If a creditor cannot satisfy his judgment through garnishment, attachments and some other legal tools pursuant to a writ of execution the creditor may initiate proceedings supplementary to execution pursuant to Florida Statute 56.29. Proceeding supplementary is the most wide ranging and comprehensive creditor remedy. Proceedings supplementary assists judgment creditors’ satisfaction of their judgments by using a equitable remedies against a variety of types of debtor rights and property which are not subject to garnishment, levy or attachment tools.
For example, proceeding supplementary enable a creditor to seize a judgment debtor’s stock in a corporation, the debtor’s accounts receivable, or his causes of action against a third party. These proceedings may also reach a debtor’s intangible assets such as trademarks or logos. The following is a sample of creditor equitable remedies implemented through proceedings supplementary:
- Avoiding fraudulent transfers: Creditors may sue third party recipients of alleged fraudulent transfers in order to reverse the transfer or obtain a judgment against the recipient for the value of property transferred. Court may order to apply transferred real property to satisfy judgment or have sheriff seize fraudulently transferred personal property.
- Reversing fraudulent conversion: Creditors may obtain a court order reversing the debtor’s use of non-exempt assets to purchase or obtain an exempt asset if the purchase was intended to protect the non-exempt assets from creditors. An example of a fraudulent conversion is using non-exempt cash to buy an exempt annuity contract.
- Piercing corporate veil: creditor may sue individual to enforce judgment against corporation where the corporation has been established to defraud creditors or is merely the debtor’s alter-ego.
- Reverse piercing: creditor sues corporation to satisfy judgment against individual who conveyed personal assets to alter-ego corporation to avoid collection.
- Apply for a charging liens against debtor’s ownership of limited partnerships and limited liability companies;
- Issuance of injunctions against the debtor preventing subsequent transfer of the debtor’s property;
- Appointment of a court receiver to take possession of the debtor’s property. Proceeding supplementary is the most wide ranging and comprehensive creditor remedy.
- Enforcement of equitable liens against the debtor’s real property including, when applicable, the debtor’s homestead.
The proceedings supplementary statute gives the creditor the right to compel the debtor to appear in court and testify before a judge or magistrate about the debtor’s assets. The creditor may require the debtor to bring to the court examination specific documents or property. The examination of the debtor must be set in the county in which the debtor currently resides. The creditor has broad authority to examine the debtor on all matters and things pertaining to the debtor’s personal or business interest, and the creditor may ask any question that directly, or indirectly, may aid in satisfying the judgement. The creditor may also examine third parties who may be the debtor’s “alter-ego” or who may be transferees of the debtor’s property.
A creditor initiates proceedings by filing a motion with the court that issued the final judgment. Proceedings may be commenced at any time during the 20 year life of a final judgment. Proceedings are initiated in the same county where the principal action was maintained.
The court may used proceedings supplementary to reach property either by ordering a sheriff to seize property or by ordering the Florida debtor or third parties to turn over assets located in Florida. The court is authorized to hold the debtor, or others in possession of the debtor’s property, in contempt for ailing to obey any order issued in the proceedings or failing to attend a court ordered examination. However, a court may not required a debtor to turn over assets located in jurisdictions outside the state. The creditor must domesticate the judgment in the foreign jurisdiction and reach such assets through the court proceedings in the foreign jurisdiction.
Proceedings supplementary also provide an independent avenue to reverse a debtor’s fraudulent transfers of personal property. The statute provides that a creditor may order a transferee of personal property to turn over to the creditor any personal property that a debtor conveyed to a spouse, relative, or other insider within one year prior to the initiation of the underlying lawsuit. At least one court has held that the four year statute of limitations applicable to fraudulent transfers does not apply to actions to actions directed against transfers of personal property in the context of a proceedings supplementary. A creditor may initiate recovery of above-described personal property transfers at any time during the 20 year life of a Florida judgment.