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Fraudulent Transfers In Florida

A corporation is a separate legal entity, with its own identity. Once funds are deposited into a corporate account, those funds become the property of the corporation. Decisions with regard to a corporation's property are made by the shareholders and carried out by the board of directors and officers of the corporation. Florida law requires that a corporation has a board of directors and that the board exercise all corporate powers. Any action of the board must be approved in a meeting and if no such meeting occurs, then by written unanimous consent of the board of directors. The board of directors has the authority to execute bylaws, which detail the methods through which these decisions and activities occur.

The directors of a corporation are fiduciaries who are entrusted with the activities of the corporation and are held to a high standard of conduct. Under Florida corporate law, a director must perform his or her corporate duties: (1) in good faith; (2) with such care as an ordinary prudent person in a like position would exercise under similar circumstances; and (3) in a manner the director reasonably believes to be in the best interests of the corporation. Courts have noted that Florida law has long recognized that corporate officers and directors owe duties of loyalty and a duty of care to the corporation. A director's fiduciary duties are extended to the creditors of a corporation when the corporation becomes insolvent or is in the vicinity of insolvency.

Fraudulent transfers in Florida are governed by statute:
A transfer made by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made if the transfer was made to an insider for an antecedent debt, the debtor was insolvent at the time, and the insider had reasonable cause to believe that the debtor was insolvent.

Generally speaking, if there is not enough corporate funds to pay all creditors, an "insider" of the corporation cannot get paid before outside creditors.

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