2009 California Code of Civil Procedure - Section 1800-1802 :: Title 11.7. Recovery Of Preferences And Exempt Property In An Assignment For The Benefit Of Creditors

1800.  (a) As used in this section, the following terms have the
following meanings:
   (1) "Insolvent" means:
   (A) With reference to a person other than a partnership, a
financial condition such that the sum of the person's debts is
greater than all of the person's property, at a fair valuation,
exclusive of both of the following:
   (i) Property transferred, concealed, or removed with intent to
hinder, delay, or defraud the person's creditors.
   (ii) Property that is exempt from property of the estate pursuant
to the election of the person made pursuant to Section 1801.
   (B) With reference to a partnership, financial condition such that
the sum of the partnership's debts are greater than the aggregate
of, at a fair valuation, both of the following:
   (i) All of the partnership's property, exclusive of property of
the kind specified in clause (i) of subparagraph (A).
   (ii) The sum of the excess of the value of each general partner's
separate property, exclusive of property of the kind specified in
clause (ii) of subparagraph (A), over the partner's separate debts.
   (2) "Inventory" means personal property leased or furnished, held
for sale or lease, or to be furnished under a contract for service,
raw materials, work in process, or materials used or consumed in a
business, including farm products such as crops or livestock, held
for sale or lease.
   (3) "Insider" means:
   (A) If the assignor is an individual, any of the following:
   (i) A relative of the assignor or of a general partner of the
assignor.
   (ii) A partnership in which the assignor is a general partner.
   (iii) A general partner of the assignor.
   (iv) A corporation of which the assignor is a director, officer,
or person in control.
   (B) If the assignor is a corporation, any of the following:
   (i) A director of the assignor.
   (ii) An officer of the assignor.
   (iii) A person in control of the assignor.
   (iv) A partnership in which the assignor is a general partner.
   (v) A general partner of the assignor.
   (vi) A relative of a general partner, director, officer, or person
in control of the assignor.
   (C) If the assignor is a partnership, any of the following:
   (i) A general partner in the assignor.
   (ii) A relative of a general partner in, general partner of, or
person in control of the assignor.
   (iii) A partnership in which the assignor is a general partner.
   (iv) A general partner of the assignor.
   (v) A person in control of the assignor.
   (D) An affiliate of the assignor or an insider of an affiliate as
if the affiliate were the assignor.
   (E) A managing agent of the assignor.
   As used in this paragraph, the following terms have the following
meanings:
   "Relative" means an individual related by affinity or
consanguinity within the third degree as determined by the common
law, or an individual in a step or adoptive relationship within the
third degree.
   An "affiliate" means a person that directly or indirectly owns,
controls, or holds, with power to vote, 20 percent or more of the
outstanding voting securities of the assignor, or 20 percent or more
of whose outstanding voting securities are directly or indirectly
owned, controlled, or held with power to vote by the assignor,
excluding securities held in a fiduciary or agency capacity without
sole discretionary power to vote, or held solely to secure a debt if
the holder has not in fact exercised the power to vote, or a person
who operates the business of the assignor under a lease or operating
agreement or whose business is operated by the assignor under a lease
or operating agreement.
   (4) "Judicial lien" means a lien obtained by judgment, levy,
sequestration, or other legal or equitable process or proceeding.
   (5) "New value" means money or money's worth in goods, services,
or new credit, or release by a transferee of property previously
transferred to the transferee in a transaction that is neither void
nor voidable by the assignor or the assignee under any applicable
law, but does not include an obligation substituted for an existing
obligation.
   (6) "Receivable" means a right to payment, whether or not the
right has been earned by performance.
   (7) "Security agreement" means an agreement that creates or
provides for a security interest.
   (8) "Security interest" means a lien created by an agreement.
   (9) "Statutory lien" means a lien arising solely by force of a
statute on specified circumstances or conditions, or lien of distress
for rent, whether or not statutory, but does not include a security
interest or judicial lien, whether or not the interest or lien is
provided by or is dependent on a statute and whether or not the
interest or lien is made fully effective by statute.
   (10) "Transfer" means every mode, direct or indirect, absolute or
conditional, voluntary or involuntary, or disposing of or parting
with property or with an interest in property, including retention of
title as a security interest.
   (b) Except as provided in subdivision (c), the assignee of any
general assignment for the benefit of creditors, as defined in
Section 493.010, may recover any transfer of property of the assignor
that is all of the following:
   (1) To or for the benefit of a creditor.
   (2) For or on account of an antecedent debt owed by the assignor
before the transfer was made.
   (3) Made while the assignor was insolvent.
   (4) Made on or within 90 days before the date of the making of the
assignment or made between 90 days and one year before the date of
making the assignment if the creditor, at the time of the transfer,
was an insider and had reasonable cause to believe the debtor was
insolvent at the time of the transfer.
   (5) Enables the creditor to receive more than another creditor of
the same class.
   (c) The assignee may not recover under this section a transfer as
follows:
   (1) To the extent that the transfer was both of the following:
   (A) Intended by the assignor and the creditor to or for whose
benefit the transfer was made to be a contemporaneous exchange for
new value given to the assignor.
   (B) In fact a substantially contemporaneous exchange.
   (2) To the extent that the transfer was all of the following:
   (A) In payment of a debt incurred in the ordinary course of
business or financial affairs of the assignor and the transferee.
   (B) Made in the ordinary course of business or financial affairs
of the assignor and the transferee.
   (C) Made according to ordinary business terms.
   (3) Of a security interest in property acquired by the assignor
that meets both of the following:
   (A) To the extent the security interest secures new value that was
all of the following:
   (i) Given at or after the signing of a security agreement that
contains a description of the property as collateral.
   (ii) Given by or on behalf of the secured party under the
agreement.
   (iii) Given to enable the assignor to acquire the property.
   (iv) In fact used by the assignor to acquire the property.
   (B) That is perfected within 20 days after the security interest
attaches.
   (4) To or for the benefit of a creditor, to the extent that, after
the transfer, the creditor gave new value to or for the benefit of
the assignor that meets both of the following:
   (A) Not secured by an otherwise unavoidable security interest.
   (B) On account of which new value the assignor did not make an
otherwise unavoidable transfer to or for the benefit of the creditor.
   (5) Of a perfected security interest in inventory or a receivable
or the proceeds of either, except to the extent that the aggregate of
all the transfers to the transferee caused a reduction, as of the
date of the making of the assignment and to the prejudice of other
creditors holding unsecured claims, of any amount by which the debt
secured by the security interest exceeded the value of all security
interest for the debt on the later of the following:
   (A) Ninety days before the date of the making of the assignment.
   (B) The date on which new value was first given under the security
agreement creating the security interest.
   (6) That is the fixing of a statutory lien.
   (7) That is payment to a claimant, as defined in Section 3085 of
the Civil Code, in exchange for the claimant's waiver or release of
any potential or asserted claim of lien, stop notice, or right to
recover on a payment bond, or any combination thereof.
   (8) To the extent that the transfer was a bona fide payment of a
debt to a spouse, former spouse, or child of the debtor, for alimony
to, maintenance for, or support of, the spouse or child, in
connection with a separation agreement, divorce decree, or other
order of a court of record, or a determination made in accordance
with state or territorial law by a governmental unit, or property
settlement agreement; but not to the extent that either of the
following occurs:
   (A) The debt is assigned to another entity voluntarily, by
operation of law or otherwise, in which case the assignee may not
recover that portion of the transfer that is assigned to the state or
any political subdivision of the state pursuant to Part D of Title
IV of the Social Security Act (42 U.S.C. Sec. 601 et seq.) and passed
on to the spouse, former spouse, or child of the debtor.
   (B) The debt includes a liability designated as alimony,
maintenance, or support, unless the liability is actually in the
nature of alimony, maintenance, or support.
   (d) An assignee of any general assignment for the benefit of
creditors, as defined in Section 493.010, may avoid a transfer of
property of the assignor transferred to secure reimbursement of a
surety that furnished a bond or other obligation to dissolve a
judicial lien that would have been avoidable by the assignee under
subdivision (b). The liability of the surety under the bond or
obligation shall be discharged to the extent of the value of the
property recovered by the assignee or the amount paid to the
assignee.
   (e) (1) For the purposes of this section:
   (A) A transfer of real property other than fixtures, but including
the interest of a seller or purchaser under a contract for the sale
of real property, is perfected when a bona fide purchaser of the
property from the debtor, against whom applicable law permits the
transfer to be perfected, cannot acquire an interest that is superior
to the interest of the transferee.
   (B) A transfer of a fixture or property other than real property
is perfected when a creditor on a simple contract cannot acquire a
judicial lien that is superior to the interest of the transferee.
   (2) For the purposes of this section, except as provided in
paragraph (3), a transfer is made at any of the following times:
   (A) At the time the transfer takes effect between the transferor
and the transferee, if the transfer is perfected at, or within 10
days after, the time, except as provided in subparagraph (B) of
paragraph (3) of subdivision (c).
   (B) At the time the transfer is perfected, if the transfer is
perfected after the 10 days.
   (C) Immediately before the date of making the assignment if the
transfer is not perfected at the later of:
   (i) The making of the assignment.
   (ii) Ten days after the transfer takes effect between the
transferor and the transferee.
   (3) For the purposes of this section, a transfer is not made until
the assignor has acquired rights in the property transferred.
   (f) For the purposes of this section, the assignor is presumed to
have been insolvent on and during the 90 days immediately preceding
the date of making the assignment.
   (g) An action by an assignee under this section must be commenced
within one year after making the assignment.

1801.  In any general assignment for the benefit of creditors (as
defined in Section 493.010), the assignor, if an individual, may
choose to retain as exempt property either the property which is
otherwise exempt under Chapter 4 (commencing with Section 703.010) of
Division 2 of Title 9 of Part 2 or, in the alternative, the
following property:
   (a) The assignor's aggregate interest, not to exceed seven
thousand five hundred dollars ($7,500) in value, in real property or
personal property that the assignor or a dependent of the assignor
uses as a residence, in a cooperative that owns property that the
assignor or a dependent of the assignor uses as a residence, or in a
burial plot for the assignor or a dependent of the assignor.
   (b) The assignor's interest, not to exceed one thousand two
hundred dollars ($1,200) in value, in one motor vehicle.
   (c) The assignor's interest, not to exceed two hundred dollars
($200) in value in any particular item, in household furnishings,
household goods, wearing apparel, appliances, books, animals, crops,
or musical instruments, that are held primarily for the personal,
family, or household use of the assignor or a dependent of the
assignor.
   (d) The assignor's aggregate interest, not to exceed five hundred
dollars ($500) in value, in jewelry held primarily for the personal,
family, or household use of the assignor or a dependent of the
assignor.
   (e) The assignor's aggregate interest, not to exceed in value four
hundred dollars ($400) plus any unused amount of the exemption
provided under subdivision (a), in any property.
   (f) The assignor's aggregate interest, not to exceed seven hundred
fifty dollars ($750) in value, in any implements, professional
books, or tools, of the trade of the assignor or the trade of a
dependent of the assignor.
   (g) Any unmatured life insurance contract owned by the assignor,
other than a credit life insurance contract.
   (h) The assignor's aggregate interest, not to exceed in value four
thousand dollars ($4,000) in any accrued dividend or interest under,
or loan value of, any unmatured life insurance contract owned by the
assignor under which the insured is the assignor or an individual of
whom the assignor is a dependent.
   (i) Professionally prescribed health aids for the assignor or a
dependent of the assignor.
   (j) The assignor's right to receive any of the following:
   (1) A social security benefit, unemployment compensation, or a
local public assistance benefit except that this paragraph does not
preclude the application of Section 1255.7 of the Unemployment
Insurance Code.
   (2) A veterans' benefit.
   (3) A disability, illness, or unemployment benefit except that
this paragraph does not preclude the application of Section 1255.7 of
the Unemployment Insurance Code.
   (4) Alimony, support, or separate maintenance, to the extent
reasonably necessary for the support of the assignor and any
dependent of the assignor.
   (5) A payment under a stock bonus, pension, profit sharing,
annuity, or similar plan or contract on account of illness,
disability, death, age, or length of service, to the extent
reasonably necessary for the support of the assignor and any
dependent of the assignor, unless:
   (i) The plan or contract was established by or under the auspices
of an employer of which the assignor was a partner, officer, director
or controlling person at the time the assignor's rights under the
plan or contract arose;
   (ii) The payment is on account of age or length of service; and
   (iii) Such plan or contract does not qualify under Section 401(a),
403(a), 403(b), 408, or 409 of the Internal Revenue Code of 1954 (26
U.S.C. 401(a), 403(a), 403(b), 408, or 409).
   (k) The assignor's right to receive, or property that is traceable
to any of the following:
   (1) An award under a crime victim's reparation law.
   (2) A payment on account of the wrongful death of an individual of
whom the assignor was a dependent, to the extent reasonably
necessary for the support of the assignor and any dependent of the
assignor.
   (3) A payment under a life insurance contract that insured the
life of an individual of whom the assignor was a dependent on the
date of such individual's death, to the extent reasonably necessary
for the support of the assignor and any dependent of the assignor.
   (4) A payment, not to exceed seven thousand five hundred dollars
($7,500), on account of personal bodily injury, as compensation for
pain and suffering or actual pecuniary loss (other than loss of
future earnings), of the assignor or an individual of whom the
assignor is a dependent.
   (5) A payment in compensation of loss of future earnings of the
assignor or an individual of whom the assignor is or was a dependent,
to the extent reasonably necessary for the support of the assignor
and any dependent of the assignor.
   In this section, "dependent" includes spouse, whether or not
actually dependent, "assignor" means each spouse, if the assignment
is made by a married couple, and "value" means fair market value as
of the date of the making of the assignment.

1802.  (a) In any general assignment for the benefit of creditors,
as defined in Section 493.010, the assignee shall, within 30 days
after the assignment has been accepted in writing, give written
notice of the assignment to the assignor's creditors, equityholders,
and other parties in interest as set forth on the list provided by
the assignor pursuant to subdivision (c).
   (b) In the notice given pursuant to subdivision (a), the assignee
shall establish a date by which creditors must file their claims to
be able to share in the distribution of proceeds of the liquidation
of the assignor's assets. That date shall be not less than 150 days
and not greater than 180 days after the date of the first giving of
the written notice to creditors and parties in interest.
   (c) The assignor shall provide to the assignee at the time of the
making of the assignment a list of creditors, equityholders, and
other parties in interest, signed under penalty of perjury, which
shall include the names, addresses, cities, states, and ZIP Codes for
each person together with the amount of that person's anticipated
claim in the assignment proceedings.