AB 1049

This bill eliminates certain legal proceedings governing the distribution of a

debtor's assets to creditors.

Under current law, a debtor may make a voluntary assignment for the benefit

of creditors and, if accepted, the assignee must file this assignment with the court

where the debtor lives or has its principal place of business. This assignment and

filing initiates a legal proceeding through which the assignee takes control of the

debtor's property and is responsible for distributing the debtor's assets to creditors.

Also under current law, a creditor may petition the court to sequestrate a debtor's

property and appoint a receiver if the execution of the creditor's judgment against

the debtor is returned unsatisfied or if a debtor corporation is insolvent or has been

dissolved. If the court appoints a receiver or an assignment is filed, the receiver or

assignee is vested with title to the debtor's property and the debtor must file with the

court an inventory of the debtor's assets and a list of the debtor's creditors along with

the amount due each. The receiver or assignee must give notice of the proceeding to

the debtor's creditors and these creditors have three months to file their claims. At

the expiration of this three-month period, the receiver or assignee must file certain

information with the court, including a list of creditors and claims filed. The receiver

or assignee or a creditor may object to any claim and obtain a court hearing as to the

objection. As part of the proceeding, the court orders distribution of the debtor's

assets in a specified order of priority and, during the proceeding, the court may also

enjoin other proceedings by creditors against the debtor. Within six months after the

expiration of the three-month period for filing claims, a receiver or assignee must

file with the court a report containing a full and itemized statement of certain

information relating to the receivership or assignment, including the property

received by the receiver or assignee and the manner in which the receiver or assignee

dealt with the property; the names of the debtor's creditors; the amount of money

realized by the receiver or assignee; and the receiver's or assignee's receipts and

disbursements, including amounts paid to the debtor's creditors. After filing this

report and giving notice to the creditors, the receiver or assignee may apply to the

court for a final settlement of accounts, which occurs by order of the court after an

opportunity for hearing.

Current law also includes additional provisions relating to a secured creditor's

claims against a debtor's assets in a liquidation proceeding and disclosure of the

nature of the creditor's security interest.

This bill repeals all of these provisions.