Miami, Florida, June 26, 2007 Mindy A. Mora, a Partner in the Restructuring & Bankruptcy Group at Bilzin Sumberg Baena Price & Axelrod LLP, led The Florida Bar task force responsible for drafting SB 2118 and HB 1445, the recently-passed legislation amending Florida Statute Chapter 727, General Assignments, but more commonly referred to as "Assignments for the Benefit of Creditors." Governor Charlie Crist signed SB 2118 into law on June 19, 2007, as Chapter No. 2007-185.
Ms. Mora and the other task force members met extensively with insolvency attorneys and assignees, and reviewed all pertinent case law that has been published since the original assignment for the benefit of creditors statute was enacted in 1987, before sending it to The Florida Bar for review and approval, and submitting it to the Florida Legislature.
"Under this bill, Florida businesses will now be able to utilize an updated state court alternative to liquidation under the federal bankruptcy law," Ms. Mora noted.
"Since 1987, commercial debtors have been able to liquidate under a comprehensive assignment for the benefit of creditors statute in state court, as opposed to the more costly process under the federal bankruptcy laws," she further explained. "Because the law had not been updated or modernized since 1987, the Business Law Section of The Florida Bar took on the task of amending it to make it a more viable alternative to chapter 7 liquidation for Florida businesses."
The new legislation revises Chapter 727 in several ways, including expansion of the powers of assignees and of the courts, staying judicial lien creditors from enforcing their claims against real property transferred to the assignment estate, increased priority claim amounts for employees and consumers, limitations on landlord and employment contract claims, and clarification of filing procedures.
"However," said Ms. Mora, "two of the most important changes this bill brings about are that assets which can be liquidated in an assignment case now clearly include tort claims and causes of action, and the defense of malfeasance by an assignor is no longer a valid defense in an action brought by an assignee. These changes are significant because they will increase the pool of assets from which creditors may obtain a recovery on their claims."
Ms. Mora praised the hard work of everyone involved with drafting and enacting the legislation. She worked closely with Representative Elaine Schwartz (D District 99), who was the House Sponsor of the bill which takes effect July 1, 2007.
"Rep. Schwartz was instrumental in getting this bill passed, as were Representative Jack Seiler (D District 92) of the Florida House of Representatives, and Senator Arthenia Joyner (D District 18) of the Florida State Senate. Without their help, and the assistance of William B. Willey, Business Law Section Lobbyist to The Florida Bar, and Orlando attorney Douglas W. Neway, we would not have been able to accomplish all we have done," said Ms. Mora.
Rep. Schwartz also had high praise for her colleagues bipartisan spirit in the Florida House and Senate.
"This was the very last piece of legislation brought to the floor in this session," she said. "There was a lot of cooperation on both sides of the aisle, because we all realized how important this bill is to Floridas business community."
The final bill consolidated the changes to Chapter 727 along with changes to Floridas exemption laws applicable to individual debtors who are Florida residents. The new legislation increases an individual debtors exemption of personal property to $4,000 if the debtor is not claiming a homestead exemption. This increase in the personal property exemption, from the prior amount of $1,000, is the first increase since 1868. Ms. Mora also noted that child and spousal support are not subject to this exemption.
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