 4 of the Civil begin delete Code. end delete begin insert Code). end insert

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 begin delete fraudulent end delete begin insert voidable end insert as to creditors under
the Uniform begin delete Fraudulent Transfer end delete begin insert Voidable Transactions end insert 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 begin delete Fraudulent Transfer end delete begin insert Voidable Transactions end insert 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.