Proceedings Supplementary and the Investigation of Hidden Assets
DRAMATIZATION NOTICE: This case study is a fictional dramatization created for educational purposes. Any resemblance to real persons or specific legal matters is coincidental. Details have been modified to protect attorney-client privilege and confidentiality. This is not a guarantee of results; every case depends on unique facts and the specific application of Florida law.
The Problem: The “I Have Nothing” Defense
It’s a scenario we see frequently at Marcadis Singer PA. A business owner, medical provider, or commercial lender spends months in litigation, wins a $500,000 judgment, and then receives a metaphorical shrug from the debtor.
On paper, the debtor is suddenly insolvent. Their bank accounts are drained. Their equipment has vanished. They tell you: “The business failed. There’s nothing left to take. You can’t squeeze blood from a turnip.”
But in Florida, a judgment is not the end of the story—it is the beginning of the hunt.
The Scenario: Fjenden Industrial Supply
Fjenden Industrial Supply (fictional) was a mid-sized commercial supplier owed $512,000 by a construction subcontractor. After obtaining a final judgment, Fjenden found the subcontractor’s warehouse empty. The owner claimed the business was “defunct” due to market pressures.
However, Fjenden noticed that the owner’s same trucks were still on the road, now bearing a slightly different logo and operating under a new LLC name. This is where Proceedings Supplementary change the trajectory of a case.
The Strategic Recovery Process
Step 1: The “Deposition in Aid of Execution”
Before moving for proceedings supplementary, we utilize Florida Rule of Civil Procedure 1.560. We bring the debtor—and often their bookkeeper or spouse—into our office for a deposition.
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The Focus: We don’t ask about why they didn’t pay the bill; we ask about where the assets went.
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The Discovery: In this case, we subpoenaed bank records from the owner’s spouse and a newly formed “Fjenden Holding LLC.” We discovered that heavy machinery worth $300,000 was “sold” to the spouse’s new entity for $10.00 just days after the original lawsuit was served.
Step 2: Initiating Proceedings Supplementary (Fla. Stat. § 56.29)
Once a suspicious transfer is identified, we move the court to initiate Proceedings Supplementary. This is a powerful statutory tool that allows a creditor to:
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Implead Third Parties: We bring the spouse and the new LLC into the existing lawsuit as “Third-Party Defendants.”
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Statutory Presumption of Fraud: Under Florida law, any transfer to an “insider” (spouse, relative, or affiliated business) made within one year of service of process is presumptively fraudulent. The burden of proof shifts to the debtor to prove the transfer was for “reasonably equivalent value.”
Step 3: Piercing the Corporate Veil & Successor Liability
In our case study, the “new” company was performing the exact same contracts with the same employees and equipment. We argued Successor Liability—the legal principle that a company cannot simply “molt” its corporate skin to shed its liabilities while keeping its assets.
Step 4: The Court’s Final Order
Because we methodically traced the paper trail, the court issued a decisive order:
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Voiding the $10 equipment sale as a fraudulent transfer.
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Authorizing the Sheriff to levy on the machinery at the new warehouse.
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Entering a personal judgment against the third parties who knowingly received the improperly shielded property.
The Result: Meaningful Recovery
Instead of a “Zero Recovery,” Fjenden Industrial Supply recovered $410,000. The threat of a Sheriff’s sale on their essential equipment—which would have halted their new business operations—forced the debtor to the negotiating table with a realistic payment plan.
What Creditors Need to Know (FAQ)
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Is it too late if they already moved the money? No. Florida’s Uniform Fraudulent Transfer Act (UFTA) allows creditors to “unwind” transfers made to hinder, delay, or defraud creditors.
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What is the “Notice to Appear”? Under current Florida standards, the court must issue a formal “Notice to Appear” to any third party holding debtor assets. This is the moment the third party realizes they are now legally and financially on the hook.
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Can I recover my attorney’s fees? Yes. Fla. Stat. § 56.29(8) allows the court to tax reasonable attorney’s fees and costs against the judgment debtor for these specialized enforcement proceedings.
Final Thoughts: Don’t Settle for a Piece of Paper
At Marcadis Singer PA, we remind our clients that a judgment is a valuable asset—but like any asset, it must be managed and enforced. If a debtor claims they “have nothing,” we look behind the curtain. Proceedings supplementary are the “teeth” of Florida law, designed to ensure that “insolvency” isn’t used as a mask for bad faith.