(205 ILCS 665/20.5)
Sec. 20.5. Receivership.
(a) If the Secretary determines that a licensee is insolvent or is violating this Act, he or she may appoint a receiver. Under the direction of the Secretary, the receiver shall, for the purpose of receivership, take possession of and title to the books, records, and assets of the licensee. The Secretary may require the receiver to provide security in an amount the Secretary deems proper. Upon appointment of the receiver, the Secretary shall have published, once each week for 4 consecutive weeks in a newspaper having a general circulation in the community, a notice informing all persons who have claims against the licensee to present them to the receiver. Within 10 days after the receiver takes possession, the licensee may apply to the Circuit Court of Sangamon County to enjoin further proceedings. The receiver may operate the business until the Secretary determines that possession should be restored to the licensee or that the business should be liquidated.
(b) If the Secretary determines that a business in receivership should be liquidated, he or she shall direct the Attorney General to file a complaint in the Circuit Court of the county in which the business is located, in the name of the People of the State of Illinois, for the orderly liquidation and dissolution of the business and for an injunction restraining the licensee and its officers and directors from continuing the operation of the business. Within 30 days after the day the Secretary determines that the business should be liquidated, the receiver shall file with the Secretary and with the clerk of the court that has charge of the liquidation a correct list of all creditors, as shown by the licensee's books and records, who have not presented their claims. The list shall state the amount of the claim after allowing all just credits, deductions, and set-offs as shown by the licensee's books. These claims shall be deemed proven unless some interested party files an objection within the time fixed by the Secretary or court that has charge of the liquidation.
(c) The General Assembly finds and declares that debt management services provide an important service to Illinois citizens. It is therefore declared to be the policy of this State that customers who receive these services must be protected from interruptions of services. To carry out this policy and to insure that customers of a licensee are protected if it is determined that a business in receivership should be liquidated, the Secretary shall make a distribution of moneys collected by the receiver in the following order of priority:
(1) Allowed claims for the actual necessary expenses
of the receivership of the business being liquidated, including:
(A) reasonable receiver's fees and receiver's
attorney's fees approved by the Secretary;
(B) all expenses of any preliminary or other
examinations into the condition of the receivership;
(C) all expenses incurred by the Secretary that
are incident to possession and control of any property or records of the licensee's business; and
(D) reasonable expenses incurred by the Secretary
as the result of business agreements or contractual arrangements necessary to insure that the services of the licensee are delivered to the community without interruption. These business agreements or contractual arrangements may include, but are not limited to, agreements made by the Secretary, or by the receiver with the approval of the Secretary, with banks, bonding companies, and other types of financial institutions.
(1.5) Secured claims.
(2) Allowed unsecured claims for wages or salaries,
excluding vacation, severance, and sick leave pay earned by employees within 90 days before the appointment of a receiver.
(3) Allowed unsecured claims of any tax, and interest
and penalty on the tax.
(4) Allowed unsecured claims, other than a kind
specified in items (1), (2), and (3) of this subsection, filed with the Secretary within the time the Secretary fixes for filing claims.
(5) Allowed unsecured claims, other than a kind
specified in items (1), (2), and (3) of this subsection, filed with the Secretary after the time fixed for filing claims by the Secretary.
(6) Allowed creditor claims asserted by an owner,
member, or stockholder of the business in liquidation.
(7) After one year from the final dissolution of the
licensee's business, all assets not used to satisfy allowed claims shall be distributed pro rata to the owner, owners, members, or stockholders of the business.
The Secretary shall pay all claims of equal priority according to the schedule established in this subsection and shall not pay claims of lower priority until all higher priority claims are satisfied. If insufficient assets are available to meet all claims of equal priority, those assets shall be distributed pro rata among those claims. All unclaimed assets of a licensee and the licensee's business shall be deposited with the Secretary to be paid out when proper claims are presented to the Secretary.
(d) Upon the order of the circuit court of the county in which the business being liquidated is located, the receiver may sell or compound any bad or doubtful debt, and on like order may sell the personal property of the business on such terms as the court approves. The receiver shall succeed to whatever rights or remedies the unsecured creditors of the business may have against the owner or owners, operators, stockholders, directors, members, managers, or officers, arising out of their claims against the licensee's business, but nothing contained in this Section shall prevent those creditors from filing their claims in the liquidation proceeding. The receiver may enforce those rights or remedies in any court of competent jurisdiction.
(e) At the close of a receivership, the receiver shall turn over to the Secretary all books of account and ledgers of the business for preservation. The Secretary shall hold all records of receiverships received at any time for a period of 2 years after the close of the receivership. The records may be destroyed at the termination of the 2-year period. All expenses of the receivership including, but not limited to, reasonable receiver's and attorney's fees approved by the Secretary, all expenses of any preliminary or other examinations into the condition of the licensee's business or the receivership, and all expenses incident to the possession and control of any property or records of the business incurred by the Secretary shall be paid out of the assets of the licensee's business. These expenses shall be paid before all other claims.
(f) Upon the filing of a complaint by the Attorney General for the orderly liquidation and dissolution of a debt management service provider's business, as provided in this Act, all pending suits and actions upon unsecured claims against the business shall abate. Nothing contained in this Act, however, prevents these claimants from filing their claims in the liquidation proceeding. If a suit or an action is instituted or maintained by the receiver on any bond or policy of insurance issued pursuant to the requirements of this Act, the bonding or insurance company sued shall not have the right to interpose or maintain any counterclaim based upon subrogation, upon any express or implied agreement of, or right to, indemnity or exoneration, or upon any other express or implied agreement with, or right against, the debt management service provider's business. Nothing contained in this Act prevents the bonding or insurance company from filing this type of claim in the liquidation proceeding.
(g) A debt management service provider may not terminate its affairs and close up its business unless it has first deposited with the Secretary an amount of money equal to all of its debts, liabilities, and lawful demands against it including the costs and expenses of a proceeding under this Section, surrendered to the Secretary its license, and filed with the Secretary a statement of termination signed by the debt management service provider containing a pronouncement of intent to close up its business and liquidate its liabilities and containing a sworn list itemizing in full all of its debts, liabilities, and lawful demands against it. Corporate licensees must attach to, and make a part of the statement of termination, a copy of a resolution providing for the termination and closing up of the licensee's affairs, certified by the secretary of the licensee and duly adopted at a shareholders' meeting by the holders of at least two-thirds of the outstanding shares entitled to vote at the meeting. Upon the filing with the Secretary of a statement of termination, the Secretary shall cause notice of that action to be published once each week for 3 consecutive weeks in a public newspaper of general circulation published in the city or village where the business is located, and if no newspaper is published in that place, then in a public newspaper of general circulation nearest to that city or village. The publication shall give notice that the debts, liabilities, and lawful demands against the business will be redeemed by the Secretary upon demand in writing made by the owner thereof, at any time within 3 years after the date of first publication. After the expiration of the 3-year period, the Secretary shall return to the person or persons designated in the statement of termination to receive repayment, and in the proportion specified in that statement, any balance of money remaining in his or her possession after first deducting all unpaid costs and expenses incurred in connection with a proceeding under this Section. The Secretary shall receive for his or her services, exclusive of costs and expenses, 2% of any amount up to $5,000 and 1% of any amount in excess of $5,000 deposited with him or her under this Section by any business. Nothing contained in this Section shall affect or impair the liability of any bonding or insurance company on any bond or insurance policy issued under this Act relating to the business.
(Source: P.A. 96-1420, eff. 8-3-10.)
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Last modified: February 18, 2015