Legislation that would eliminate the requirement to publish specific public notices as well as the entire statutory scheme that protects creditors when a business is sold will be heard by the Assembly Judiciary Committee on Tuesday June 19.
Introduced by Senator Ellen Corbett (D-San Leandro), SB 12 would repeal in its entirety, California's bulk sales law that protects creditors, many of whom are small businesses, by providing notification of a pending sale of a debtor businesses' assets. The bill offers no proposal to replace the safeguards that are currently in place.
According to the California Escrow Association, in April 2012 alone, over 800 business and liquor license transactions requiring publication took place.
SB 12 is opposed by CNPA, the California Escrow Association and the California Escrow Institute.
California is one of only four states that continue to protect creditors through a non-judicial bulk sale process. The procedure used in most other states requires a creditor to obtain an attorney and pursue a remedy in the courts.
The California Commission on Uniform State Laws is the sponsor of the bill and has been working to repeal the law for several years. The Commission argues that emerging technology and existing regulations provide an adequate remedy.
Opponents counter that the sponsor's position simply ignores the reality that in all likelihood, once all of its assets are transferred, a debtor businesses essentially becomes judgment proof.