Illinois General Assembly - Full Text of SB2571
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Full Text of SB2571  97th General Assembly

SB2571eng 97TH GENERAL ASSEMBLY

  
  
  

 


 
SB2571 EngrossedLRB097 14109 HEP 60600 b

1    AN ACT concerning transportation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Vehicle Code is amended by changing
5Section 5-102.7 as follows:
 
6    (625 ILCS 5/5-102.7)
7    Sec. 5-102.7. Dealer Recovery Trust Fund.
8    (a) The General Assembly finds that motor vehicle dealers
9that go out of business without fulfilling agreements to pay
10off the balance of their customers' liens on traded-in vehicles
11cause financial harm to those customers by leaving those
12customers liable for multiple vehicle loans and cause harm to
13the integrity of the motor vehicle retailing industry. It is
14the intent of the General Assembly to protect vehicle
15purchasers by creating a Dealer Recovery Trust Fund to
16reimburse these consumers.
17    (b) The Dealer Recovery Trust Fund shall be used solely for
18the limited purpose of helping victims of dealership closings.
19Any interest accrued by moneys in the Fund shall be deposited
20and become part of the Dealer Recovery Trust Fund and its
21purpose. The sole beneficiaries of the Dealer Recovery Trust
22Fund are victims of dealership closings.
23    (c) Except where the context otherwise requires, the

 

 

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1following words and phrases, when used in this Section, have
2the meanings ascribed to them in this subsection (c):
3    "Applicant" means a person who applies for reimbursement
4from the Dealer Recovery Trust Fund Board.
5    "Board" means the Dealer Recovery Trust Fund Board created
6under this Section.
7    "Dealer" means a new vehicle dealer licensed under Section
85-101 or a used vehicle dealer licensed under Section 5-102,
9excepting a dealer who primarily sells mobile homes,
10recreational vehicles, or trailers or any dealer who sells 25
11vehicles or fewer per calendar year, not counting sales of
12vehicles to another dealer or auction house.
13    "Fund" means the Dealer Recovery Trust Fund created under
14this Section.
15    "Fund Administrator" means the private entity, which shall
16be appointed by the Board, that administers the Dealer Recovery
17Trust Fund.
18    (d) Beginning October 1, 2011, each application or renewal
19for a new vehicle dealer's license and each application or
20renewal for a used vehicle dealer's license shall be
21accompanied by the applicable Annual Dealer Recovery Fund Fee
22under Section 5-101 or 5-102 of this Code. The fee shall be in
23addition to any other fees imposed under this Article, shall be
24submitted at the same time an application or renewal for a new
25vehicle dealer's license or used vehicle dealer's license is
26submitted, and shall be made payable to and remitted directly

 

 

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1to the Dealer Recovery Trust Fund, a trust fund outside of the
2State Treasury which is hereby created. In addition, the Dealer
3Recovery Trust Fund may accept any federal, State, or private
4moneys for deposit into the Fund.
5    (e) The Fund Administrator shall maintain a list of all
6dealers who have paid the fee under subsection (d) of this
7Section for the current year, which shall be available to the
8Secretary of State and the Board. The Secretary of State shall
9revoke the dealer license of any dealer who does not pay the
10fee imposed under subsection (d) of this Section. The Secretary
11of State and the Fund Administrator may enter into information
12sharing agreements as needed to implement this Section.
13    (f) The Fund shall be audited annually by an independent
14auditor who is a certified public accountant and who has been
15selected by the Board. The independent auditor shall compile an
16annual report, which shall be filed with the Board and shall be
17a public record. The auditor shall be paid by the Fund,
18pursuant to an order of the Board.
19    (g) The Fund shall be maintained by the Fund Administrator,
20who shall keep current records of the amounts deposited into
21the Fund and the amounts paid out of the Fund pursuant to an
22order of the Board. These records shall be made available to
23all members of the Board upon reasonable request during normal
24business hours. The Fund Administrator shall report the balance
25in the Fund to the Board monthly, by the 15th day of each
26month. For purposes of determining the amount available to pay

 

 

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1claims under this Section at any meeting of the Board, the
2Board shall use the Fund Administrator's most recent monthly
3report. The Fund Administrator shall purchase liability
4insurance to cover management of the Fund at a cost not to
5exceed 2% of the balance in the Fund as of January 15th of that
6year.
7    (h) In any year for which the balance in the Fund as of
8August 31st is greater than $3,500,000, the Fund Administrator
9shall notify the Secretary of State and the Secretary of State
10shall suspend collection of the fee for the following year for
11any dealer who has not had a claim paid from the Fund, has not
12had his or her license suspended or revoked, and has not been
13assessed any civil penalties under this Code during the 3
14previous years.
15    (i) Moneys in the Dealer Recovery Trust Fund may be paid
16from the Fund only as directed by a written order of the Board
17and used only for the following purposes:
18        (i) to pay claims under a written order of the Board as
19    provided in this Section; or
20        (ii) to reimburse the Fund Administrator for its
21    expenses related to the administration of the Fund,
22    provided that the reimbursement to the Fund Administrator
23    in any year shall not exceed 2% of the balance in the Fund
24    as of January 15th of that year.
25    (j) The Dealer Recovery Trust Fund Board is hereby created.
26The Board shall consist of the Secretary of State, or his or

 

 

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1her designee, who shall serve as chair, the Attorney General,
2or his or her designee, who shall serve as secretary, and one
3person alternatively representing new and independent Illinois
4automobile dealers, selected collectively by the Attorney
5General, or his or her designee, and the Secretary of State, or
6his or her designee. The Secretary of State may propose
7procedures and employ personnel as necessary to implement this
8Section. The Board shall meet quarterly, and as needed, as
9directed by the chair. The Board may not pay out any claims
10before the balance deposited into the Fund exceeds $500,000.
11Board meetings shall be open to the public. The Board has the
12authority to take any action by at least a two-thirds majority
13vote.
14    (k) The following persons may apply to the Board for
15reimbursement from the Dealer Recovery Trust Fund:
16        (i) A retail customer who, on or after October 1, 2011,
17    purchases a vehicle from a dealer who subsequently files
18    for bankruptcy or whose vehicle dealer's license is
19    subsequently revoked by the Secretary of State or otherwise
20    terminated and, as part of the purchase transaction, trades
21    in a vehicle with an outstanding lien to the dealer if lien
22    satisfaction was a condition of the purchase agreement and
23    the retail customer determines that the lien has not been
24    satisfied;
25        (ii) A retail customer who, on or after October 1,
26    2011, purchases a vehicle with an undisclosed lien from a

 

 

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1    dealer who subsequently files for bankruptcy or whose
2    vehicle dealer's license is subsequently revoked by the
3    Secretary of State or otherwise terminated;
4        (iii) A dealer who, on or after October 1, 2011,
5    purchases a vehicle with an undisclosed lien from another
6    dealer who subsequently files for bankruptcy or whose
7    vehicle dealer's license is subsequently revoked by the
8    Secretary of State or otherwise terminated.
9    (l) To be considered by the Board, an applicant must submit
10his or her claim to the Board within 9 months after the date of
11the transaction that gave rise to the claim.
12    (m) At each meeting of the Board, it shall consider all
13claims that are properly submitted to it on forms prescribed by
14the Secretary of State at least 30 days before the date of the
15Board's meeting. Before the Board may consider a claim against
16a dealer, it must make a written determination that the dealer
17has filed for bankruptcy under the provisions of 11 U.S.C.
18Chapter 7; that the Secretary of State has revoked his or her
19dealer's license; or that the license has been otherwise
20terminated. Once the Board has made this determination, it may
21consider the applicant's claim against the dealer. If a
22two-thirds majority of the Board determines that the dealer has
23committed a violation under subsection (k), it shall grant the
24applicant's claim. Except as otherwise provided in this
25Section, the maximum amount of any award for a claim under
26paragraph (i) of subsection (k) of this Section shall be equal

 

 

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1to the amount of the unpaid balance of the lien that the dealer
2agreed to pay off on behalf of the applicant as shown on the
3bill of sale or the retail installment sales contract. The
4maximum amount of any claim under paragraph (ii) or (iii) of
5subsection (k) of this Section shall be equal to the amount of
6the undisclosed lien. However, no award for a claim under
7subsection (k) of this Section shall exceed $35,000.
8    (n) If the balance in the Fund at the time of any Board
9meeting is less than the amount of the total amount of all
10claims awarded at that meeting, then all awards made at that
11meeting shall be reduced, pro rata, so that the amount of
12claims does not exceed the balance in the Fund. Before it
13reviews new claims, the Board shall issue written orders to pay
14the remaining portion of any claims that were so reduced,
15provided that the balance in the Fund is sufficient to pay
16those claims.
17    (o) Whenever the balance of the Fund falls below $500,000,
18the Board may charge dealers an additional assessment of up to
19$50 to bring the balance to at least $500,000. Not more than
20one additional assessment may be made against a dealer in any
2112-month period.
22    (p) If the total amount of claims awarded against any
23dealer exceeds 33% of the balance in the Fund, the Board may
24permanently reduce the amount of those claims, pro rata, so
25that those claims do not exceed 33% of the balance in the Fund.
26    (q) The Board shall issue a written order directing the

 

 

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1Fund Administrator to pay an applicant's claim to a secured
2party where the Board has received a signed agreement between
3the applicant and the secured party holding the lien. The
4agreement must (i) state that the applicant and the secured
5party agree to accept payment from the Fund to the secured
6party as settlement in full of all claims against the dealer;
7and (ii) release the lien and the title, if applicable, to the
8vehicle that was the subject of the claim. The written order
9shall state the amount of the claim and the name and address of
10the secured party to whom the claim shall be paid. The Fund
11Administrator shall pay the claim within 30 days after it
12receives the Board's order.
13    (r) No dealer or principal associated with a dealer's
14license is eligible for licensure, renewal or relicensure until
15the full amount of reimbursement for an unpaid claim, plus
16interest as determined by the Board, is paid to the Fund.
17Nothing in this Section shall limit the authority of the
18Secretary of State to suspend, revoke, or levy civil penalties
19against a dealer, nor shall full repayment of the amount owed
20to the Fund nullify or modify the effect of any action by the
21Secretary.
22    (s) Nothing in this Section shall limit the right of any
23person to seek relief though civil action against any other
24person as an alternative to seeking reimbursement from the
25Fund.
26(Source: P.A. 97-480, eff. 10-1-11.)