The Senate Judiciary Committee in the Delaware Legislature is considering a bill to clarify specific aspects of the state’s unclaimed property laws. Senate Bill 281 (“the Act”), introduced on May 4, 2022, proposes to grant broader rights to the State Escheator, impacting both Voluntary Disclosure Agreement programs and audits. Building on changes provided in Senate Bill 104, the most notable proposed change is that the State Escheator would be permitted to issue a notice of examination to any holder who has failed to respond to requests made pursuant to a verified report or compliance review, or to complete a verified report or compliance review.
In addition, if enacted, the Act would clarify and confirm the current practice regarding the timing of the liquidation of securities and the mailing of written notice to owners primarily to eliminate litigation risk for the state. Currently, the State Escheator liquidates securities and mails written notice to owners relatively contemporaneously in weekly batches; however, the liquidation may precede the mailing of notice by several days. A claimant’s recovery is not impacted by changes because the recovery is normally determined by the date the claim is filed relative to the date of notice. Because owner addresses reported by holders are often incomplete or have obvious errors, the Act would allow, but not require, the State Escheator to take reasonable steps to update, correct, or validate owner addresses to make delivery of the written notice more likely, as well as limiting liability for the State Escheator for any such actions or lack of actions.
Clarification would also be provided as to how to determine the value of claims for securities property by clarifying a date certain for the statutory 558-day period to begin when the date of notice cannot otherwise be determined or when notice is not required or sent. Proposals include confirming the current practice, that the time for a claimant to appeal to the Tax Appeal Board begins to run on the initial issuance of payment, in circumstances where the State Escheator has paid the claim and is not reset by the reissuance of a check. Under the Act, the State Escheator would expressly be allowed to pay claims on a pro rata basis for property received before August 1, 2022, or resulting from a bankruptcy proceeding, when the reported amount of property exceeds the remitted amount and would expressly prohibit holders from relying on the Act to engage in this practice prospectively.
Certain sections of the Act would be effective retroactively for any claims, examinations, voluntary disclosure agreements, or litigation pending as of the effective date of the Act.
We will keep you updated on the status of the Act, as Delaware is a key state for many holders of unclaimed property. As noted, Senate Bill 281 has been proposed but not enacted.
TECHNICAL INFORMATION CONTACTS:
Mark A. Paolillo
Principal
Ryan
857.288.1976
mark.paolillo@ryan.com
Susan Han
Principal
Ryan
442.244.2447
susan.han@ryan.com
Jeff Henshall
Principal
Ryan
404.682.1200
jeff.henshall@ryan.com
Christopher Jensen
Principal
Ryan
469.399.4142
christopher.jensen@ryan.com
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