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Successfully Setting Aside Fraudulent Transfer of Stock

On Behalf of | Sep 1, 2013 | Collection

My firm was recently successful in collections by having a stock transfer from a husband to his second wife set aside as fraudulent. The husband was in a bitter divorce with his former wife and had many judgments entered against him in favor of his ex-wife. During the divorce proceedings, he remarried and transferred 50% of his ownership in his company to his second wife. As a result, we filed a motion to implead the second wife as a third-party defendant to have the transfer to her set aside, which the court granted. As long as a creditor has an outstanding judgment and files the requisite affidavit pursuant to the proceedings supplementary statute (Fla. Stat. §56.29(1)), the creditor is entitled to proceedings supplementary against any recipient of a fraudulent transfer from the debtor.

Following entry of the order impleading the second wife, we filed a motion to set aside the transfer under Florida Statutes §56.29(6)(2) which states that any transfer made with the intent to “delay, hinder or defraud creditors” must be set aside. In this case, we were able to demonstrate to the court that the husband transferred the stock in his company to himself and his second wife as “tenants by the entirety” for no consideration and at a time when he knew he was indebted to his first wife. The transfer was concealed at the time it occurred and despite the transfer, the husband still controlled the company, including its bank accounts and assets. The court gleaned from the evidence presented that the stock was transferred to “delay, hinder and defraud” his ex-wife.

Once the court set aside the transfer, the sheriff was ordered to take possession of the shares of stock and sell the stock. A sheriff sale was held and the ex-wife was the successful bidder and purchased the stock. She is now the sole owner of her ex-husband’s company which is currently in business. This is just another example of how effective the proceedings supplementary statue is in Florida.