Recently in the early spring of 2016, Ascentium Capital was the named defendant in two Texas District Court lawsuits connected to a business arrangement whereby doctors would sell home health care, administered by nurse practitioners hired by the vendor. Ascentium financed $45,000,000 of these deals involving a small number of iPads and a license to use a home health care product! The Plaintiffs are seeking damages as well as certification of a class action.
SB 297 amends the California Finance Lenders Law by increasing licensing and registration requirements while expanding oversight of lead generators in the lending industry. The law adds a new category of regulation to the legislation that now requires brokers and lenders to secure finance lenders licenses in California.
On May 4, 2017, the House Financial Services Committee approved Chairman Jeb Hensarling’s (R-TX) Financial CHOICE Act (H.R. 10) by a party-line vote of 34-26. The bill goes to the full House and will be considered on the floor later in May sometime before the Memorial Day recess.
Contract provisions known as “hell or high water” clauses typically refer to contractual and statutory safeguards common in finance leases whereby a lessee agrees to pay rent to the lessor despite the circumstance, come hell or high water. The assurance of payment provided by this type of clause is a lessor’s major motivating factor in providing the necessary funds for the transaction.
SB 297 was introduced in the California Senate in 2016 to expand the licensure and regulation of finance lenders and brokers by including finders, i.e., individuals that facilitate loans between borrowers and lenders. The latest version of SB 297, amended on April 17, 2017, now refers to “finders” as lead generators. Reaction to the amended version finds attorneys, scholars, and observers alike questioning various aspects of the bill.
An earlier blog discussed the California Senate’s bill to expand the licensure and regulation of finance lenders and brokers to include finders. On April 17, 2017, SB 297 was amended in the California Senate. As the bill amends the California Finance Lenders Law it would increase licensing and registration requirements while expanding oversight of lead generators in the lending industry.
Because modern voidable transaction laws permit certain transactions to be avoided despite the lack of any actual fraud, the advice of experienced legal counsel is often necessary for avoiding transfers which may suggest fraud that is constructive or otherwise not purposeful. Managing, and therefore, mitigating the risk of voidable transactions involves balancing cost and results. As with most transactions, the insertion of certain, key, important terms in an agreement may help bring desired results.
Cal. Civ. Code § 3439.04(a) refers to transfers made or obligations incurred by a debtor with actual intent to harm one of its creditors by hindering, delaying, or defrauding the creditor. Thus, “actual intent” must be present for the transfer to be “voidable” under the statute. Cal. Civ. Code § 3439.04(b) states that any determination of actual intent states must consider eleven (11) factors set out in § 3439.04(b).
Less than two years ago, the California legislature accepted a proposal to adopt amendments to the California Uniform Fraudulent Transfer Act (UFTA). Effective on January 1, 2016, one of the amendments changed the name of the statute to the “Uniform Voidable Transactions Act” (UVTA). The amendments also eliminated the word “fraudulent” from the statute, replacing it with “voidable.” This, in itself, is an interesting fact since California law at the time of the amendments provided that a fraudulent transfer is void from inception.
Upon the filing of most Chapter 11 bankruptcy cases, a hearing will be held by the bankruptcy court to review and hear an array of motions filed by the debtor. These motions typically include approval to make post-petition financing arrangements and immediate payment on pre-petition debt as necessary. These motions also seek approval of the employment and payment of professionals including, but not limited to, attorneys, appraisers, and real estate brokers.