California Civil Code Part 3432
Uncover 2022
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California’s Civil Code part 3432 reads: A debtor could pay one creditor in place of one other, or could give to 1 creditor safety for the cost of his demand in place of one other.
Certainly one of many judgment articles: I’m not a lawyer, and this text is my opinion primarily based on my expertise, please seek the advice of with a lawyer when you want authorized recommendation.
For post-judgment restoration makes an attempt in California, what in case your proposed charging order (or another kind of order) is accepted by the courtroom, after which an (particular person or entity) debtor tries to assert that CCP 3432 and their monetary scenario solely permits them to pay a few of their collectors, however not you?
If the California debtor wins their CCP 3432 argument that they’re unable to pay all their money owed, are they allowed to pay some collectors and go away you and their different collectors hanging?
What if the California debtor is an organization that makes use of CCP 3432 to argue that they should pay dividends to their traders, nevertheless can not pay their collectors? Would that argument fail as a result of dividends paid to traders usually are not thought of money owed, and are supposed to come back out of earnings; and you probably have not paid your money owed, you don’t actually have earnings to distribute?
Logically, an obligation to pay out dividends can be thought of a debt, nevertheless that obligation wouldn’t truly come up till and except there have been precise earnings to distribute.
In case your California enterprise debtor tries to make use of CCP 3432, which CCP code part(s) may you employ to attempt to cease them? After all, within the case of a enterprise paying dividends however not collectors is likely to be thought of a fraudulent switch, as a result of even when you name the transfers “earnings”, they have been distributed with out honest market worth in return, and left the enterprise unable to pay its common collectors.
Within the case of a debtor’s fraud, one may seek for case regulation which mentions each 3432 and fraudulent transfers. Fairness traders usually are not collectors though bondholders are. The debt must be reliable, or else the cost could possibly be thought of a fraudulent switch.
If it isn’t a enterprise debtor, or not a fraudulent switch scenario; it is going to in all probability be tough to combat a CCP 3432 argument, could your judgment debtor by no means carry it up. I’m not a lawyer, and my opinion for countering a CCP 3432 argument, is to counsel a reimbursement association over time. If the debtor claims they can not pay you as a result of they’re paying another person, counsel they pay slightly every month, and attempt to make {that a} court-endorsed stipulated order.
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