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CALIFORNIA CORPORATE & SECURITIES LAW

State Controller Defeats Judgment Creditor’s Claim To Escheated Funds

Here is the question:

Can a judgment creditor can enforce an assignment issued pursuant to the Enforcement of Judgments Law (CCP § 680.10 et seq.) for escheated property pursuant to the Unclaimed Property Law (CCP § 1500 et seq.) when the judgment debtor is a suspended corporation pursuant to the Revenue & Taxation Code § 23301?

According to the Fourth District Court of Appeal, the answer is no:

Allowing an assignee of a suspended corporation to obtain unclaimed property under the Unclaimed Property Law procedures would allow the suspended corporation to enjoy the ordinary privileges of an ongoing concern by resolving its debt without the risk of paying taxes, undermining the purpose of Revenue and Taxation Code section 23301.

Bovet v. Chiang, 2017 Cal. App. LEXIS 523 (Cal. Ct. App. 2017).

Bottom line is that a creditor that has reduced its claim to a judgment is left empty handed while the State of California is permitted to hang on to other people’s property indefinitely.  This hardly seems a fair or just result.

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