103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB5311

 

Introduced 2/9/2024, by Rep. Daniel Didech

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Illinois Receivership Act. Creates a process in which a person is appointed by the court as the court's agent under the court's direction to take possession of, manage and, if authorized by the Act or court order, transfer, sell, lease, or otherwise dispose of receivership property. Requires the court to provide notice and opportunity for a hearing as appropriate before the court can issue an order under the Act. Applies to real property and any personal property related to or used in operating the real property and personal property and fixtures. Exempts an interest in real property improved by one to four dwelling units with some exceptions. Provides that the Act does not apply to a receiver appointed under the Illinois Mortgage Foreclosure Law.


LRB103 37152 JRC 67271 b

 

 

A BILL FOR

 

HB5311LRB103 37152 JRC 67271 b

1    AN ACT concerning civil law.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the
5Illinois Receivership Act.
 
6    Section 2. Definitions. In this Act:
7    (1) "Adequate protection" means protection against the
8decrease in the value of a person's interest in property
9resulting from the turnover, stay, use, sale or lease of such
10property during the receivership.
11    (2) "Affiliate" means:
12        (A) with respect to an individual:
13            (i) a companion of the individual;
14            (ii) a lineal ancestor or descendant, whether by
15        blood or adoption, of:
16                (I) the individual; or
17                (II) a companion of the individual;
18            (iii) a companion of an ancestor or descendant
19        described in clause (ii);
20            (iv) a sibling, aunt, uncle, great aunt, great
21        uncle, first cousin, niece, nephew, grandniece, or
22        grandnephew of the individual, whether related by the
23        whole or the half blood or adoption, or a companion of

 

 

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1        any of them; or
2            (v) any other individual occupying the residence
3        of the individual; and
4        (B) with respect to a person other than an individual:
5            (i) another person that directly or indirectly
6        controls, is controlled by, or is under common control
7        with the person;
8            (ii) an officer, director, manager, member,
9        partner, employee, or trustee or other fiduciary of
10        the person; or
11            (iii) a companion of, or an individual occupying
12        the residence of, an individual described in clause
13        (i) or (ii).
14    (3) "Collateral" means the property subject to a lien.
15    (4) "Companion" means:
16        (A) the spouse of an individual;
17        (B) the domestic partner of an individual;
18        (C) another individual in a civil union with an
19    individual; or
20        (D) an individual sharing the same residence with
21    another individual.
22    (5) "Court" means a circuit court of this State. In the
23context of a foreign receiver, the court means the court of the
24state that appointed the foreign receiver.
25    (6) "Debtor" means a person having an interest, other than
26a lien, in collateral, whether or not the person is liable for

 

 

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1the secured obligation. The term includes a mortgagor.
2    (7) "Executory contract" means a contract, including a
3lease, under which each party has an unperformed obligation
4and the failure of a party to complete performance would
5constitute a material breach.
6    (8) "Foreign receiver" means a receiver appointed by a
7court in another state.
8    (9) "Governmental unit" means an office, department,
9division, bureau, board, commission, or other agency of this
10State or a subdivision of this State.
11    (10) "Lien" means a charge against or interest in property
12to secure payment of a debt or performance of an obligation.
13    (11) "Mortgage" means a record, however denominated, that
14creates or provides for a consensual lien on real property or
15rents, even if it also creates or provides for a lien on
16personal property.
17    (12) "Mortgagee" means a person entitled to enforce an
18obligation secured by a mortgage.
19    (13) "Mortgagor" means a person that grants a mortgage or
20a successor in ownership of the real property described in the
21mortgage.
22    (14) "Owner" means the person for whose property a
23receiver is appointed.
24    (15) "Person" means an individual, estate, business or
25nonprofit entity, public corporation, government or
26governmental subdivision, agency, or instrumentality, or other

 

 

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1legal entity.
2    (16) "Proceeds" means the following property:
3        (A) whatever is acquired on the sale, lease, license,
4    exchange, or other disposition of receivership property;
5        (B) whatever is collected on, or distributed on
6    account of, receivership property;
7        (C) rights arising out of receivership property;
8        (D) to the extent of the value of receivership
9    property, claims arising out of the loss, nonconformity,
10    or interference with the use of, defects or infringement
11    of rights in, or damage to the property; or
12        (E) to the extent of the value of receivership
13    property and to the extent payable to the owner or secured
14    party, insurance payable by reason of the loss or
15    nonconformity of, defects or infringement of rights in, or
16    damage to the property.
17    (17) "Property" means all of a person's right, title, and
18interest, both legal and equitable, in real and personal
19property, tangible and intangible, wherever located and
20however acquired. The term includes proceeds, products,
21offspring, rents, or profits of or from the property.
22    (18) "Receiver" means a person appointed by the court as
23the court's agent, and subject to the court's direction, to
24take possession of, manage, and, if authorized by this Act or
25court order, transfer, sell, lease, license, exchange,
26collect, or otherwise dispose of receivership property.

 

 

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1    (19) "Receivership" means a proceeding in which a receiver
2is appointed.
3    (20) "Receivership property" means the property of an
4owner which is described in the order appointing a receiver or
5a subsequent order. The term includes any proceeds, products,
6offspring, rents, or profits of or from the property.
7    (21) "Record", used as a noun, means information that is
8inscribed on a tangible medium or that is stored on an
9electronic or other medium and is retrievable in perceivable
10form.
11    (22) "Rents" means:
12        (A) sums payable for the right to possess or occupy,
13    or for the actual possession or occupation of, real
14    property of another person;
15        (B) sums payable to a mortgagor under a policy of
16    rental-interruption insurance covering real property;
17        (C) claims arising out of a default in the payment of
18    sums payable for the right to possess or occupy real
19    property of another person;
20        (D) sums payable to terminate an agreement to possess
21    or occupy real property of another person;
22        (E) sums payable to a mortgagor for payment or
23    reimbursement of expenses incurred in owning, operating,
24    and maintaining real property or constructing or
25    installing improvements on real property; or
26        (F) other sums payable under an agreement relating to

 

 

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1    the real property of another person which constitute rents
2    under law of this State other than this Act.
3    (23) "Secured obligation" means an obligation the payment
4or performance of which is secured by a security agreement.
5    (24) "Secured party" means a person entitled to enforce a
6secured obligation. The term includes a mortgagee.
7    (25) "Security agreement" means an agreement that creates
8or provides for a lien. The term includes a mortgage.
9    (26) "Sign" means, with present intent to authenticate or
10adopt a record:
11        (A) to execute or adopt a tangible symbol; or
12        (B) to attach to or logically associate with the
13    record an electronic sound, symbol, or process.
14    (27) "State" means a state of the United States, the
15District of Columbia, Puerto Rico, the United States Virgin
16Islands, or any territory or insular possession subject to the
17jurisdiction of the United States.
 
18    Section 3. Notice and opportunity for hearing.
19    (a) Except as otherwise provided in subsection (b), the
20court may issue an order under this Act only after notice and
21opportunity for a hearing appropriate in the circumstances.
22    (b) The court may issue an order under this Act:
23        (1) without prior notice if the circumstances require
24    issuance of an order before notice is given;
25        (2) after notice and without a prior hearing if the

 

 

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1    circumstances require issuance of an order before a
2    hearing is held; or
3        (3) after notice and without a hearing if no
4    interested party timely requests a hearing.
 
5    Section 4. Scope; exclusions.
6    (a) Except as otherwise provided in subsection (b) or (c),
7this Act applies to a receivership for an interest in any one
8or more of the following:
9        (1) real property and any personal property related to
10    or used in operating the real property; or
11        (2) personal property and fixtures.
12    (b) This Act does not apply to a receivership for an
13interest in real property improved by one to four dwelling
14units unless:
15        (1) the interest is used for agricultural, commercial,
16    industrial, or mineral-extraction purposes, other than
17    incidental uses by an owner occupying the property as the
18    owner's primary residence;
19        (2) the interest secures an obligation incurred at a
20    time when the property was used or planned for use for
21    agricultural, commercial, industrial, or
22    mineral-extraction purposes;
23        (3) the owner planned or is planning to develop the
24    property into one or more dwelling units to be sold or
25    leased in the ordinary course of the owner's business; or

 

 

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1        (4) the owner is collecting or has the right to
2    collect rents or other income from the property from a
3    person other than an affiliate of the owner.
4    (c) This Act does not apply to a receivership authorized
5by law of this State other than this Act in which the receiver
6is a governmental unit or an individual acting in an official
7capacity on behalf of the unit, except to the extent provided
8by the other law. Notwithstanding the foregoing, a
9governmental unit may elect for this Act to apply to a
10receivership to the extent not inconsistent with the other
11law.
12    (d) This Act does not apply to any receiver appointed
13pursuant to Section 15-1704 of the Illinois Mortgage
14Foreclosure Law.
15    (e) This Act does not limit the authority of a court to
16appoint a receiver under law of this State other than this Act.
17    (f) Unless displaced by a particular provision of this
18Act, the principles of law and equity supplement this Act.
 
19    Section 5. Power of court. The court that appoints a
20receiver under this Act has exclusive jurisdiction and
21authority:
22        (a) to direct and control the receiver;
23        (b) over all receivership property wherever located;
24        (c) to determine all controversies related to the
25    receivership or the collection, preservation, improvement,

 

 

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1    disposition, and distribution of receivership property;
2    and
3        (d) over all matters otherwise arising in or relating
4    to the receivership, the receivership property, the
5    exercise of the receiver's powers, or the performance of
6    the receiver's duties.
 
7    Section 6. Appointment of receiver.
8    (a) The court may appoint a receiver:
9        (1) before judgment, to protect a party that
10    demonstrates an apparent right, title, or interest in
11    property that is the subject of the action, if the
12    property or its revenue-producing potential:
13            (A) is being subjected to or is in danger of waste,
14        loss, dissipation, or impairment; or
15            (B) has been or is about to be the subject of a
16        voidable transaction;
17        (2) after judgment:
18            (A) to enforce or otherwise carry the judgment
19        into effect; or
20            (B) to preserve nonexempt property pending appeal
21        or when an execution has been returned unsatisfied and
22        the owner refuses to apply the property in
23        satisfaction of the judgment; or
24        (3) in an action against a person that is not an
25    individual if:

 

 

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1            (A) the object of the action is the dissolution of
2        the person;
3            (B) the person has been dissolved;
4            (C) the persons in control of the person are
5        deadlocked in the management of the person's affairs;
6            (D) the acts of the persons in control of the
7        person are illegal, oppressive, or fraudulent; or
8            (E) the person is insolvent or generally is not
9        paying the person's debts as those debts become due;
10        (4) in an action in which a receiver may be appointed
11    by law or on equitable grounds; or
12        (5) during the time allowed for redemption, to
13    preserve property sold in an execution or foreclosure sale
14    and secure its rents to the person entitled to the rents.
15    (b) In connection with the foreclosure or other
16enforcement of a lien, the court may appoint a receiver for the
17collateral if:
18        (1) appointment is necessary to protect the property
19    from waste, loss, transfer, dissipation, or impairment;
20        (2) the debtor agreed in a signed record to
21    appointment of a receiver on default;
22        (3) the owner agreed, after default and in a signed
23    record, to appointment of a receiver;
24        (4) the collateral and any other collateral security
25    held by the secured party are not sufficient to satisfy
26    the secured obligation;

 

 

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1        (5) the owner fails to turn over to the secured party
2    proceeds or rents the secured party was entitled to
3    collect; or
4        (6) the holder of a subordinate lien obtains
5    appointment of a receiver for the property.
6    (c) The court may appoint a receiver to prevent
7irreparable harm without prior notice under Section 3(b)(1) or
8without a prior hearing under Section 3(b)(2) and may
9condition such appointment on the giving of security by the
10person seeking the appointment for the payment of damages,
11reasonable attorney's fees, and costs incurred or suffered by
12any person if the court later concludes that the appointment
13was not justified. If the court later concludes that the
14appointment was justified, the court shall release the
15security.
 
16    Section 7. Disqualification from appointment as receiver;
17disclosure of interest.
18    (a) Any person, whether or not a resident of this State,
19may serve as a receiver unless the person is disqualified
20under this Act.
21    (b) The court may not appoint a person as receiver unless
22the person submits to the court a statement under penalty of
23perjury that the person is not disqualified.
24    (c) Except as otherwise provided in subsection (d), a
25person is disqualified from appointment as receiver if the

 

 

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1person:
2        (1) is an affiliate of a party or the judge presiding
3    over the receivership;
4        (2) has an interest materially adverse to an interest
5    of a party;
6        (3) has a material financial interest in the outcome
7    of the action, other than compensation the court may allow
8    the receiver;
9        (4) has a debtor-creditor relationship with a party;
10        (5) holds an equity interest in a party, other than a
11    noncontrolling interest in a publicly traded company;
12        (6) is a sheriff of any county; or
13        (7) is otherwise prohibited from acting as an agent of
14    the court under the laws of this State.
15    (d) A person is not disqualified from appointment as
16receiver solely because the person:
17        (1) was appointed receiver or is owed compensation in
18    an unrelated matter involving a party or was engaged by a
19    party in a matter unrelated to the receivership;
20        (2) is an individual obligated to a party on a debt
21    that is not in default and was incurred primarily for
22    personal, family, or household purposes; or
23        (3) maintains with a party a deposit account as
24    defined in Section 9-102(a)(29) of the Uniform Commercial
25    Code.
26    (e) A person seeking appointment of a receiver may

 

 

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1nominate a person to serve as receiver, but the court is not
2bound by the nomination.
 
3    Section 8. Receiver's bond; alternative security.
4    (a) Except as otherwise provided in subsection (b) and
5(c), a receiver shall post with the court a bond that:
6        (1) is conditioned on the faithful discharge of the
7    receiver's duties;
8        (2) has one or more sureties approved by the court;
9        (3) is in an amount the court specifies; and
10        (4) is effective as of the date of the receiver's
11    appointment.
12    (b) The court may approve the posting by a receiver with
13the court of alternative security, such as a letter of credit
14or deposit of funds. The receiver may not use receivership
15property as alternative security. Interest that accrues on
16deposited funds must be paid to the receiver on the receiver's
17discharge.
18    (c) For good cause shown, the court may waive the
19requirement that the receiver post with the court a bond or
20alternative security required by this Section.
21    (d) The court may authorize a receiver to act before the
22receiver posts the bond or alternative security required by
23this Section.
 
24    Section 9. Status of receiver as lien creditor.

 

 

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1    (a) On appointment of a receiver, the receiver has the
2status of a lien creditor:
3        (1) under Article 9 of the Uniform Commercial Code as
4    to receivership property that is personal property or
5    fixtures;
6        (2) under the Conveyances Act as to receivership
7    property that is real property; and
8        (3) as if the receiver were a creditor that obtained a
9    judicial lien on all the receivership property, subject to
10    satisfying the recording requirements as to real property
11    described in Section 12(c)(3) of this Act.
12    (b) The receiver's priority as lien creditor against real
13property shall be from the time of recording of the order
14appointing the receiver pursuant to Section 12(c)(3) of this
15Act, except as to persons with actual or constructive notice
16of the appointment.
 
17    Section 10. Security agreement covering after-acquired
18property. Except as otherwise provided by law of this State
19other than this Act, property that a receiver or owner
20acquires after appointment of the receiver is subject to a
21security agreement entered into before the appointment to the
22same extent as if the court had not appointed the receiver.
 
23    Section 11. Collection and turnover of receivership
24property.

 

 

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1    (a) Unless the court orders otherwise, on demand by a
2receiver:
3        (1) a person that owes a debt that is receivership
4    property and is matured or payable on demand or on order
5    shall pay the debt to or on the order of the receiver,
6    except to the extent the debt is subject to setoff or
7    recoupment; and
8        (2) subject to subsection (c), a person that has
9    possession, custody, or control of receivership property
10    shall turn the property over to the receiver.
11    (b) A person that has notice of the appointment of a
12receiver and owes a debt that is receivership property may not
13satisfy the debt by payment to the owner.
14    (c) If a creditor has possession, custody, or control of
15receivership property and the validity, perfection, or
16priority of the creditor's lien on the property depends on the
17creditor's possession, custody, or control, the creditor may
18retain possession, custody, or control until the court orders
19adequate protection of the creditor's lien.
20    (d) The receiver may seek to compel a person to comply with
21the obligations of this Section by motion. The court may order
22a person that has possession, custody, or control of
23receivership property to turn over such property to the
24receiver.
25    (e) Unless a bona fide dispute exists about a receiver's
26right to possession, custody, or control of receivership

 

 

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1property, the court may sanction as civil contempt a person's
2failure to turn the property over when required by this
3Section.
 
4    Section 12. Powers and duties of receiver.
5    (a) Except as limited by court order or law of this State
6other than this Act, a receiver may:
7        (1) collect, control, manage, conserve, and protect
8    receivership property;
9        (2) operate a business constituting receivership
10    property, including preservation, use, sale, lease,
11    license, exchange, collection, or disposition of the
12    property in the ordinary course of business;
13        (3) in the ordinary course of business, incur
14    unsecured debt and pay expenses incidental to the
15    receiver's preservation, use, sale, lease, license,
16    exchange, collection, or disposition of receivership
17    property and otherwise in the performance of the
18    receiver's duties, including the power to pay obligations
19    incurred prior to the receiver's appointment if, in the
20    receiver's business judgment, payment is necessary to
21    preserve the value of receivership property using funds
22    that are not subject to any lien or right of setoff in
23    favor of a creditor who has not consented to the payment
24    and whose interests are not adequately protected;
25        (4) incur debt under a secured obligation in effect as

 

 

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1    of the receiver's appointment subject to the same terms,
2    conditions and lien priorities that existed as of the
3    receiver's appointment;
4        (5) assert a right, claim, cause of action, or defense
5    of the owner which relates to receivership property and
6    maintain in the receiver's name or owner's name any action
7    to enforce any such right, claim, cause of action, or
8    defense and intervene in actions in which owner is a party
9    for the purpose of exercising any rights pursuant to this
10    subsection (a)(5) or requesting transfer of venue of the
11    action to the court;
12        (6) seek and obtain instruction from the court
13    concerning receivership property, exercise of the
14    receiver's powers, and performance of the receiver's
15    duties;
16        (7) on subpoena, compel a person to submit to
17    examination under oath, or to produce and permit
18    inspection and copying of designated records or tangible
19    things, with respect to receivership property or any other
20    matter that may affect administration of the receivership;
21        (8) engage a professional as provided in Section 15;
22        (9) apply to a court of another state for appointment
23    as ancillary receiver with respect to receivership
24    property located in that state; and
25        (10) exercise any power conferred by court order, this
26    Act, or law of this State other than this Act.

 

 

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1    (b) With court approval, a receiver may:
2        (1) Except as otherwise provided in subsection (a)(4),
3    incur debt for the use or benefit of receivership property
4    other than in the ordinary course of business provided
5    that any lien securing such indebtedness is junior to any
6    existing liens on the receivership property, unless
7    otherwise authorized by the law of this State other than
8    this Act;
9        (2) make improvements to receivership property;
10        (3) use, sell, lease, or transfer receivership
11    property other than in the ordinary course of business as
12    provided in Section 16 and execute in the owner's name any
13    documents, conveyances and consents as be required for
14    such use, sale, lease, or transfer;
15        (4) assume or reject an executory contract of the
16    owner as provided in Section 17;
17        (5) pay compensation to the receiver as provided in
18    Section 21, and to each professional engaged by the
19    receiver as provided in Section 15;
20        (6) recommend allowance or disallowance of a claim of
21    a creditor as provided in Section 20;
22        (7) make a distribution of receivership property as
23    provided in Section 20;
24        (8) settle or release any rights, claims, causes of
25    action, or defenses or the owner asserted in subsection
26    (a)(5); and

 

 

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1        (9) abandon to the owner any receivership property
2    that is burdensome or is not of material value to the
3    receivership.
4    (c) A receiver shall:
5        (1) prepare and retain appropriate business records
6    from the receiver's appointment until the receiver's
7    discharge, including a record of each receipt,
8    disbursement, and disposition of receivership property;
9        (2) account for receivership property, including the
10    proceeds of a sale, lease, license, exchange, collection,
11    or other disposition of the property;
12        (3) promptly file or record, as applicable, with the
13    county recorder's office in the county where the real
14    property is located, a copy of the order appointing the
15    receiver and, if a legal description of the real property
16    is not included in the order, the legal description;
17        (4) disclose to the court any fact arising during the
18    receivership which would disqualify the receiver under
19    Section 7; and
20        (5) perform any duty imposed by court order, this Act,
21    or law of this State other than this Act.
22    (d) A subordination agreement is enforceable to the same
23extent that it is enforceable under the law of this State other
24than this Act.
25    (e) The powers and duties of a receiver may be expanded,
26modified, or limited by court order.
 

 

 

HB5311- 20 -LRB103 37152 JRC 67271 b

1    Section 13. Duties of owner.
2    (a) An owner shall:
3        (1) assist and cooperate with the receiver in the
4    administration of the receivership and the discharge of
5    the receiver's duties;
6        (2) preserve and turn over to the receiver all
7    receivership property in the owner's possession, custody,
8    or control;
9        (3) identify all records and other information
10    relating to the receivership property, including a
11    password, authorization, or other information needed to
12    obtain or maintain access to or control of the
13    receivership property, and make available to the receiver
14    the records and information in the owner's possession,
15    custody, or control;
16        (4) on subpoena, submit to examination under oath by
17    the receiver concerning the acts, conduct, property,
18    liabilities, and financial condition of the owner or any
19    matter relating to the receivership property or the
20    receivership; and
21        (5) perform any duty imposed by court order, this Act,
22    or law of this State other than this Act.
23    (b) Without limiting the owner's obligations under
24subsection (a), and unless the court orders otherwise, the
25owner shall file with the court and provide the receiver

 

 

HB5311- 21 -LRB103 37152 JRC 67271 b

1within 14 days of the receiver's appointment:
2        (1) A list of all receivership property and exempt
3    property of the owner, identifying:
4            (A) The location of the property, including the
5        legal description of any real property;
6            (B) A description of all liens to which the
7        property is subject; and
8            (C) The estimated value of the property.
9        (2) A list of all creditors, taxing authorities, and
10    regulatory authorities having claims against the owner:
11            (A) their mailing addresses;
12            (B) the amount and nature of their respective
13        claims as of the date of the receiver's appointment;
14            (C) whether the claims are secured by liens; and
15            (D) and whether the claims are disputed.
16    (c) If an owner is a person other than an individual, this
17Section applies to each officer, director, manager, member,
18partner, trustee, or other person exercising or having the
19power to exercise control over the affairs of the owner.
20    (d) If a person knowingly fails to perform a duty imposed
21by this Section, the court may:
22        (1) award the receiver actual damages caused by the
23    person's failure, reasonable attorney's fees, and costs;
24        (2) sanction the failure as civil contempt; and
25        (3) impose other equitable remedies, including an
26    injunction or constructive trust to address a person's

 

 

HB5311- 22 -LRB103 37152 JRC 67271 b

1    failure to comply with a duty under this Section.
 
2    Section 14. Stay; injunction.
3    (a) Except as otherwise provided in subsection (d) or
4ordered by the court, an order appointing a receiver operates
5as a stay, applicable to all persons, of an act, action, or
6proceeding:
7        (1) to obtain possession of, exercise control over, or
8    enforce a judgment against receivership property; and
9        (2) to enforce a lien against receivership property to
10    the extent the lien secures a claim against the owner
11    which arose before entry of the order.
12    (b) In addition to any stay provided in this Section, the
13court may enjoin an act, action, or proceeding against or
14relating to receivership property, the owner, or the receiver
15if the injunction is necessary to protect the receivership
16property or facilitate administration of the receivership.
17    (c) A person whose act, action, or proceeding is stayed or
18enjoined under this Section may apply to the court for relief
19from the stay or injunction for cause, including lack of
20adequate protection.
21    (d) An order appointing a receiver does not operate as a
22stay or injunction of:
23        (1) an act, action, or proceeding to perfect, or
24    maintain or continue the perfection of, an interest in
25    receivership property, provided that if perfection of an

 

 

HB5311- 23 -LRB103 37152 JRC 67271 b

1    interest would require seizure of receivership property or
2    commencement of an action, the perfection shall instead be
3    accomplished by filing with the court, and by serving upon
4    the receiver, notice of the interest within the time fixed
5    by law for seizure or commencement;
6        (2) commencement or continuation of a criminal
7    proceeding;
8        (3) commencement or continuation of an action or
9    proceeding, or enforcement of a judgment other than a
10    money judgment in an action or proceeding, by a
11    governmental unit to enforce its police or regulatory
12    power;
13        (4) establishment by a governmental unit of a tax
14    liability against the owner or receivership property or an
15    appeal of the liability; or
16        (5) the exercise of rights of a party to a swap
17    agreement, securities contract, repurchase agreement,
18    commodity contract, forward contract, or master netting
19    agreement, as those terms are defined in the federal
20    Bankruptcy Code, to the extent that a court would not have
21    the power to stay the exercise if the owner were a debtor
22    under the Bankruptcy Code.
23    (e) The court may void an act that violates a stay or
24injunction under this Section.
25    (f) If a person knowingly violates a stay or injunction
26under this Section, the court may:

 

 

HB5311- 24 -LRB103 37152 JRC 67271 b

1        (1) award actual damages caused by the violation,
2    reasonable attorney's fees, and costs; and
3        (2) sanction the violation as civil contempt.
4    (g) If the stay under this Section enjoins the performance
5of an act or the commencement of an action or proceeding, the
6time established by law other than this Act, court order or
7contract to perform such act or commence such action or
8proceeding shall be tolled during the stay.
 
9    Section 15. Engagement and compensation of professionals.
10    (a) With court approval, a receiver may engage one or more
11attorneys, accountants, appraisers, auctioneers, brokers, or
12other professionals to assist the receiver in performing a
13duty or exercising a power of the receiver. The court may
14authorize the receiver's engagement of professionals on any
15reasonable terms and conditions of employment, including on a
16retainer, on an hourly basis, on a fixed or percentage fee
17basis, on a contingent fee basis or a combination of the
18foregoing. In connection with the proposed engagement of a
19professional, the receiver shall disclose to the court:
20        (1) the identity and qualifications of the
21    professional;
22        (2) the scope and nature of the proposed engagement;
23        (3) any potential conflict of interest; and
24        (4) the proposed compensation.
25    (b) A person is not disqualified from engagement under

 

 

HB5311- 25 -LRB103 37152 JRC 67271 b

1this Section solely because of the person's engagement by,
2representation of, or other relationship with the receiver, a
3creditor, or a party. This Act does not prevent the receiver
4from serving in the receivership as an attorney, accountant,
5appraiser, auctioneer, broker, or other professional when
6authorized by law.
7    (c) Subject to any procedures that the court may impose,
8the receiver or professionals engaged by the receiver under
9subsection (a) may be paid reasonable compensation for their
10services on an interim basis in the same manner as other
11expenses of administration and without the necessity of court
12approval.
13    (d) Except to the extent the fees and expenses of the
14receiver or professionals engaged by the receiver under
15subsection (a) have been approved by the court, any interim
16payments of fees and expenses shall be approved in connection
17with the receiver's final report as provided in Section 23.
18The receiver or professionals seeking court approval of their
19fees and expenses shall file with the court such information
20as may be necessary for the court to determine the
21reasonableness of the requested fees and expenses. If engaged
22on an hourly basis, a receiver or professional shall file with
23the court an itemized statement of the time spent, work
24performed, and billing rate of each person that performed the
25work and an itemized list of expenses. The receiver shall pay
26the amount approved by the court.
 

 

 

HB5311- 26 -LRB103 37152 JRC 67271 b

1    Section 16. Use or transfer of receivership property not
2in ordinary course of business.
3    (a) In this Section, "good faith" means honesty in fact
4and the observance of reasonable commercial standards of fair
5dealing.
6    (b) With court approval, a receiver may use receivership
7property other than in the ordinary course of business.
8    (c) With court approval, a receiver may transfer
9receivership property other than in the ordinary course of
10business by sale, lease, license, exchange, or other
11disposition. Unless the agreement of sale provides otherwise,
12a sale under this Section is free and clear of a lien of the
13person that obtained appointment of the receiver, any
14subordinate lien, and any right of redemption. However, unless
15the holder of a senior lien consents, such a sale:
16        (1) is subject to the senior lien and to the rights and
17    remedies of the holder of the senior lien under law other
18    than this Act; and
19        (2) does not affect the obligation secured by the
20    senior lien.
21    (d) A lien on receivership property which is extinguished
22by a transfer under subsection (c) attaches to the proceeds of
23the transfer with the same validity, perfection, and priority
24the lien had on the property immediately before the transfer,
25even if the proceeds are not sufficient to satisfy all

 

 

HB5311- 27 -LRB103 37152 JRC 67271 b

1obligations secured by the lien.
2    (e) A transfer under subsection (c) may occur by means
3other than a public auction sale. A creditor holding a valid
4lien on the property to be transferred may purchase the
5property and offset against the purchase price part or all of
6the allowed amount secured by the lien, if the creditor
7tenders funds sufficient to satisfy in full the reasonable
8expenses of transfer and the obligation secured by any senior
9lien extinguished by the transfer.
10    (f) A reversal or modification of an order approving a
11transfer under subsection (c) does not affect the validity of
12the transfer to a person that acquired the property in good
13faith or revive against the person any lien extinguished by
14the transfer, whether the person knew before the transfer of
15the request for reversal or modification, unless the court
16stayed the order before the transfer.
 
17    Section 17. Executory contracts.
18    (a) In this Section, "timeshare interest" means an
19interest having a duration of more than three years which
20grants its holder the right to use and occupy an
21accommodation, facility, or recreational site, whether
22improved or not, for a specific period less than a full year
23during any given year.
24    (b) Except as otherwise provided in subsection (h), with
25court approval and notice to persons that are parties to the

 

 

HB5311- 28 -LRB103 37152 JRC 67271 b

1executory contract, a receiver may assume or reject an
2executory contract of the owner relating to receivership
3property. The court may condition the receiver's assumption
4and continued performance of the contract on terms appropriate
5under the circumstances. If the receiver does not request
6court approval to assume or reject an executory contract
7within 120 days after the receiver's appointment, the receiver
8is deemed to have rejected the contract. The court may extend
9the 120-day period prior to the expiration of the 120-day
10period.
11    (c) A receiver's performance of an executory contract
12before court approval under subsection (b) of its assumption
13or rejection is not an assumption of the contract and does not
14preclude the receiver from seeking approval to reject the
15contract.
16    (d) A provision in an executory contract which requires or
17permits a forfeiture, modification, or termination of the
18contract because of the appointment of a receiver or the
19financial condition of the owner does not affect a receiver's
20power under subsection (b) to assume the contract.
21    (e) A receiver's right to possess or use receivership
22property pursuant to an executory contract terminates upon
23rejection of the contract under subsection (b). Rejection of
24an executory contract constitutes a breach of the executory
25contract effective immediately before appointment of the
26receiver. A claim for damages for rejection of the contract

 

 

HB5311- 29 -LRB103 37152 JRC 67271 b

1shall be presented or filed in the same manner as other claims
2in the receivership no later than:
3        (1) the time set for submitting a claim in the
4    receivership; or
5        (2) 30 days after the court approves the rejection.
6    (f) If, at the time a receiver is appointed, the owner has
7the right to assign an executory contract relating to
8receivership property under law of this State other than this
9Act, the receiver may assign the contract with court approval
10and subject to the terms of the contract.
11    (g) If a receiver rejects under subsection (b) an
12executory contract for the sale of receivership property that
13is real property in possession of the purchaser or a
14real-property timeshare interest, the purchaser may:
15        (1) treat the rejection as a termination of the
16    contract, and in that case the purchaser has a lien on the
17    property for the recovery of any part of the purchase
18    price the purchaser paid; or
19        (2) retain the purchaser's right to possession under
20    the contract, and in that case the purchaser shall
21    continue to perform all obligations arising under the
22    contract and may offset any damages caused by
23    nonperformance of an obligation of the owner after the
24    date of the rejection, but the purchaser has no right or
25    claim against other receivership property or the receiver
26    on account of the damages.

 

 

HB5311- 30 -LRB103 37152 JRC 67271 b

1    (h) A receiver may not reject an unexpired lease of real
2property under which the owner is the landlord if:
3        (1) the tenant occupies the leased premises as the
4    tenant's primary residence;
5        (2) the receiver was appointed at the request of a
6    person other than a mortgagee; or
7        (3) the receiver was appointed at the request of a
8    mortgagee and:
9            (A) the lease is superior to the lien of the
10        mortgage;
11            (B) the tenant has an enforceable agreement with
12        the mortgagee or the holder of a senior lien under
13        which the tenant's occupancy will not be disturbed as
14        long as the tenant performs its obligations under the
15        lease;
16            (C) the mortgagee has consented to the lease,
17        either in a signed record or by its failure timely to
18        object that the lease violated the mortgage; or
19            (D) the terms of the lease were commercially
20        reasonable at the time the lease was agreed to and the
21        tenant did not know or have reason to know that the
22        lease violated the mortgage.
 
23    Section 18. Defenses and immunities of receiver.
24    (a) A receiver is entitled to all defenses and immunities
25provided by law of this State for an act or omission within the

 

 

HB5311- 31 -LRB103 37152 JRC 67271 b

1scope of the receiver's appointment.
2    (b) Approval of the court that appointed the receiver must
3be obtained before the commencement of an action or proceeding
4against the receiver or a professional engaged by the receiver
5regarding an act or omission in administering receivership
6property.
7    (c) A party or party in interest may conduct discovery of
8the receiver concerning any matter relating to the receiver's
9administration of the receivership property after obtaining an
10order authorizing the discovery.
 
11    Section 19. Interim report of receiver.
12    (a) A receiver may file or, if ordered by the court, shall
13file an interim report that includes:
14        (1) the dates covered by the interim report;
15        (2) the activities of the receiver since appointment
16    or a previous report;
17        (3) receipts and disbursements, including a payment
18    made or proposed to be made to a professional engaged by
19    the receiver;
20        (4) receipts and dispositions of receivership
21    property;
22        (5) fees and expenses of the receiver and, if not
23    filed separately, a request for approval of payment of the
24    fees and expenses; and
25        (6) any other information required by the court.
 

 

 

HB5311- 32 -LRB103 37152 JRC 67271 b

1    Section 20. Notice of appointment; claim against
2receivership; distribution to creditors.
3    (a) Except as otherwise provided in subsection (i), a
4receiver shall give notice of appointment of the receiver to
5all creditors of the owner by:
6        (1) deposit for delivery through first-class mail or
7    other commercially reasonable delivery method including
8    email to the last-known address or email address of each
9    creditor; and
10        (2) such other means as directed by the court.
11    (b) Except as otherwise provided in subsection (i), the
12notice required by subsection (a) must specify the date by
13which each creditor holding a claim against the owner which
14arose before appointment of the receiver must file the claim
15with the court. The date specified must be at least 60 days
16after the date of the notice under subsection (a). Unless the
17court orders otherwise, a claim that is not timely filed with
18the court is not entitled to a distribution from the
19receivership.
20    (c) A claim filed by a creditor under this subsection
21shall be titled "Proof of Claim" and must:
22        (1) state the name and address of the creditor;
23        (2) state the amount and basis of the claim;
24        (3) identify any property securing the claim;
25        (4) be signed by the creditor or an authorized agent

 

 

HB5311- 33 -LRB103 37152 JRC 67271 b

1    under penalty of perjury; and
2        (5) include a copy of any record on which the claim is
3    based.
4    (d) A claim filed with court in accordance with
5subsections (b) and (c) constitutes prima facie evidence of
6the validity and amount of the claim.
7    (e) An assignment by a creditor of a claim against the
8owner or receivership is effective against the receiver only
9if the assignee gives timely notice of the assignment to the
10receiver in a signed record prior to the entry of an order
11approving a receiver's final report.
12    (f) At any time before entry of an order approving a
13receiver's final report, the receiver or other person with an
14interest in the receivership may file with the court an
15objection to a claim of a creditor, stating the basis for the
16objection. The court shall allow or disallow the claim
17according to the law of this State other than this Act.
18    (g) Upon motion of the receiver or other person with an
19interest in the receivership, the following claims may be
20estimated for purpose of allowance under this section:
21        (1) any contingent or unliquidated claims, the fixing
22    or liquidation of which would unduly delay the
23    administration of the receivership; or
24        (2) any right to payment arising from a right to an
25    equitable remedy for breach of performance.
26    (h) Claims subject to estimation under subsection (g)

 

 

HB5311- 34 -LRB103 37152 JRC 67271 b

1shall be allowed in the estimated amount as determined by the
2court.
3    (i) If the court concludes that receivership property is
4likely to be insufficient to satisfy claims of each creditor
5holding a perfected lien on the property, the court may order
6that:
7        (1) the receiver need not give notice under subsection
8    (a) of the appointment to all creditors of the owner, but
9    only such creditors as the court directs; and
10        (2) unsecured creditors need not submit claims under
11    this Section.
12    (j) Subject to Section 21:
13        (1) a distribution of receivership property to a
14    creditor holding a perfected lien on the property must be
15    made in accordance with the creditor's priority under law
16    of this State other than this Act;
17        (2) a distribution of receivership property to a
18    creditor with an allowed unsecured claim must be made as
19    the court directs on a pro rata basis according to law of
20    this State other than this Act; and
21        (3) if all of the creditors holding claims have been
22    paid in full, any residue shall be paid to the owner.
 
23    Section 21. Fees and expenses.
24    (a) The court may award a receiver from receivership
25property the reasonable and necessary fees and expenses of

 

 

HB5311- 35 -LRB103 37152 JRC 67271 b

1performing the duties of the receiver and exercising the
2powers of the receiver.
3    (b) The court may order one or more of the following to pay
4the reasonable and necessary fees and expenses of the
5receivership, including reasonable attorney's fees and costs:
6        (1) a person that requested the appointment of the
7    receiver, if the receivership does not produce sufficient
8    funds to pay the fees and expenses; or
9        (2) a person whose conduct justified or would have
10    justified the appointment of the receiver under Section
11    6(a)(1) or 6(a)(3)(D).
 
12    Section 22. Removal of receiver; replacement; termination
13of receivership.
14    (a) The court may remove a receiver for cause.
15    (b) The court shall replace a receiver that dies, resigns,
16or is removed.
17    (c) If the court finds that a receiver that resigns or is
18removed, or the representative of a receiver that is deceased,
19has accounted fully for and turned over to the successor
20receiver all receivership property and has filed a report of
21all receipts and disbursements during the service of the
22replaced receiver, the replaced receiver is discharged.
23    (d) The court may discharge a receiver and terminate the
24court's administration of the receivership property if the
25court finds that appointment of the receiver was improvident

 

 

HB5311- 36 -LRB103 37152 JRC 67271 b

1or that the circumstances no longer warrant continuation of
2the receivership. If the court finds that the appointment was
3sought wrongfully or in bad faith, the court may assess
4against the person that sought the appointment:
5        (1) the fees and expenses of the receivership,
6    including reasonable attorney's fees and costs; and
7        (2) actual damages caused by the appointment,
8    including reasonable attorney's fees and costs.
 
9    Section 23. Final report of receiver; discharge.
10    (a) Unless excused by the court, on completion of a
11receiver's duties, the receiver shall file a motion seeking
12approval of a final report and termination of the court's
13administration of the receivership property.
14    (b) The final report shall include:
15        (1) a description of the activities of the receiver in
16    the conduct of the receivership;
17        (2) a list of receivership property at the
18    commencement of the receivership and any receivership
19    property received during the receivership;
20        (3) a list of disbursements, including payments to
21    professionals engaged by the receiver;
22        (4) a list of dispositions of receivership property;
23        (5) a list of distributions made or proposed to be
24    made from the receivership for creditor claims;
25        (6) if not filed separately, a request for approval of

 

 

HB5311- 37 -LRB103 37152 JRC 67271 b

1    the payment of fees and expenses of the receiver and the
2    receiver's professionals; and
3        (7) any other information required by the court.
4    (c) If the court approves a final report filed under
5subsection (a) and the receiver distributes all receivership
6property, the receiver is discharged and the court's
7administration of the receivership property is terminated. The
8order approving a final report and termination of the
9receivership shall include such additional terms as the court
10deems appropriate.
 
11    Section 24. Receivership in another state; ancillary
12proceeding.
13    (a) The court may appoint a foreign receiver as an
14ancillary receiver with respect to property located in this
15State or subject to the jurisdiction of the court for which a
16receiver could be appointed under this Act, if:
17        (1) the person would be eligible to serve as receiver
18    under Section 7 of this Act; and
19        (2) the appointment furthers the person's possession,
20    custody, control, or disposition of property subject to
21    the receivership in the other state.
22        (3) the appointment is authorized by the court that
23    appointed the foreign receiver.
24    (b) The court may issue an order that gives effect to an
25order entered in another state appointing or directing a

 

 

HB5311- 38 -LRB103 37152 JRC 67271 b

1receiver.
2    (c) Unless the court orders otherwise, an ancillary
3receiver appointed under subsection (a) has the rights,
4powers, duties and obligations of a receiver appointed under
5this Act.
 
6    Section 25. Effect of enforcement by secured party.
7    (a) A request by a secured party for appointment of a
8receiver, the appointment of a receiver, or application by a
9secured party of receivership property or proceeds to the
10secured obligation does not:
11        (1) make the secured party a mortgagee in possession
12    of real property;
13        (2) impose any duty on the secured party under Section
14    9-207 of the Uniform Commercial Code;
15        (3) make the secured party an agent of the owner;
16        (4) constitute an election of remedies that precludes
17    a later action to enforce the secured obligation;
18        (5) make the secured obligation unenforceable; or
19        (6) limit any right available to the secured party
20    with respect to the secured obligation.
 
21    Section 26. Uniformity of application and construction. In
22applying and construing this uniform Act, consideration must
23be given to the need to promote uniformity of the law with
24respect to its subject matter among states that enact it.
 

 

 

HB5311- 39 -LRB103 37152 JRC 67271 b

1    Section 27. Relation to Electronic Signatures in Global
2and National Commerce Act. This Act modifies, limits, or
3supersedes the Electronic Signatures in Global and National
4Commerce Act, 15 U.S.C. Section 7001 et seq., but does not
5modify, limit, or supersede Section 101(c) of that Act, 15
6U.S.C. Section 7001(c), or authorize electronic delivery of
7any of the notices described in Section 103(b) of that Act, 15
8U.S.C. Section 7003(b).
 
9    Section 28. Transition. This Act does not apply to a
10receivership for which the receiver was appointed before the
11effective date of this Act.
 
12    Section 29. Inapplicability. The provisions of Section
132-415 of the Code of Civil Procedure do not apply to a
14receivership under this Act.