Debtors oftentimes attempt to shield their assets from creditors by transferring them away to others. If this is done, a creditor can bring an action under Florida’s Uniform Fraudulent Transfer Act (UFTA) to attempt to undue the transfer and execute on the transferred property as a fraudulent transfer.
Alternatively a holder of a Florida judgment can seek to reach transferred documents under “proceedings supplementary.” Such action has the benefit of not requiring the commencement of a new and independent action. Another benefit of proceedings supplementary over an action under the UFTA is that the 4 year statute of limitations under the UFTA will not apply – instead the creditor can proceed at any time during the term of the judgment so long as the action giving rise to the judgment was filed within 4 years of a fraudulent transfer. Biel Reo LLC, 156 So3d 506 (1st DCA 2014).
A recent Florida case illustrates another advantage of proceedings supplementary. In the case, a judgment holder proceeded against a debtor to reach assets that the debtor had transferred to his spouse. The trial court ruled against the creditor, finding that the creditor had not proved the debtor made the transfer to “delay, hinder, or defraud creditors” (which is a requirement of the proceedings supplementary statute). The creditor had the burden of proof on this issue and did not meet it.
The trial court decision was overturned on appeal, because in proceedings supplementary if certain stated time period requirements are met, the burden of proof is on the debtor to show that the transfer at issue was not made to delay, hinder or defraud creditors. That is, the burden of proof was on the debtor, not the creditor. A useful reminder of another advantage of proceedings supplementary.
RREF SNV-FL SSL, LLC., Appellant, v. Shamrock Storage, LLC et al, 1st District. Case No. 1D14-4257, 40 Fla.L.Weekly D2407a