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Public Act 92-0400
SB888 Enrolled LRB9204552JStm
AN ACT concerning certain financial services.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Transmitters of Money Act is amended by
changing Sections 5, 20, 25, 30, 40, and 45 and adding
Section 92 as follows:
(205 ILCS 657/5)
Sec. 5. Definitions. As used in this Act, unless the
context otherwise requires, the words and phrases defined in
this Section have the meanings set forth in this Section.
"Authorized seller" means a person not an employee of a
licensee who engages in the business regulated by this Act on
behalf of a licensee under a contract between that person and
the licensee.
"Bill payment service" means the business of transmitting
money on behalf of an Illinois resident for the purpose of
paying the resident's bills.
"Controlling person" means a person owning or holding the
power to vote 25% or more of the outstanding voting
securities of a licensee or the power to vote the securities
of another controlling person of the licensee. For purposes
of determining the percentage of a licensee controlled by a
controlling person, the person's interest shall be combined
with the interest of any other person controlled, directly or
indirectly, by that person or by a spouse, parent, or child
of that person.
"Department" means the Department of Financial
Institutions.
"Director" means the Director of Financial Institutions.
"Licensee" means a person licensed under this Act.
"Location" means a place of business at which activity
regulated by this Act occurs.
"Material litigation" means any litigation that,
according to generally accepted accounting principles, is
deemed significant to a licensee's financial health and would
be required to be referenced in a licensee's annual audited
financial statements, reports to shareholders, or similar
documents.
"Money" means a medium of exchange that is authorized or
adopted by a domestic or foreign government as a part of its
currency and that is customarily used and accepted as a
medium of exchange in the country of issuance.
"Money transmitter" means a person who is located in or
doing business in this State and who directly or through
authorized sellers does any of the following in this State:
(1) Sells or issues payment instruments.
(2) Engages in the business of receiving money for
transmission or transmitting money.
(3) Engages in the business of exchanging, for
compensation, money of the United States Government or a
foreign government to or from money of another
government.
"Outstanding payment instrument" means, unless otherwise
treated by or accounted for under generally accepted
accounting principles on the books of the licensee, a payment
instrument issued by the licensee that has been sold in the
United States directly by the licensee or has been sold in
the United States by an authorized seller of the licensee and
reported to the licensee as having been sold, but has not
been paid by or for the licensee.
"Payment instrument" means a check, draft, money order,
traveler's check, or other instrument or memorandum, written
order or written receipt for the transmission or payment of
money sold or issued to one or more persons whether or not
that instrument or order is negotiable. Payment instrument
does not include an instrument that is redeemable by the
issuer in merchandise or service, a credit card voucher, or a
letter of credit. A written order for the transmission or
payment of money that results in the issuance of a check,
draft, money order, traveler's check, or other instrument or
memorandum is not a payment instrument.
"Person" means an individual, partnership, association,
joint stock association, corporation, or any other form of
business organization.
"Transmitting money" means the transmission of money by
any means, including transmissions to or from locations
within the United States or to and from locations outside of
the United States by payment instrument, facsimile or
electronic transfer, courier or otherwise, and includes bill
payment services.
(Source: P.A. 88-643, eff. 1-1-95.)
(205 ILCS 657/20)
Sec. 20. Qualifications for a license.
(a) In order to obtain a license under this Act, an
applicant must prove to the satisfaction of the Director all
of the following:
(1) That the applicant has and maintains the net
worth specified in Column A, computed according to
generally accepted accounting principles, corresponding
to the number of locations in this State at which the
applicant is conducting business or proposes to conduct
business by itself and by any authorized sellers
specified in Column B:
Column A Column B
$35,000 1
50,000 2-3
100,000 4-5
150,000 6-9
200,000 10-14
300,000 15-19
400,000 20-24
500,000 25 or more
(2) That the applicant is in good standing and in
statutory compliance in the state or country of
incorporation or when the applicant is an entity other
than a corporation, is properly registered under the laws
of this State or another state or country, and if
required, the corporation or entity is authorized to do
business in the State of Illinois.
(3) That the applicant has not been convicted
within the 10 years preceding the application of a felony
under the laws of this State, another state, the United
States, or a foreign jurisdiction.
(4) That no officer, director, controlling person,
or principal of the applicant has been convicted within
the 10 years preceding the application of a felony under
the laws of this State, another state, the United States,
or a foreign jurisdiction.
(5) That the financial responsibility, financial
condition, business experience, character, and general
fitness of the applicant and its management are such as
to justify the confidence of the public and that the
applicant is fit, willing, and able to carry on the
proposed business in a lawful and fair manner.
(b) The Director may, for good cause shown, waive the
requirement of items (3) and (4) of subsection (a) of this
Section.
(Source: P.A. 88-643, eff. 1-1-95.)
(205 ILCS 657/25)
Sec. 25. Application for license.
(a) An application for a license must be in writing,
under oath, and in the form the Director prescribes. The
application must contain or be accompanied by all of the
following:
(1) The name of the applicant and the address of
the principal place of business of the applicant and the
address of all locations and proposed locations of the
applicant in this State.
(2) The form of business organization of the
applicant, including:
(A) a copy of its articles of incorporation
and amendments thereto and a copy of its bylaws,
certified by its secretary, if the applicant is a
corporation;
(B) a copy of its partnership agreement,
certified by a partner, if the applicant is a
partnership; or
(C) a copy of the documents that control its
organizational structure, certified by a managing
official, if the applicant is organized in some
other form.
(3) The name, business and home address, and a
chronological summary of the business experience,
material litigation history, and felony convictions over
the preceding 10 years of:
(A) the proprietor, if the applicant is an
individual;
(B) every partner, if the applicant is a
partnership;
(C) each officer, director, and controlling
person, if the applicant is a corporation; and
(D) each person in a position to exercise
control over, or direction of, the business of the
applicant, regardless of the form of organization of
the applicant.
(4) Financial statements, not more than one year
old, prepared in accordance with generally accepted
accounting principles and audited by a licensed public
accountant or certified public accountant showing the
financial condition of the applicant and an unaudited
balance sheet and statement of operation as of the most
recent quarterly report before the date of the
application, certified by the applicant or an officer or
partner thereof. If the applicant is a wholly owned
subsidiary or is eligible to file consolidated federal
income tax returns with its parent, however, unaudited
financial statements for the preceding year along with
the unaudited financial statements for the most recent
quarter may be submitted if accompanied by the audited
financial statements of the parent company for the
preceding year along with the unaudited financial
statement for the most recent quarter.
(5) Filings of the applicant with the Securities
and Exchange Commission or similar foreign governmental
entity (English translation), if any.
(6) A list of all other states in which the
applicant is licensed as a money transmitter and whether
the license of the applicant for those purposes has ever
been withdrawn, refused, canceled, or suspended in any
other state, with full details.
(7) A list of all money transmitter locations and
proposed locations in this State.
(8) A sample of the contract for authorized
sellers.
(9) A sample form of the proposed payment
instruments to be used in this State.
(10) The name and business address of the clearing
banks through which the applicant intends to conduct any
business regulated under this Act.
(11) A surety bond or other security as required by
Section 30 of this Act.
(12) The applicable fees as required by Section 45
of this Act.
(13) A written consent to service of process as
provided by Section 100 of this Act.
(14) A written statement that the applicant is in
full compliance with and agrees to continue to fully
comply with all state and federal statutes and
regulations relating to money laundering.
(15) All additional information the Director
considers necessary in order to determine whether or not
to issue the applicant a license under this Act.
(b) The Director may, for good cause shown, waive, in
part, any of the requirements of this Section.
(Source: P.A. 88-643, eff. 1-1-95.)
(205 ILCS 657/30)
Sec. 30. Surety bond.
(a) An applicant for a license shall post and a licensee
must maintain with the Director a bond or bonds issued by
corporations qualified to do business as surety companies in
this State.
(b) The applicant or licensee shall post a bond in the
amount of the greater of $100,000 or an amount equal to the
daily average of outstanding payment instruments for the
preceding 12 months or operational history, whichever is
shorter, up to a maximum amount of $2,000,000. When the
amount of the required bond exceeds $1,000,000, the applicant
or licensee may, in the alternative, post a bond in the
amount of $1,000,000 plus a dollar for dollar increase in the
net worth of the applicant or licensee over and above the
amount required in Section 20, up to a total amount of
$2,000,000.
(c) The bond must be in a form satisfactory to the
Director and shall run to the State of Illinois for the
benefit of any claimant against the applicant or licensee
with respect to the receipt, handling, transmission, and
payment of money by the licensee or authorized seller in
connection with the licensed operations. A claimant damaged
by a breach of the conditions of a bond shall have a right to
action upon the bond for damages suffered thereby and may
bring suit directly on the bond, or the Director may bring
suit on behalf of the claimant.
(d) (Blank). Instead of the bond and net worth
requirements required in this Section, the applicant or
licensee may pledge to the Director cash or securities that
bear a rating of one of the 3 highest grades by Moody's
Investor's Service, Inc. or Standard and Poor's Corporation
in an amount equal to the bond and net worth requirements set
forth in subsection (b). The Director may provide for the
custody of the securities by a trust company or bank located
in this State and qualified to do business under the
Corporate Fiduciary Act. The compensation, if any, of the
custodian must be paid by the pledging applicant or licensee.
(e) (Blank). The bonds and securities so pledged may,
with the approval of the Director, be exchanged for other
bonds or securities. No bond or security may be sold or
transferred by the Director except on order of the circuit
court or as otherwise provided. As long as the applicant or
licensee pledging the bonds or securities remains solvent and
in good standing under this Act, it shall be permitted to
receive from the Director the interest and dividends on the
deposit.
(f) After receiving a license, the licensee must
maintain the required bond plus net worth (if applicable) or
securities until 5 years after it ceases to do business in
this State unless all outstanding payment instruments are
eliminated or the provisions under the Uniform Disposition of
Unclaimed Property Act have become operative and are adhered
to by the licensee. Notwithstanding this provision, however,
the amount required to be maintained may be reduced to the
extent that the amount of the licensee's payment instruments
outstanding in this State are reduced.
(g) If the Director at any time reasonably determines
that the required bond or deposit of securities is insecure,
deficient in amount, or exhausted in whole or in part, he may
in writing require the filing of a new or supplemental bond
or other security in order to secure compliance with this Act
and may demand compliance with the requirement within 30 days
following service on the licensee.
(Source: P.A. 88-643, eff. 1-1-95.)
(205 ILCS 657/40)
Sec. 40. Renewals of license. As a condition for renewal
of a license, a the licensee must submit to the Director, and
the Director must receive, on or before December 1 of each
year, an application for renewal made, in writing and under
oath, on a form prescribed by the Director. A licensee whose
failing to submit an application for renewal is not received
by the Department on or before December 31 shall not have its
license renewed and shall be required to submit to the
Director an application for a new license in accordance with
Section 25. Upon a showing of good cause, the Director may
extend the deadline for the filing of an application for
renewal. The application for renewal of a license shall
contain or be accompanied by all of the following:
(1) The name of the licensee and the address of the
principal place of business of the licensee.
(2) A list of all locations where the licensee is
conducting business under its license and a list of all
authorized sellers through whom the licensee is conducting
business under its license, including the name and business
address of each authorized seller.
(3) Audited financial statements covering the past year
of operations, prepared in accordance with generally accepted
accounting principles, showing the financial condition of the
licensee. The licensee shall submit the audited financial
statement after the application for renewal has been
approved. The audited financial statement must be received
by the Department no later than 120 days after the end of the
licensee's fiscal year, but before April 30 of the year of
the renewed license. If the licensee is a wholly owned
subsidiary or is eligible to file consolidated federal income
tax returns with its parent, the licensee may submit
unaudited financial statements if accompanied by the audited
financial statements of the parent company for its most
recently ended year.
(4) A statement of the dollar amount and number of money
transmissions and payment instruments sold, issued,
exchanged, or transmitted in this State by the licensee and
its authorized sellers for the past year.
(5) A statement of the dollar amount of uncompleted
money transmissions and payment instruments outstanding or in
transit, in this State, as of the most recent quarter
available.
(6) The annual license renewal fees and any penalty fees
as provided by Section 45 of this Act.
(7) Evidence sufficient to prove to the satisfaction of
the Director that the licensee has complied with all
requirements under Section 20 relating to its net worth,
under Section 30 relating to its surety bond or other
security, and under Section 50 relating to permissible
investments.
(8) A statement of a change in information provided by
the licensee in its application for a license or its previous
applications for renewal including, but not limited to, new
directors, officers, authorized sellers, or clearing banks
and material changes in the operation of the licensee's
business.
(Source: P.A. 88-643, eff. 1-1-95.)
(205 ILCS 657/45)
Sec. 45. Fees.
(a) The Director shall charge and collect fees, which
shall be nonrefundable unless otherwise indicated, in
accordance with the provisions of this Act as follows:
(1) For applying for a license, an application fee
of $100 and a license fee, which shall be refunded if the
application is denied or withdrawn, of $100 plus $10 for
each location at which the applicant and its authorized
sellers are conducting business or propose to conduct
business excepting the applicant's principal place of
business.
(2) For renewal of a license, a fee of $100 plus
$10 for each location at which the licensee and its
authorized sellers are conducting business, except the
licensee's principal place of business.
(3) For an application to add an authorized seller
location, $10 for each authorized seller location.
(4) For service of process or other notice upon the
Director as provided by Section 100, a fee of $10.
(5) For an application for renewal of a license
received by the Department submitted after December 1, a
penalty fee of $10 per day for each day after December 1
in addition to any other fees required under this Act
unless an extension of time has been granted by the
Director.
(6) For failure to submit financial statements as
required by Section 40 on or before April 30, a penalty
fee of $10 per day for each day the statement is late
after April 30 unless an extension of time has been
granted by the Director.
(b) Beginning one year after the effective date of this
Act, the Director may, by rule, amend the fees set forth in
this Section.
(c) All moneys received by the Department under this Act
shall be deposited into the Financial Institutions Fund.
(Source: P.A. 88-643, eff. 1-1-95.)
(205 ILCS 657/92 new)
Sec. 92. Receivership.
(a) If the Director determines that a licensee is
insolvent or is violating this Act, he or she may appoint a
receiver. Under the direction of the Director, the receiver
shall, for the purpose of receivership, take possession of
and title to the books, records, and assets of the licensee.
The Director may require the receiver to provide security in
an amount the Director deems proper. Upon appointment of the
receiver, the Director 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 Director determines that
possession should be restored to the licensee or that the
business should be liquidated.
(b) If the Director 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 Director determines that the
business should be liquidated, the receiver shall file with
the Director 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 Director or court that has charge of
the liquidation.
(c) The General Assembly finds and declares that debt
management services provide important and vital services 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 Director 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 Director;
(B) all expenses of any preliminary or other
examinations into the condition of the receivership;
(C) all expenses incurred by the Director that
are incident to possession and control of any
property or records of the licensee's business; and
(D) reasonable expenses incurred by the
Director 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
Director, or by the receiver with the approval of
the Director, with banks, bonding companies, and
other types of financial institutions.
(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 Director within the time the Director
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 Director after the time fixed for filing
claims by the Director.
(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 Director 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 Director to be paid out when
proper claims are presented to the Director.
(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 Director all books of account and ledgers of
the business for preservation. The Director 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
Director, 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 Director 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
licensee'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 licensee'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 licensee may not terminate its affairs and close
up its business unless it has first deposited with the
Director 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 Director its license, and filed with the
Director a statement of termination signed by the licensee
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
Director of a statement of termination, the Director 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 Director 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 Director 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 Director 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.
Section 10. The Debt Management Service Act is amended
by changing Sections 2, 4, and 6 and adding Section 20.5 as
follows:
(205 ILCS 665/2) (from Ch. 17, par. 5302)
Sec. 2. Definitions. As used in this Act:
"Debt management service" means the planning and
management of the financial affairs of a debtor for a fee and
the receiving of money from the debtor for the purpose of
distributing it to the debtor's creditors in payment or
partial payment of the debtor's obligations or soliciting
financial contributions from creditors. The business of debt
management is conducted in this State if the debt management
business, its employees, or its agents are located in this
State or if the debt management business solicits or
contracts with debtors located in this State.
This term shall not include the following when engaged in
the regular course of their respective businesses and
professions:
(a) Attorneys at law.
(b) Banks, fiduciaries, credit unions, savings and loan
associations, and savings banks as duly authorized and
admitted to transact business in the State of Illinois and
performing credit and financial adjusting service in the
regular course of their principal business.
(c) Title insurers and abstract companies, while doing
an escrow business.
(d) Judicial officers or others acting pursuant to court
order.
(e) Employers for their employees.
(f) Bill payment services, as defined in the
Transmitters of Money Act.
"Director" means Director of Financial Institutions.
"Debtor" means the person or persons for whom the debt
management service is performed.
"Person" means an individual, firm, partnership,
association, limited liability company, corporation, or
not-for-profit corporation.
"Licensee" means a person licensed under this Act.
"Director" means the Director of the Department of
Financial Institutions.
(Source: P.A. 90-545, eff. 1-1-98.)
(205 ILCS 665/4) (from Ch. 17, par. 5304)
Sec. 4. Application for license. Application for a
license to engage in the debt management service business in
this State shall be made to the Director and shall be in
writing, under oath, and in the form prescribed by the
Director.
Each applicant, at the time of making such application,
shall pay to the Director the sum of $30.00 as a fee for
investigation of the applicant, and the additional sum of
$100.00 as a license fee.
Every applicant shall submit to the Director, at the time
of the application for a license, a bond to be approved by
the Director in which the applicant shall be the obligor, in
the sum of $25,000 or such additional amount as required by
the Director based on the amount of disbursements made by the
licensee in the previous year, and in which an insurance
company, which is duly authorized by the State of Illinois,
to transact the business of fidelity and surety insurance
shall be a surety; provided, however, the Director may accept
in lieu of the surety bond, a deposit in cash, a certified
check payable to the Director of Financial Institutions, or
United States Government Bonds in the amount of at least
$25,000.
The bond shall run to the Director for the use of the
Department or of any person or persons who may have a cause
of action against the obligor in said bond arising out of any
violation of this Act or rules by a license. Such bond shall
be conditioned that the obligor will faithfully conform to
and abide by the provisions of this Act and of all rules,
regulations and directions lawfully made by the Director and
will pay to the Director or to any person or persons any and
all money that may become due or owing to the State or to
such person or persons, from said obligor under and by virtue
of the provisions of this Act.
(Source: P.A. 90-545, eff. 1-1-98.)
(205 ILCS 665/6) (from Ch. 17, par. 5306)
Sec. 6. Renewal of license. Each licensee under the
provisions of this Act may on or before December 1 make
application to the Director for renewal of its license, which
application for renewal shall be on the form prescribed by
the Director and shall be accompanied by a fee of $100.00
together with a bond or other surety as required, in a
minimum amount of $25,000 or such an amount as required by
the Director based on the amount of disbursements made by the
licensee in the previous year. The application must be
received by the Department no later than December 1 of the
year preceding the year for which the application applies.
(Source: P.A. 90-545, eff. 1-1-98.)
(205 ILCS 665/20.5 new)
Sec. 20.5. Receivership.
(a) If the Director determines that a licensee is
insolvent or is violating this Act, he or she may appoint a
receiver. Under the direction of the Director, the receiver
shall, for the purpose of receivership, take possession of
and title to the books, records, and assets of the licensee.
The Director may require the receiver to provide security in
an amount the Director deems proper. Upon appointment of the
receiver, the Director 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 Director determines that
possession should be restored to the licensee or that the
business should be liquidated.
(b) If the Director 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 Director determines that the
business should be liquidated, the receiver shall file with
the Director 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 Director or court that has charge of
the liquidation.
(c) The General Assembly finds and declares that debt
management services provide important and vital services 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 Director 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 Director;
(B) all expenses of any preliminary or other
examinations into the condition of the receivership;
(C) all expenses incurred by the Director that
are incident to possession and control of any
property or records of the licensee's business; and
(D) reasonable expenses incurred by the
Director 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
Director, or by the receiver with the approval of
the Director, with banks, bonding companies, and
other types of financial institutions.
(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 Director within the time the Director
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 Director after the time fixed for filing
claims by the Director.
(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 Director 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 Director to be paid out when
proper claims are presented to the Director.
(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 Director all books of account and ledgers of
the business for preservation. The Director 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
Director, 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 Director 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
licensee'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 licensee'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 licensee may not terminate its affairs and close
up its business unless it has first deposited with the
Director 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 Director its license, and filed with the
Director a statement of termination signed by the licensee
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
Director of a statement of termination, the Director 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 Director 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 Director 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 Director 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.
Passed in the General Assembly May 25, 2001.
Approved August 16, 2001.
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