Register to Receive Email Updates Regarding California Senate Bill 12
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Regular readers of the First Corporate Solutions blog may recall that we posted a special alert a few weeks ago regarding California Senate Bill 12 (SB 12). As a refresher, SB 12 seeks to amend significant sections of the state Business and Professions Code, the Civil Procedure Code, the Revenue and Taxation Code and Article 6 of the Uniform Commercial Code.
If passed, SB 12 will repeal the California Bulk Sales Law in its entirety.
In an effort to keep our customers and friends in the California Escrow community advised of the latest news regarding this important piece of legislature, we offer the following link to help you track the progress of SB 12: http://leginfo.legislature.ca.gov/faces/billHistoryClient.xhtml. From there, you can register to receive email updates as new developments occur.
3 thoughts on “Register to Receive Email Updates Regarding California Senate Bill 12”
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As far as I can determine SB 12, which was a bill that was gutted and amended to make this sweeping change of doing away with Division 6 of the Uniform Commercial code is being pushed by a group that is in favor of Uniform Laws. That is ok, IF IT MAKES SENSE! Some states have laws on the books because of their history and experience in a given area. There is a reason we are structured this way. We are a BIG Country and what works for one, may not for all.
The only reason I can find for promoting this change, is the concept that if we streamline the process for purchasing a business, more people will buy businesses. I don’t think that logic holds water in this case. You have to look at the (presumably) unintended consequences to make sure the “cure” is not worse than the “disease”.
It appears to me (and someone please correct me if I am wrong), that SB 12 would eliminate a buyer’s statutory successor liability to unsecured creditors. This may be a good thing, until you think about its effect on the seller and on the buyer, after the purchase.
If suppliers don’t have the Notice to Creditors and the current statutory incentive for the Buyer to publish it and conform to the time tested process, what will they do? Will they cease to extend credit to businesses and go with the “cash and carry model? Will they decide to protect their interest by requiring a UCC-1 Financing Statement be filed for every business they do extend credit to? I think one of those scenarios is the most likely.
In either case there are many foreseeable ripple effects on sellers, buyers and the economy in general. In scenario number one, small businesses already suffering from a credit crunch will get even crunchier; In scenario number two, imagine the documentation nightmare resulting if and when a business owner needs to refinance his small business loan; or obtain financing to expand his business. An informed buyer would probably not see it the same way as the committee promoting this “streamlining” bill.
I have heard some Escrow Professionals express a concern that consumers will decide not to do an escrow because of this. I am not concerned about that because the liability elephants in the room in a Bulk Sale remain – namely the secured creditors and state agencies whose rights are established elsewhere BOE.
I could go on, but I think I have made my main observations. I’d love to hear feedback!
I read the statement above and I am an Escrow Professional and have been in this field for 45 years and believe me when I say the fallout from NOT doing an escrow under the Bulk Sale Code would be a nightmare…even tho the buyer and/or seller may hae remedy outside of the Code is in and of itself would only make attorneys richer. Remember, it’s attorneys who write the law and if repealed it will be the attorneys who make themselves rich because there would be lawsuits. Repealing this would NOT eliminate those escrows that fall under the Codes for liquor licenses, it would only eliminate the publishing the Notice to Creditors, but at least the Notice is out there when the ABC 227 is recorded. I feel sorry for the creditors, unsecured, who have to dela with this, the economy is already bad enough, this would only make it worse. It’s obvious you donot understand the escrow process or you would not have made the comment you made.
I guess my post was not clear. I am advocating retaining the code exactly the way it is and pointing out some of the potential fallout from this bill’s passage from actions I think creditors may take to protect themselves. Having done this 32 years myself, I don’t think that we disagree at all.