California Commercial Code

§ 6106.2

COM § 6106.2Div. 6

Statute text

(a)This section applies only to a bulk sale where the consideration is two million dollars ($2,000,000) or less and is substantially all cash or an obligation of the buyer to pay cash in the future to the seller or a combination thereof.

(b)Upon every bulk sale subject to this section except one made by sale at auction or a sale or series of sales conducted by a liquidator on the seller’s behalf, it is the duty of the buyer or, if the transaction is handled through an escrow, the escrow agent to apply the cash consideration in accordance with this section so far as necessary to pay those debts of the seller for which claims are due and payable on or before the date of the bulk sale and are received in writing on or prior to the date specified as the last date to file claims with the person designated in the notice to receive claims. This duty of the buyer or escrow agent runs to each claimant timely filing the claim.

(c)If the seller disputes whether a claim is due and payable on the date of the bulk sale or the amount of any claim, the buyer or escrow agent shall withhold from distribution an amount equal to (1) 125 percent of the first seven thousand five hundred dollars ($7,500) of the claim, and (2) an amount equal to that portion of the claim in excess of the first seven thousand five hundred dollars ($7,500), or the pro rata amount under subdivision (b) of Section 6106.4, if applicable, and shall send a written notice to the claimant filing the claim on or before two business days after the distribution that the amount will be paid to the seller, or to the other claimants in accordance with subdivision (b) of Section 6106.4, as the case may be, unless attached within 25 days from the mailing of the notice. Any portion of the amount withheld which is not attached by the claimant within that time shall be paid by the buyer or escrow agent to the seller, or to the other claimants in accordance with subdivision (b) of Section 6106.4 if they have not been paid in full. An attachment of any amount so withheld shall be limited in its effect to the amount withheld for the attaching claimant and shall give the attaching claimant no greater priority or rights with respect to its claim than the claimant would have had if the claim had not been disputed. For purposes of this subdivision, a claimant may obtain the issuance of an attachment for a claim which is less than five hundred dollars ($500) and which otherwise meets the requirements of Section 483.010 of the Code of Civil Procedure or which is a secured claim or lien of the type described in Section 483.010 of the Code of Civil Procedure. The remedy in this subdivision shall be in addition to any other remedies the claimant may have, including any right to attach the property intended to be transferred or any other property.

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Legislative history

Added by Stats. 1990, Ch. 1191, Sec. 4.