Creditors may become frustrated when they discover a debtor has engaged in an unfair transaction that hampers their ability to collect payment. However, creditors are not without remedy in the event that there has been some funny business with the debtor’s finances. Regardless of the debtor’s intentions behind the questionable […]
Involuntary bankruptcy is a legal proceeding creditors may use to force a debtor into bankruptcy, rather than a debtor voluntarily seeking bankruptcy protection on his or her own behalf. Creditors seeking involuntary bankruptcy must file a petition in the bankruptcy court, and the debtor has the opportunity to defend against […]
A payment bond provided by the general contractor is a valuable asset to any subcontractor or supplier on that project. Payment is assured by the bond—a subcontractor or supplier will get paid even if the general contractor doesn’t make payment. While there are certain hurdles to perfecting your bond rights that get a lot of attention, such as the Notice to Owner Requirement, there is one possibly critical question that has been largely ignored: What is the effective duration of the payment bond? In other words, does the work have to be provided during a certain time period in order for payment to be covered by the bond?
Quite often a creditor discovers that one of its debtors has avoided satisfying a liability by fraudulently transferring assets to another individual or entity. This is a frustrating discovery, but the creditor is not without remedies. Under Florida Statutes fraudulent transfers can be attacked and unwound through two methods. The popular method is filing a lawsuit to include a statutory cause of action to invalidate the fraudulent transfer under Chapter 726, Florida Statutes. A lesser used approach is through a post-judgment procedure known as proceedings supplementary under Section 56.29, Florida Statutes. This blog post discusses these two differing approaches for unwinding fraudulent transfers, when proceedings supplementary is the preferable approach, and a related doctrine of Florida common law known as the Diligent Creditor Rule.
Whether due to economic hardships, mismanagement, unforeseen circumstances, or even fraud and breach of fiduciary duty, a condo or homeowners association may find itself in desperate need of help. Additionally, properties that have been neglected may also be running afoul of local code compliance regulations or may be so far […]
You have a claim against a corporation and/or its officers, but you find out that the corporation is dissolved and there is a successor corporation in its place that appears to be essentially the same corporation. Now what? In Bernard v. Kee Mfg. Co., Inc., Florida’s Supreme Court adopted the […]
By Austin B Calhoun
Vendors are sometimes presented with customers going into bankruptcy. Vendors experienced in this dilemma are aware of preference actions pursuant to 11 U.S.C. § 547(b), whereby the trustee seeks to recover from the vendor all payments received from the debtor within the 90 day period prior to petition. There are various mechanisms and defenses a vendor can employ to block preference action recovery. One such tool is the critical vendor doctrine. This blog examines the steps a vendor must take to successfully implement the critical vendor doctrine in Florida bankruptcy courts.
Once a creditor obtains a judgment against a debtor, attempting to garnish the funds, accounts and assets of that debtor held by a third party is an extremely efficient and often successful means for collecting on that judgment. Chapter 77, Florida Statutes, governs garnishment actions within the State of Florida and provides for two main types of garnishment, which have been discussed in previous Blog posts. These include a Writ of Garnishment issued to a bank or financial institution and a Continuing Writ of Garnishment issued to a debtor’s employer. Although a judgment creditor can utilize both forms of garnishment in attempting to collect on the judgment, under Section 222.11, Florida Statutes, a debtor has the right to make claimed exemptions to garnishment actions when the debtor is head of household. However, such claimed exemptions may not preclude a creditor’s attempt at garnishment in certain situations. This Blog post discusses when claimed exemptions for head of household may not apply to garnishment actions when the debtor is an independent contractor, the sole owner of a corporation or an owner of a single member LLC.
Lenders and trade vendors often sagely require personal guarantees from the insiders of their debtor. In the event of debtor bankruptcy, a creditor may look to the insider-guarantor to satisfy the debt. The creditor’s ability to be made whole, then, is directly related to the financial position of the insider-guarantor. There is a problem: the Deprizio doctrine can erode the insider-guarantor’s financial position. Under the doctrine, the bankruptcy Trustee may disgorge assets from the guarantor that could otherwise satisfy the debt. Luckily, there is a solution to the Deprizio problem: a carefully crafted guaranty agreement that waives the guarantor’s claim against the bankruptcy debtor. This blog post explains the problem and clarifies the solution.
Under Florida law, the dissolution of a corporation can occur for many reasons. Section 607.1401, Florida Statutes, covers dissolution occurring by the actions of incorporators; section 607.1402, Florida Statutes, concerns dissolution by the board of directors and/or shareholders; and section 607.1420, Florida Statutes, governs administrative dissolution, which is an action commenced by the department of the Florida Secretary of State for various reasons. Whatever the cause for the dissolution, Florida law is clear on the process for winding up the corporation, including the allowable actions by agents, officers and directors subsequent to the dissolution. Specifically, those individuals may not carry on any business except that appropriate to wind up and liquidate the business and its affairs. Fla. Stat. § 607.1405(1). If a person enters into contracts or conducts other business in the name of a dissolved corporation then that person can be held personally liable for those contracts and business obligations. This blog post will discuss the extent of that personal liability and the remedies available to those damaged by corporate action subsequent to dissolution.