The following transfers are not subject to this Article:
(1) Those made to give security for the performance of an obligation;
(2) General assignments for the benefit of all the creditors of the transferor, and subsequent transfers by the assignee thereunder;
(3) Transfers in settlement or realization of a lien or other security interests;
(4) Sales by executors, administrators, receivers, trustees in bankruptcy, or any public officer under judicial process;
(5) Sales made in the course of judicial or administrative proceedings for the dissolution or reorganization of a corporation and of which notice is sent to the creditors of the corporation pursuant to order of the court or administrative agency;
(6) Transfers to a person maintaining a known place of business in this State who becomes bound to pay the debts of the transferor in full and gives public notice of that fact, and who is solvent after becoming so bound;
(7) A transfer to a new business enterprise organized to take over and continue the business, if public notice of the transaction is given and the new enterprise assumes the debts of the transferor and he receives nothing from the transaction except an interest in the new enterprise junior to the claims of creditors;
(8) Transfers of property which is exempt from execution. Public notice under subsection (6) or subsection (7) may be given by publishing once a week for two consecutive weeks in a newspaper of general circulation where the transferor had its principal place of business in this state an advertisement including the names and addresses of the transferor and transferee and the effective date of the transfer.
UNIFORM LAWS COMMENT: Prior Uniform Statutory Provision: None.
Purposes:
1. The section defines the transfers which although within the general definition of the previous section ought not to be subjected to the requirements of this Article.
2. Some of the existing Bulk Sales Laws cover "bulk mortgages" as well as outright sales. In this Code security interests of all kinds in personal property are regulated by Article 9, Secured Transactions. Subsection (1) of this section therefore excludes all transfers for security from the operation of this Article. See also Sec 9-111.
3. The exclusions described in subsections (2), (3), (4), (5) and (8) are believed to explain themselves.
4. Subsection (6) will exclude a great many transactions from the requirements of this Article. It is believed the exclusion is justified, and that it removes many of the objections to a law of this character. The transactions excluded are outright sales, since that is the only kind of a transaction in which the transferee is likely to bind himself to pay the transferor's debts. The purpose of this Article on outright sales is to give the seller's creditors a reasonable chance to collect their debts. (See Sections 6-104 through 6-108.) If the buyer is willing to assume personal liability for those debts, and is himself solvent after such assumption, there is no reason to subject the transaction to the delay and red tape which this Article imposes.
5. Subsection (7) deals with certain changes in the ownership of a business, as by incorporation, change of membership of a firm, or transfer from a sole proprietor to a firm. The exclusion is believed to be justified within the limits stated in the subsection. Notice that in all the transactions to which the subsection applies (a) both the original debtor and the new enterprise are personally bound to pay the debts, (b) the property subject to the debts before the transfer is still subject to them, and (c) the original debtor has taken nothing out of the transaction except an interest (shares in a corporation, an interest in a firm, or a subordinated obligation) which is junior to the debts.
Cross References:
Point 1: Section 6-102.
Point 2: Section 9-111 and Article 9 generally.
Definitional Cross References:
"Creditor". Sections 1-201 and 6-109.
"Person". Section 1-201.
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