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(810 ILCS 5/9-615)
Sec. 9-615.
Application of proceeds of disposition; liability for
deficiency and right to surplus.
(a) Application of proceeds. A secured party shall apply or pay
over for application the cash proceeds of disposition in the following order
to:
(1) the reasonable expenses of retaking, holding, |
| preparing for disposition, processing, and disposing, and, to the extent provided for by agreement and not prohibited by law, reasonable attorney's fees and legal expenses incurred by the secured party;
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(2) the satisfaction of obligations secured by the
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| security interest or agricultural lien under which the disposition is made;
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(3) the satisfaction of obligations secured by any
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| subordinate security interest in or other subordinate lien on the collateral if:
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(A) the secured party receives from the holder of
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| the subordinate security interest or other lien an authenticated demand for proceeds before distribution of the proceeds is completed; and
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(B) in a case in which a consignor has an
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| interest in the collateral, the subordinate security interest or other lien is senior to the interest of the consignor; and
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(4) a secured party that is a consignor of the
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| collateral if the secured party receives from the consignor an authenticated demand for proceeds before distribution of the proceeds is completed.
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(b) Proof of subordinate interest. If requested by a secured party,
a holder of a subordinate security interest or other lien shall furnish reasonable
proof of the interest or lien within a reasonable time. Unless the holder does so, the
secured party need not comply with the holder's demand under subsection (a)(3).
(c) Application of noncash proceeds. A secured party need not
apply or pay over for application noncash proceeds of disposition under this
Section unless the failure to do so would be commercially unreasonable. A secured
party that applies or pays over for application noncash proceeds shall do so in a
commercially reasonable manner.
(d) Surplus or deficiency if obligation secured. If the security
interest under which a disposition is made secures payment or performance of an
obligation, after making the payments and applications required by subsection (a)
and permitted by subsection (c):
(1) unless subsection (a)(4) requires the secured
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| party to apply or pay over cash proceeds to a consignor, the secured party shall account to and pay a debtor for any surplus; and
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(2) the obligor is liable for any deficiency.
(e) No surplus or deficiency in sales of certain rights to
payment. If the underlying transaction is a sale of accounts, chattel paper,
payment intangibles, or promissory notes:
(1) the debtor is not entitled to any surplus; and
(2) the obligor is not liable for any deficiency.
(f) Calculation of surplus or deficiency in disposition to person
related to secured party. The surplus or deficiency following a disposition is
calculated based on the amount of proceeds that would have been realized in a
disposition complying with this Part
and described in subsection
(f)(2) of this Section to
a transferee other than the secured party, a
person related to the secured party, or a secondary obligor if:
(1) the transferee in the disposition is the secured
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| party, a person related to the secured party, or a secondary obligor; and
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(2) the amount of proceeds of the disposition is
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| significantly below the range of proceeds that would have been received from a complying disposition by a forced sale without reserve to a willing buyer other than the secured party, a person related to the secured party, or a secondary obligor.
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(g) Cash proceeds received by junior secured party. A secured
party that receives cash proceeds of a disposition in good faith and without
knowledge that the receipt violates the rights of the holder of a security
interest or
other lien that is not subordinate to the security interest or agricultural
lien under
which the disposition is made:
(1) takes the cash proceeds free of the security
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(2) is not obligated to apply the proceeds of the
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| disposition to the satisfaction of obligations secured by the security interest or other lien; and
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(3) is not obligated to account to or pay the holder
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| of the security interest or other lien for any surplus.
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(Source: P.A. 91-893, eff. 7-1-01.)
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