2022 -- S 2093 | |
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LC003941 | |
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STATE OF RHODE ISLAND | |
IN GENERAL ASSEMBLY | |
JANUARY SESSION, A.D. 2022 | |
____________ | |
A N A C T | |
RELATING TO COURTS AND CIVIL PROCEDURE -- PROCEDURE IN PARTICULAR | |
ACTIONS -- RHODE ISLAND COMMERCIAL RECEIVERSHIP ACT | |
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Introduced By: Senators F Lombardi, Archambault, McCaffrey, and Euer | |
Date Introduced: January 25, 2022 | |
Referred To: Senate Judiciary | |
It is enacted by the General Assembly as follows: | |
1 | SECTION 1. Title 10 of the General Laws entitled "COURTS AND CIVIL PROCEDURE |
2 | - PROCEDURE IN PARTICULAR ACTIONS" is hereby amended by adding thereto the following |
3 | chapter: |
4 | CHAPTER 21 |
5 | RHODE ISLAND COMMERCIAL RECEIVERSHIP ACT |
6 | 10-21-1. Short title. |
7 | This chapter shall be known and may be cited as the "Rhode Island Commercial |
8 | Receivership Act." |
9 | 10-21-2. Definitions. |
10 | As used in this chapter: |
11 | (1) "Affiliate" means: |
12 | (i) With respect to an individual: |
13 | (A) A companion of the individual; |
14 | (B) A lineal ancestor or descendant, whether by blood or adoption of: |
15 | (I) The individual; or |
16 | (II) A companion of the individual; |
17 | (C) A companion of an ancestor or descendant described in § 10-21-2(1)(i)(B); |
18 | (D) A sibling, aunt, uncle, great aunt, great uncle, first cousin, niece, nephew, grandniece, |
| |
1 | or grandnephew of the individual, whether related by the whole or the half blood or adoption, or a |
2 | companion of any of them; or |
3 | (E) Any other individual occupying the residence of the individual; and |
4 | (ii) With respect to a person other than an individual: |
5 | (A) Another person that directly or indirectly controls, is controlled by, or is under common |
6 | control with the person; |
7 | (B) An officer, director, manager, member, partner, employee, or trustee or other fiduciary |
8 | of the person; or |
9 | (C) A companion of, or an individual occupying the residence of, an individual described |
10 | in §§10-21-2(1)(ii)(A) or (B). |
11 | (2) "Collateral" means the property subject to a lien. |
12 | (3) "Companion" means: |
13 | (i) The spouse of an individual; |
14 | (ii) The domestic partner of an individual; or |
15 | (iii) Another individual in a civil union with an individual. |
16 | (4) "Court" means the superior court. |
17 | (5) "Debtor" means a person having an interest, other than a lien, in collateral, whether or |
18 | not the person is liable for the secured obligation. The term "debtor" includes a mortgagor. |
19 | (6) "Executory contract" means a contract, including a lease, under which each party has |
20 | an unperformed obligation and the failure of a party to complete performance would constitute a |
21 | material breach. |
22 | (7) "Governmental unit" means an office, department, division, bureau, board, |
23 | commission, or other agency of this state or a subdivision of this state. |
24 | (8) "Lien" means an interest in property which secures payment or performance of an |
25 | obligation. |
26 | (9) "Mortgage" means a record, however denominated, that creates or provides for a |
27 | consensual lien on real property or rents, even if it also creates or provides for a lien on personal |
28 | property. |
29 | (10) "Mortgagee" means a person entitled to enforce an obligation secured by a mortgage. |
30 | (11) "Mortgagor" means a person that grants a mortgage or a successor in ownership of the |
31 | real property described in the mortgage. |
32 | (12) "Owner" means the person for whose property a receiver is appointed. |
33 | (13) "Person" means an individual, estate, partnership, association, trust, business or |
34 | nonprofit entity, public corporation, government or governmental subdivision, agency, or |
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1 | instrumentality, or other legal entity. |
2 | (14) "Proceeds" means the following property: |
3 | (i) Whatever is acquired on the sale, lease, license, exchange, or other disposition of |
4 | receivership property; |
5 | (ii) Whatever is collected on, or distributed on account of, receivership property; |
6 | (iii) Rights arising out of receivership property; |
7 | (iv) To the extent of the value of receivership property, claims arising out of the loss, |
8 | nonconformity, or interference with the use of, defects or infringement of rights in, or damage to |
9 | the property; or |
10 | (v) To the extent of the value of receivership property and to the extent payable to the |
11 | owner or secured party, insurance payable by reason of the loss or nonconformity of, defects or |
12 | infringement of rights in, or damage to the property. |
13 | (15) "Property" means all of a person's right, title, and interest, both legal and equitable, in |
14 | real and personal property, tangible and intangible, wherever located and however acquired. The |
15 | term includes proceeds, products, offspring, rents, or profits of or from the property. |
16 | (16) "Receiver" means a person appointed by the court as the court's agent, and subject to |
17 | the court's direction, to take possession of, manage, and, if authorized by this chapter or court order, |
18 | transfer, sell, lease, license, exchange, collect, or otherwise dispose of receivership property. |
19 | (17) "Receivership" means a proceeding in which a receiver is appointed. |
20 | (18) "Receivership property" means the property of an owner which is described in the |
21 | order appointing a receiver or a subsequent order. The term includes any proceeds, products, |
22 | offspring, rents, or profits of or from the property. |
23 | (19) "Record," used as a noun, means information that is inscribed on a tangible medium |
24 | or that is stored on an electronic or other medium and is retrievable in perceivable form. |
25 | (20) "Rents" means: |
26 | (i) Sums payable for the right to possess or occupy, or for the actual possession or |
27 | occupation of, real property of another person; |
28 | (ii) Sums payable to a mortgagor under a policy of rental-interruption insurance covering |
29 | real property; |
30 | (iii) Claims arising out of a default in the payment of sums payable for the right to possess |
31 | or occupy real property of another person; |
32 | (iv) Sums payable to terminate an agreement to possess or occupy real property of another |
33 | person; |
34 | (v) Sums payable to a mortgagor for payment or reimbursement of expenses incurred in |
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1 | owning, operating, and maintaining real property or constructing or installing improvements on |
2 | real property; or |
3 | (vi) Other sums payable under an agreement relating to the real property of another person |
4 | which constitute rents under law of this state other than this chapter. |
5 | (21) "Secured obligation" means an obligation the payment or performance of which is |
6 | secured by a security agreement. |
7 | (22) "Secured party" means a person entitled to enforce a secured obligation. The term |
8 | includes a mortgagee. |
9 | (23) "Security agreement" means an agreement that creates or provides for a lien. The term |
10 | includes a mortgage. |
11 | (24) "Sign" means, with present intent to authenticate or adopt a record: |
12 | (i) To execute or adopt a tangible symbol; or |
13 | (ii) To attach to or logically associate with the record an electronic sound, symbol, or |
14 | process. |
15 | (25) "State" means a state of the United States, the District of Columbia, Puerto Rico, the |
16 | United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the |
17 | United States. |
18 | 10-21-2.1. Additional definitions for emergency declaration temporary non- |
19 | liquidating receivership. |
20 | In this chapter: |
21 | (1) “Emergency” means a serious, dangerous or unexpected situation that causes or |
22 | potentially causes widespread or substantial loss of life, injury, damage or public health concern |
23 | for a significant number of persons or substantial loss of property, including a “disaster” as defined |
24 | in § 30-15-3. |
25 | (2) “Emergency declaration” means a declaration of disaster emergency issued by the |
26 | governor pursuant to § 30-15-9. |
27 | (3) "Emergency declaration provisions" means §§ 10-21-2.1, 10-21-3.1, 10-21-6.1, 10-21- |
28 | 12.1, 10-21-13.1, 10-21-14.1, 10-21-16.1, 10-21-19.1, 10-21-21.1, and 10-21-28.1. |
29 | (4) "Temporary non-liquidating receiver" means a receiver appointed under the emergency |
30 | declaration provisions. |
31 | (5) "Temporary non-liquidating receivership" means a receivership in which a temporary |
32 | non-liquidating receiver has been appointed. |
33 | 10-21-3. Notice and opportunity for hearing. |
34 | (a) Except as otherwise provided in subsection (b) of this section, the court may issue an |
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1 | order under this chapter only after notice and opportunity for a hearing appropriate in the |
2 | circumstances. |
3 | (b) The court may issue an order under this chapter: |
4 | (1) Without prior notice if the circumstances require issuance of an order before notice is |
5 | given; |
6 | (2) After notice and without a prior hearing if the circumstances require issuance of an |
7 | order before a hearing is held; or |
8 | (3) After notice and without a hearing if no interested party timely requests a hearing. |
9 | 10-21-3.1. Administrative and procedural orders in temporary non-liquidating |
10 | receivership. |
11 | The general assembly acknowledges that: |
12 | (1) The presiding justice of the superior court may issue administrative orders governing |
13 | the procedures in temporary non-liquidating receiverships. |
14 | (2) The business calendar justice to whom a temporary non-liquidating receivership has |
15 | been assigned may issue procedural orders in the temporary non-liquidating receivership. |
16 | 10-21-4. Scope -- Exclusions. |
17 | (a) Except as otherwise provided in subsections (b) or (c) of this section, this chapter |
18 | applies to a receivership for an interest in any one or more of the following: |
19 | (1) Real property and any personal property related to or used in operating the real property; |
20 | or |
21 | (2) Personal property and fixtures. |
22 | (b) This chapter does not apply to a receivership for an interest in real property improved |
23 | by one to four (4) dwelling units unless: |
24 | (1) The interest is used for agricultural, commercial, industrial, or mineral-extraction |
25 | purposes, other than incidental uses by an owner occupying the property as the owner's primary |
26 | residence; |
27 | (2) The interest secures an obligation incurred at a time when the property was used or |
28 | planned for use for agricultural, commercial, industrial, or mineral-extraction purposes; |
29 | (3) The owner planned or is planning to develop the property into one or more dwelling |
30 | units to be sold or leased in the ordinary course of the owner's business; or |
31 | (4) The owner is collecting or has the right to collect rents or other income from the |
32 | property from a person other than an affiliate of the owner. |
33 | (c) This chapter does not apply to a receivership authorized by law of this state other than |
34 | this chapter in which the receiver is a governmental unit or an individual acting in an official |
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1 | capacity on behalf of the unit except to the extent provided by the other law. |
2 | (d) This chapter does not limit the authority of a court to appoint a receiver under law of |
3 | this state other than this chapter. |
4 | (e) Unless displaced by a particular provision of this chapter, the principles of law and |
5 | equity supplement this chapter. |
6 | 10-21-5. Power of court. |
7 | The court that appoints a receiver under this chapter has exclusive jurisdiction to direct the |
8 | receiver and determine any controversy related to the receivership or receivership property. |
9 | 10-21-6. Appointment of receiver. |
10 | (a) The court may appoint a receiver: |
11 | (1) Before judgment, to protect a party that demonstrates an apparent right, title, or interest |
12 | in property that is the subject of the action, if the property or its revenue-producing potential: |
13 | (i) Is being subjected to or is in danger of waste, loss, dissipation, misapplication, or |
14 | impairment; or |
15 | (ii) Has been or is about to be the subject of a voidable transaction; |
16 | (2) After judgment: |
17 | (i) To carry the judgment into effect; or |
18 | (ii) To preserve nonexempt real property pending appeal or when an execution has been |
19 | returned unsatisfied and the owner refuses to apply the property in satisfaction of the judgment; |
20 | (3) In an action against a person that is not an individual if: |
21 | (i) The object of the action is the dissolution of the person; |
22 | (ii) The person is not an individual, and the person has been dissolved or revoked; |
23 | (iii) The persons responsible for management of the person are deadlocked in the |
24 | management of the person's affairs; |
25 | (iv) The acts of the persons in control of the person are illegal, oppressive, or fraudulent; |
26 | or |
27 | (v) The person is insolvent or generally is not paying the person's debts as those debts |
28 | become due; or |
29 | (4) In an action in which a receiver may be appointed on equitable grounds. |
30 | (b) In connection with the foreclosure or other enforcement of a security agreement, the |
31 | court may appoint a receiver for the collateral if: |
32 | (1) Appointment is necessary to protect the collateral from waste, loss, transfer, dissipation, |
33 | misapplication, or impairment; |
34 | (2) The debtor agreed in a signed record to appointment of a receiver on default; |
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1 | (3) The owner agreed, after default and in a signed record, to appointment of a receiver; |
2 | (4) The collateral and any other security held by the secured party are not reasonably |
3 | expected to be sufficient to satisfy the secured obligation; or |
4 | (5) The owner fails to turn over to the secured party proceeds or rents the secured party |
5 | was entitled to collect. |
6 | (c) The court may condition appointment of a receiver without prior notice under § 10-21- |
7 | 3(b)(1) or without a prior hearing under § 10-21-3(b)(2) on the giving of security by the person |
8 | seeking the appointment for the payment of damages, reasonable attorneys' fees, and costs incurred |
9 | or suffered by any person if the court later concludes that the appointment was not justified. If the |
10 | court later concludes that the appointment was justified, the court shall release the security. |
11 | 10-21-6.1. Appointment of temporary non-liquidating receiver. |
12 | (a) The court may appoint a temporary non-liquidating receiver on the request of the owner |
13 | if: |
14 | (1) As of the date of an emergency declaration, the owner was not insolvent; |
15 | (2) As of the date of an emergency declaration, the owner was generally paying its debts |
16 | as those debts became due; |
17 | (3) As of the date of an emergency declaration, the owner was not in material default of its |
18 | obligations to a secured party; and |
19 | (4) Either: |
20 | (i) Because of the events giving rise to the emergency, the owner’s gross revenue has |
21 | declined by more than twenty percent (20%), in a sixty (60) day period beginning on or after the |
22 | date of an emergency declaration, as compared to the same period of the previous year; or |
23 | (ii) Because of action by a governmental unit exercising its police or regulatory power to |
24 | mitigate or otherwise address the emergency, the owner suspended or ceased a substantial part of |
25 | its business operations. |
26 | 10-21-7. Disqualification from appointment as receiver -- Disclosure of interest. |
27 | (a) The court may not appoint a person as receiver unless the person submits to the court a |
28 | statement under penalty of perjury that the person is not disqualified. |
29 | (b) Except as otherwise provided in subsection (c) of this section, a person is disqualified |
30 | from appointment as receiver if the person: |
31 | (1) Is an affiliate of a party; |
32 | (2) Has an interest materially adverse to an interest of a party; |
33 | (3) Has a material financial interest in the outcome of the action, other than compensation |
34 | the court may allow the receiver; |
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1 | (4) Has a debtor-creditor relationship with a party; or |
2 | (5) Holds an equity interest in a party, other than a non-controlling interest in a publicly- |
3 | traded company. |
4 | (c) A person is not disqualified from appointment as receiver solely because the person: |
5 | (1) Was appointed receiver or is owed compensation in an unrelated matter involving a |
6 | party or was engaged by a party in a matter unrelated to the receivership; |
7 | (2) Is an individual obligated to a party on a debt that is not in default and was incurred |
8 | primarily for personal, family, or household purposes; or |
9 | (3) Maintains with a party a deposit account as defined in § 6A-9-102(a)(29). |
10 | (d) A person seeking appointment of a receiver may nominate a person to serve as receiver, |
11 | but the court is not bound by the nomination. |
12 | 10-21-8. Receiver's bond -- Alternative security. |
13 | (a) Except as otherwise provided in subsection (b) of this section, a receiver shall post with |
14 | the court a bond that: |
15 | (1) Is conditioned on the faithful discharge of the receiver's duties; |
16 | (2) Has one or more sureties approved by the court; |
17 | (3) Is in an amount the court specifies; and |
18 | (4) Is effective as of the date of the receiver's appointment. |
19 | (b) The court may approve the posting by a receiver with the court of alternative security, |
20 | such as a letter of credit or deposit of funds. The receiver may not use receivership property as |
21 | alternative security. Interest that accrues on deposited funds must be paid to the receiver on the |
22 | receiver's discharge. |
23 | (c) The court may authorize a receiver to act before the receiver posts the bond or |
24 | alternative security required by this section. |
25 | (d) A claim against a receiver's bond or alternative security must be made not later than |
26 | one year after the date the receiver is discharged. |
27 | 10-21-9. Status of receiver as lien creditor. |
28 | On appointment of a receiver, in addition to the receiver’s other status under this chapter, |
29 | the receiver has the status of a lien creditor under: |
30 | (1) Chapter 9 of title 6A as to receivership property that is personal property or fixtures; |
31 | and |
32 | (2) Section 34-13-2 as to receivership property that is real property. |
33 | 10-21-10. Security interest covering after-acquired property. |
34 | Except as otherwise provided by law of this state other than this chapter, property that a |
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1 | receiver or owner acquires after appointment of the receiver is subject to a security agreement |
2 | entered into before the appointment to the same extent as if the court had not appointed the receiver. |
3 | 10-21-11. Collection and turnover of receivership property. |
4 | (a) Unless the court orders otherwise, on demand by a receiver: |
5 | (1) A person that owes a debt that is receivership property and is matured or payable on |
6 | demand or on order shall pay the debt to or on the order of the receiver, except to the extent the |
7 | debt is subject to setoff or recoupment; and |
8 | (2) Subject to subsection (c) of this section, a person that has possession, custody, or control |
9 | of receivership property shall turn the property over to the receiver. |
10 | (b) A person that has notice of the appointment of a receiver and owes a debt that is |
11 | receivership property may not satisfy the debt by payment to the owner. |
12 | (c) If a creditor has possession, custody, or control of receivership property and the validity, |
13 | perfection, or priority of the creditor's lien on the property depends on the creditor's possession, |
14 | custody, or control, the creditor may retain possession, custody, or control until the court orders |
15 | adequate protection of the creditor's lien. |
16 | (d) Unless a bona fide dispute exists about a receiver's right to possession, custody, or |
17 | control of receivership property, the court may sanction as civil contempt a person's failure to turn |
18 | the property over when required by this section. |
19 | 10-21-12. Powers and duties of receiver. |
20 | (a) Except as limited by court order or law of this state other than this chapter, a receiver |
21 | may: |
22 | (1) Collect, control, manage, conserve, and protect receivership property; |
23 | (2) Operate a business constituting receivership property, including preservation, use, sale, |
24 | lease, license, exchange, collection, or disposition of the property in the ordinary course of |
25 | business; |
26 | (3) In the ordinary course of business, incur unsecured debt and pay expenses incidental to |
27 | the receiver's preservation, use, sale, lease, license, exchange, collection, or disposition of |
28 | receivership property; |
29 | (4) Assert a right, claim, cause of action, or defense of the owner which relates to |
30 | receivership property; |
31 | (5) Seek and obtain instruction from the court concerning receivership property, exercise |
32 | of the receiver's powers, and performance of the receiver's duties; |
33 | (6) On subpoena, compel a person to submit to examination under oath, or to produce and |
34 | permit inspection and copying of designated records or tangible things, with respect to receivership |
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1 | property or any other matter that may affect administration of the receivership; |
2 | (7) Engage a professional as provided in § 10-21-15; |
3 | (8) Apply to a court of another state for appointment as ancillary receiver with respect to |
4 | receivership property located in that state; and |
5 | (9) Exercise any power conferred by court order, this chapter, or law of this state other than |
6 | this chapter. |
7 | (b) With court approval, a receiver may: |
8 | (1) Incur debt for the use or benefit of receivership property other than in the ordinary |
9 | course of business; |
10 | (2) Make improvements to receivership property; |
11 | (3) Use or transfer receivership property other than in the ordinary course of business as |
12 | provided in § 10-21-16; |
13 | (4) Adopt or reject an executory contract of the owner as provided in § 10-21-17; |
14 | (5) Pay compensation to the receiver as provided in § 10-21-21, and to each professional |
15 | engaged by the receiver as provided in § 10-21-15; |
16 | (6) Recommend allowance or disallowance of a claim of a creditor as provided in §10-21- |
17 | 20; and |
18 | (7) Make a distribution of receivership property as provided in §10-21-20. |
19 | (c) A receiver shall: |
20 | (1) Prepare and retain appropriate business records, including a record of each receipt, |
21 | disbursement, and disposition of receivership property; |
22 | (2) Account for receivership property, including the proceeds of a sale, lease, license, |
23 | exchange, collection, or other disposition of the property; |
24 | (3) Record with the land evidence records of each city or town in which the property is |
25 | located a copy of the order appointing the receiver and, if a legal description of the real property is |
26 | not included in the order, the legal description; |
27 | (4) Disclose to the court any fact arising during the receivership which would disqualify |
28 | the receiver under § 10-21-7; and |
29 | (5) Perform any duty imposed by court order, this chapter, or law of this state other than |
30 | this chapter. |
31 | (d) The powers and duties of a receiver may be expanded, modified, or limited by court |
32 | order. |
33 | 10-21-12.1. Powers and duties of temporary non-liquidating receiver -- Operating |
34 | plan. |
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1 | (a) A temporary non-liquidating receiver shall: |
2 | (1) Assist the owner in developing an operating plan in consultation; |
3 | (2) Present the operating plan to the court for approval; and |
4 | (3) Monitor the owner’s business operations and the owner’s compliance with the plan. |
5 | (b) An operating plan must: |
6 | (1) Except to the extent that a particular creditor has agreed to a different treatment of its |
7 | claim: |
8 | (i) Provide for the payment of any secured obligation of the owner on the terms of the |
9 | secured obligation; |
10 | (ii) Provide for the payment of the owner’s debts accruing or arising after the appointment |
11 | of the receiver when such debts become due; and |
12 | (iii) Provide for the payment of each of the owner’s other debts either: |
13 | (A) In periodic installments over a term of not more than three (3) years after the court |
14 | approves the plan; or |
15 | (B) As to a particular debt, in such other manner as the owner and the creditor may agree |
16 | in a record; and |
17 | (2) Include such other measures as necessary to justify the termination of the receivership. |
18 | (c) The court may modify the operating plan. |
19 | (d) A temporary non-liquidating receiver may not exercise any of the powers under §§ 10- |
20 | 21-12(a)(1) through (4) unless: |
21 | (1) The court directs otherwise for cause; or |
22 | (2) The owner defaults on an approved operating plan after such notice and opportunity to |
23 | cure the default as the court specifies. |
24 | 10-21-13. Duties of owner. |
25 | (a) An owner shall: |
26 | (1) Assist and cooperate with the receiver in the administration of the receivership and the |
27 | discharge of the receiver's duties; |
28 | (2) Preserve and turn over to the receiver all receivership property in the owner's |
29 | possession, custody, or control; |
30 | (3) Identify all records and other information relating to the receivership property, |
31 | including a password, authorization, or other information needed to obtain or maintain access to or |
32 | control of the receivership property, and make available to the receiver the records and information |
33 | in the owner's possession, custody, or control; |
34 | (4) On subpoena, submit to examination under oath by the receiver concerning the acts, |
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1 | conduct, property, liabilities, and financial condition of the owner or any matter relating to the |
2 | receivership property or the receivership; and |
3 | (5) Perform any duty imposed by court order, this chapter, or law of this state other than |
4 | this chapter. |
5 | (b) If an owner is a person other than an individual, this section applies to each officer, |
6 | director, manager, member, partner, trustee, or other person exercising or having the power to |
7 | exercise control over the affairs of the owner. |
8 | (c) If a person knowingly fails to perform a duty imposed by this section, the court may: |
9 | (1) Award the receiver actual damages caused by the person's failure, reasonable attorneys' |
10 | fees, and costs; and |
11 | (2) Sanction the failure as civil contempt. |
12 | 10-21-13.1. Owner’s duties in temporary non-liquidating receivership. |
13 | Unless the court orders otherwise, the owner shall: |
14 | (1) Develop an operating plan and any modifications to the plan that the temporary non- |
15 | liquidating receiver may propose; |
16 | (2) Obtain court approval of the operating plan; and |
17 | (3) Timely perform the owner’s duties under the operating plan. |
18 | 10-21-14. Stay -- Injunction. |
19 | (a) Except as otherwise provided in subsection (d) of this section or ordered by the court, |
20 | an order appointing a receiver operates as a stay, applicable to all persons, of an act, action, or |
21 | proceeding: |
22 | (1) To obtain possession of, exercise control over, or enforce a judgment against |
23 | receivership property; and |
24 | (2) To enforce a lien against receivership property to the extent the lien secures a claim |
25 | against the owner which arose before entry of the order. |
26 | (b) Except as otherwise provided in subsection (d) of this section, the court may enjoin an |
27 | act, action, or proceeding against or relating to receivership property if the injunction is necessary |
28 | to protect the property or facilitate administration of the receivership. |
29 | (c) A person whose act, action, or proceeding is stayed or enjoined under this section may |
30 | apply to the court for relief from the stay or injunction for cause. |
31 | (d) An order under subsection (a) or (b) of this section does not operate as a stay or |
32 | injunction of: |
33 | (1) An act, action, or proceeding to perfect, or maintain or continue the perfection of, an |
34 | interest in receivership property; |
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1 | (2) Commencement or continuation of a criminal proceeding; |
2 | (3) Commencement or continuation of an action or proceeding, or enforcement of a |
3 | judgment other than a money judgment in an action or proceeding, by a governmental unit to |
4 | enforce its police or regulatory power; |
5 | (4) Establishment by a governmental unit of a tax liability against the owner or receivership |
6 | property or an appeal of the liability; or |
7 | (5) Exercise of rights of a party to a swap agreement, securities contract, repurchase |
8 | agreement, commodity contract, forward contract or master netting agreement, as those terms are |
9 | defined in the federal Bankruptcy Code, to the extent that a court would not have the power to stay |
10 | the exercise if the defendant were a debtor under the Bankruptcy Code. |
11 | (e) The court may void an act that violates a stay or injunction under this section. |
12 | (f) If a person knowingly violates a stay or injunction under this section, the court may: |
13 | (1) Award actual damages caused by the violation, reasonable attorneys' fees, and costs; |
14 | and |
15 | (2) Sanction the violation as civil contempt. |
16 | 10-21-14.1. Stay in a temporary non-liquidating receivership. |
17 | On appointment of a temporary non-liquidating receiver, the stay under § 10-21-14(a) is |
18 | effective for the period that the court considers necessary, but not more than ninety (90) days. The |
19 | court may extend the stay in increments of not more than thirty (30) days. |
20 | 10-21-15. Engagement and compensation of professional. |
21 | (a) With court approval, a receiver may engage an attorney, accountant, appraiser, |
22 | auctioneer, broker, or other professional to assist the receiver in performing a duty or exercising a |
23 | power of the receiver. The receiver shall disclose to the court: |
24 | (1) The identity and qualifications of the professional; |
25 | (2) The scope and nature of the proposed engagement; |
26 | (3) Any potential conflict of interest; and |
27 | (4) The proposed compensation. |
28 | (b) A person is not disqualified from engagement under this section solely because of the |
29 | person's engagement by, representation of, or other relationship with the receiver, a creditor, or a |
30 | party. This chapter does not prevent the receiver from serving in the receivership as an attorney, |
31 | accountant, auctioneer, or broker when authorized by law. |
32 | (c) A receiver or professional engaged under subsection (a) of this section shall file with |
33 | the court an itemized statement of the time spent, work performed, and billing rate of each person |
34 | that performed the work and an itemized list of expenses. The receiver shall pay the amount |
| LC003941 - Page 13 of 22 |
1 | approved by the court. |
2 | 10-21-16. Use or transfer of receivership property not in the ordinary course of |
3 | business. |
4 | (a) In this section, "good faith" means honesty in fact and the observance of reasonable |
5 | commercial standards of fair dealing. |
6 | (b) With court approval, a receiver may use receivership property other than in the ordinary |
7 | course of business. |
8 | (c) With court approval, a receiver may transfer receivership property other than in the |
9 | ordinary course of business by sale, lease, license, exchange, or other disposition. Unless the |
10 | agreement of sale provides otherwise, a sale under this section is free and clear of a lien of the |
11 | person that obtained appointment of the receiver, any subordinate lien, and any right of redemption. |
12 | However, unless the holder of a senior lien consents, such a sale: |
13 | (1) Is subject to the senior lien and to the rights and remedies of the holder of the senior |
14 | lien under law other than this chapter; and |
15 | (2) Does not affect the obligation secured by the senior lien. |
16 | (d) A lien on receivership property which is extinguished by a transfer under subsection |
17 | (c) of this section attaches to the proceeds of the transfer with the same validity, perfection, and |
18 | priority the lien had on the property immediately before the transfer, even if the proceeds are not |
19 | sufficient to satisfy all obligations secured by the lien. |
20 | (e) A transfer under subsection (c) of this section may occur by means other than a public |
21 | auction sale. A creditor holding a valid lien on the property to be transferred may purchase the |
22 | property and offset against the purchase price part or all of the allowed amount secured by the lien, |
23 | if the creditor tenders funds sufficient to satisfy in full the reasonable expenses of transfer and the |
24 | obligation secured by any senior lien extinguished by the transfer. |
25 | (f) A reversal or modification of an order approving a transfer under subsection (c) of this |
26 | section does not affect the validity of the transfer to a person that acquired the property in good |
27 | faith or revive against the person any lien extinguished by the transfer, whether or not the person |
28 | knew before the transfer of the request for reversal or modification, unless the court stayed the |
29 | order before the transfer. |
30 | 10-21-16.1. Use or transfer of receivership property in a temporary non-liquidating |
31 | receivership. |
32 | The owner may use or transfer receivership property, by sale, lease, license, exchange or |
33 | other disposition, only: |
34 | (1) With court approval; and |
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1 | (2) After the court approves the operating plan, in accordance with the plan. |
2 | 10-21-17. Executory contract. |
3 | (a) In this section, "timeshare interest" means a "time share" as defined in § 34-41-1.02. |
4 | (b) Except as otherwise provided in subsection (h) of this section, with court approval, a |
5 | receiver may adopt or reject an executory contract of the owner relating to receivership property. |
6 | The court may condition the receiver's adoption and continued performance of the contract on terms |
7 | appropriate under the circumstances. If the receiver does not request court approval to adopt or |
8 | reject the contract within a reasonable time after the receiver's appointment, the receiver is deemed |
9 | to have rejected the contract. |
10 | (c) A receiver's performance of an executory contract before court approval of its adoption |
11 | or rejection under subsection (b) of this section is not an adoption of the contract and does not |
12 | preclude the receiver from seeking approval to reject the contract. |
13 | (d) A provision in an executory contract which requires or permits a forfeiture, |
14 | modification, or termination of the contract because of the appointment of a receiver or the financial |
15 | condition of the owner does not affect a receiver's power under subsection (b) of this section to |
16 | adopt the contract. |
17 | (e) A receiver's right to possess or use receivership property pursuant to an executory |
18 | contract terminates on rejection of the contract under subsection (b) of this section. Rejection is a |
19 | breach of the contract effective immediately before appointment of the receiver. A claim for |
20 | damages for rejection of the contract must be submitted by the later of: |
21 | (1) The time set for submitting a claim in the receivership; or |
22 | (2) Thirty (30) days after the court approves the rejection. |
23 | (f) If at the time a receiver is appointed, the owner has the right to assign an executory |
24 | contract relating to receivership property under the law of this state other than this chapter, the |
25 | receiver may assign the contract with court approval. |
26 | (g) If a receiver rejects under subsection (b) of this section an executory contract for the |
27 | sale of receivership property that is real property in possession of the purchaser or a real-property |
28 | timeshare interest, the purchaser may: |
29 | (1) Treat the rejection as a termination of the contract, and in that case the purchaser has a |
30 | lien on the property for the recovery of any part of the purchase price the purchaser paid; or |
31 | (2) Retain the purchaser's right to possession under the contract, and in that case the |
32 | purchaser shall continue to perform all obligations arising under the contract and may offset any |
33 | damages caused by nonperformance of an obligation of the owner after the date of the rejection, |
34 | but the purchaser has no right or claim against other receivership property or the receiver on account |
| LC003941 - Page 15 of 22 |
1 | of the damages. |
2 | (h) A receiver may not reject an unexpired lease of real property under which the owner is |
3 | the landlord if: |
4 | (1) The tenant occupies the leased premises as the tenant's primary residence; |
5 | (2) The receiver was appointed at the request of a person other than a mortgagee; or |
6 | (3) The receiver was appointed at the request of a mortgagee and: |
7 | (i) The lease is superior to the lien of the mortgage; |
8 | (ii) The tenant has an enforceable agreement with the mortgagee or the holder of a senior |
9 | lien under which the tenant's occupancy will not be disturbed as long as the tenant performs its |
10 | obligations under the lease; |
11 | (iii) The mortgagee has consented to the lease, either in a signed record or by its failure |
12 | timely to object that the lease violated the mortgage; or |
13 | (iv) The terms of the lease were commercially reasonable at the time the lease was agreed |
14 | to and the tenant did not know or have reason to know that the lease violated the mortgage. |
15 | 10-21-18. Defenses and immunities of receiver. |
16 | (a) A receiver is entitled to all defenses and immunities provided by law of this state other |
17 | than this chapter for an act or omission within the scope of the receiver's appointment. |
18 | (b) A receiver may be sued personally for an act or omission in administering receivership |
19 | property only with approval of the court that appointed the receiver. |
20 | 10-21-19. Interim report of receiver. |
21 | A receiver may file or, if ordered by the court, shall file an interim report that includes: |
22 | (1) The activities of the receiver since appointment or a previous report; |
23 | (2) Receipts and disbursements, including a payment made or proposed to be made to a |
24 | professional engaged by the receiver; |
25 | (3) Receipts and dispositions of receivership property; |
26 | (4) Fees and expenses of the receiver and, if not filed separately, a request for approval of |
27 | payment of the fees and expenses; and |
28 | (5) Any other information required by the court. |
29 | 10-21-19.1. Interim report of temporary non-liquidating receiver. |
30 | In addition to the any interim report required by § 10-21-19, unless the court orders |
31 | otherwise, a temporary non-liquidating receiver shall file a monthly report that includes: |
32 | (1) Development and implementation of the operating plan; and |
33 | (2) The owner’s compliance with the operating plan and with this chapter. |
34 | 10-21-20. Notice of appointment -- Claim against receivership -- Distribution to |
| LC003941 - Page 16 of 22 |
1 | creditors. |
2 | (a) Except as otherwise provided in subsection (f) of this section, a receiver shall give |
3 | notice of appointment of the receiver to creditors of the owner by: |
4 | (1) Deposit for delivery through first-class mail or other commercially reasonable delivery |
5 | method to the last known address of each creditor; and |
6 | (2) Publication as directed by the court. |
7 | (b) Except as otherwise provided in subsection (f) of this section, the notice required by |
8 | subsection (a) of this section must specify the date by which each creditor holding a claim against |
9 | the owner which arose before appointment of the receiver must submit the claim to the receiver. |
10 | The date specified must be at least four (4) months after the later of notice under subsection (a)(1) |
11 | of this section or last publication under subsection (a)(2) of this section. The court may extend the |
12 | period for submitting the claim. Unless the court orders otherwise, a claim that is not submitted |
13 | timely is not entitled to a distribution from the receivership. |
14 | (c) A claim submitted by a creditor under this section must: |
15 | (1) State the name and address of the creditor; |
16 | (2) State the amount and basis of the claim; |
17 | (3) Identify any property securing the claim; |
18 | (4) Be signed by the creditor under penalty of perjury; and |
19 | (5) Include a copy of any record on which the claim is based. |
20 | (d) An assignment by a creditor of a claim against the owner is effective against the receiver |
21 | only if the assignee gives timely notice of the assignment to the receiver in a signed record. |
22 | (e) At any time before entry of an order approving a receiver's final report, the receiver |
23 | may file with the court an objection to a claim of a creditor, stating the basis for the objection. The |
24 | court shall allow or disallow the claim according to law of this state other than this chapter. |
25 | (f) If the court concludes that receivership property is likely to be insufficient to satisfy |
26 | claims of each creditor holding a perfected lien on the property, the court may order that: |
27 | (1) The receiver need not give notice under subsection (a) of this section of the appointment |
28 | to all creditors of the owner, but only such creditors as the court directs; and |
29 | (2) Unsecured creditors need not submit claims under this section. |
30 | (g) Subject to §10-21-21: |
31 | (1) A distribution of receivership property to a creditor holding a perfected lien on the |
32 | property must be made in accordance with the creditor's priority under law of this state other than |
33 | this chapter; and |
34 | (2) A distribution of receivership property to a creditor with an allowed unsecured claim |
| LC003941 - Page 17 of 22 |
1 | must be made as the court directs according to law of this state other than this chapter. |
2 | 10-21-21. Fees and expenses. |
3 | (a) The court may award a receiver from receivership property the reasonable and |
4 | necessary fees and expenses of performing the duties of the receiver and exercising the powers of |
5 | the receiver. |
6 | (b) The court may order one or more of the following to pay the reasonable and necessary |
7 | fees and expenses of the receivership, including reasonable attorneys' fees and costs: |
8 | (1) A person that requested the appointment of the receiver, if the receivership does not |
9 | produce sufficient funds to pay the fees and expenses; or |
10 | (2) A person whose conduct justified or would have justified the appointment of the |
11 | receiver under § 10-21-6(a)(1). |
12 | 10-21-21.1. Emergency declaration receivership program coordinator. |
13 | The presiding justice of the superior court may appoint an individual to serve as program |
14 | coordinator to identify and coordinate sources for funding, legal services, accounting services, and |
15 | other appropriate services for temporary non-liquidating receiverships. The individual must have |
16 | appropriate qualifications for the position and shall serve at the pleasure of the presiding justice. |
17 | The program coordinator is not a judicial officer, but may be sued personally for an act or omission |
18 | in performing his or her duties only with the approval of the presiding justice. On application to the |
19 | presiding justice after notice and opportunity for hearing, the program coordinator may be awarded |
20 | reasonable compensation through an equitable charge on receivership property in temporary non- |
21 | liquidating receiverships. |
22 | 10-21-22. Removal of receiver -- Replacement -- Termination of receivership. |
23 | (a) The court may remove a receiver for cause. |
24 | (b) The court shall replace a receiver that dies, resigns, or is removed. |
25 | (c) If the court finds that a receiver that resigns or is removed, or the representative of a |
26 | receiver that is deceased, has accounted fully for and turned over to the successor receiver all |
27 | receivership property and has filed a report of all receipts and disbursements during the service of |
28 | the replaced receiver, the replaced receiver is discharged. |
29 | (d) The court may discharge a receiver and terminate the court's administration of the |
30 | receivership property if the court finds that appointment of the receiver was improvident or that the |
31 | circumstances no longer warrant continuation of the receivership. If the court finds that the |
32 | appointment was sought wrongfully or in bad faith, the court may assess against the person that |
33 | sought the appointment: |
34 | (1) The fees and expenses of the receivership, including reasonable attorneys' fees and |
| LC003941 - Page 18 of 22 |
1 | costs; and |
2 | (2) Actual damages caused by the appointment, including reasonable attorneys' fees and |
3 | costs. |
4 | 10-21-23. Final report of receiver -- Discharge. |
5 | (a) On completion of a receiver's duties, the receiver shall file a final report including: |
6 | (1) A description of the activities of the receiver in the conduct of the receivership; |
7 | (2) A list of receivership property at the commencement of the receivership and any |
8 | receivership property received during the receivership; |
9 | (3) A list of disbursements, including payments to professionals engaged by the receiver; |
10 | (4) A list of dispositions of receivership property; |
11 | (5) A list of distributions made or proposed to be made from the receivership for creditor |
12 | claims; |
13 | (6) If not filed separately, a request for approval of the payment of fees and expenses of |
14 | the receiver; and |
15 | (7) Any other information required by the court. |
16 | (b) If the court approves a final report filed under subsection (a) of this section and the |
17 | receiver distributes all receivership property, the receiver is discharged. |
18 | 10-21-24. Receivership in another state -- Ancillary proceeding. |
19 | (a) The court may appoint a receiver appointed in another state, or that person's nominee, |
20 | as an ancillary receiver with respect to property located in this state or subject to the jurisdiction of |
21 | the court for which a receiver could be appointed under this chapter, if: |
22 | (1) The person or nominee would be eligible to serve as receiver under this chapter; and |
23 | (2) The appointment furthers the person's possession, custody, control, or disposition of |
24 | property subject to the receivership in the other state. |
25 | (b) The court may issue an order that gives effect to an order entered in another state |
26 | appointing or directing a receiver. |
27 | (c) Unless the court orders otherwise, an ancillary receiver appointed under subsection (a) |
28 | of this section has the rights, powers, and duties of a receiver appointed under this chapter. |
29 | 10-21-25. Effect of enforcement by secured party. |
30 | A request by a secured party for appointment of a receiver, the appointment of a receiver, |
31 | or application by a secured party of receivership property or proceeds to the secured obligation |
32 | does not: |
33 | (1) Make the secured party a mortgagee in possession of the real property; |
34 | (2) Impose any duty on the secured party under § 6A-9-207; |
| LC003941 - Page 19 of 22 |
1 | (3) Make the secured party an agent of the owner; |
2 | (4) Constitute an election of remedies that precludes a later action to enforce the secured |
3 | obligation; |
4 | (5) Make the secured obligation unenforceable; or |
5 | (6) Limit any right available to the secured party with respect to the secured obligation. |
6 | 10-21-26. Uniformity of application and construction. |
7 | In applying and construing this uniform act, consideration must be given to the need to |
8 | promote uniformity of the law with respect to its subject matter among states that enact it. |
9 | 10-21-27. Relation to electronic signatures in global and national commerce act. |
10 | This chapter modifies, limits, or supersedes the Electronic Signatures in Global and |
11 | National Commerce Act, 15 U.S.C. § 7001 et seq., but does not modify, limit, or supersede § 101(c) |
12 | of that act, (15 U.S.C. § 7001(c)), or authorize electronic delivery of any of the notices described |
13 | in § 103(b) of that act, (15 U.S.C. § 7003(b)). |
14 | 10-21-28. Transition. |
15 | This chapter does not apply to a receivership for which the receiver was appointed before |
16 | the effective date of this chapter. |
17 | 10-21-28.1. Emergency declaration temporary non-liquidating receivership |
18 | transition provisions. |
19 | (a) Notwithstanding § 10-21-28, the court may for cause apply this chapter to a receivership |
20 | for which a receiver was appointed before the effective date of this chapter, if the owner would |
21 | otherwise be eligible for a temporary non-liquidating receivership. |
22 | (b) Unless extended by the general assembly, the emergency declaration provisions apply |
23 | only to a receivership in which the court first appoints a receiver: |
24 | (1) If because of the COVID-19 pandemic, during the period beginning on the effective |
25 | date of this chapter and ending on June 30, 2022; or |
26 | (2) If because of any other emergency, during the period beginning on the date the |
27 | emergency declaration is issued and ending ninety (90) days after the end of the emergency. |
28 | 10-21-29. Official comments. |
29 | It is the intention of the general assembly that the official comments to the Uniform |
30 | Commercial Real Estate Receivership Act as approved and recommended for enactment in all the |
31 | States by the National Conference of Commissioners on Uniform State Laws in 2015 represent the |
32 | express legislative intent of the general assembly and shall be used as a guide for interpretation of |
33 | this chapter. |
| LC003941 - Page 20 of 22 |
1 | SECTION 2. This act shall take effect upon passage. |
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LC003941 | |
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| LC003941 - Page 21 of 22 |
EXPLANATION | |
BY THE LEGISLATIVE COUNCIL | |
OF | |
A N A C T | |
RELATING TO COURTS AND CIVIL PROCEDURE -- PROCEDURE IN PARTICULAR | |
ACTIONS -- RHODE ISLAND COMMERCIAL RECEIVERSHIP ACT | |
*** | |
1 | This act would create a temporary non-liquidating receivership program for businesses that |
2 | have had a substantial decline in revenue after an emergency declaration by the government or for |
3 | businesses that have suspended or ceased a substantial part of their operations because of action by |
4 | a governmental unit exercising its police or regulatory powers to address an emergency. |
5 | This act would take effect upon passage. |
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LC003941 | |
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| LC003941 - Page 22 of 22 |