2016 -- H 7905

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LC005188

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

____________

A N   A C T

RELATING TO COURTS AND CIVIL PROCEDURE--PROCEDURE IN PARTICULAR

ACTIONS

     Introduced By: Representatives Keable, Blazejewski, Shekarchi, and McKiernan

     Date Introduced: March 10, 2016

     Referred To: House Judiciary

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 10 of the General Laws entitled "COURTS AND CIVIL

PROCEDURE-PROCEDURE IN PARTICULAR ACTIONS" is hereby amended by adding

thereto the following chapter:

CHAPTER 21

UNIFORM COMMERCIAL RECEIVERSHIP ACT

     10-21-1. Short title. -- This chapter shall be known and may be cited as the "Uniform

Commercial Receivership Act".

     10-21-2. Definitions. -- In this chapter:

     (1) "Affiliate" means:

     (i) With respect to an individual:

     (A) A companion of the individual;

     (B) A lineal ancestor or descendant, whether by blood or adoption; of:

     (I) The individual; or

     (II) A companion of the individual;

     (C) A companion of an ancestor or descendant described in §10-21-2(1)(i)(B);

     (D) A sibling, aunt, uncle, great aunt, great uncle, first cousin, niece, nephew, grandniece,

or grandnephew of the individual, whether related by the whole or the half blood or adoption, or a

companion of any of them; or

     (E) Any other individual occupying the residence of the individual; and

     (ii) With respect to a person other than an individual:

     (A) Another person that directly or indirectly controls, is controlled by, or is under

common control with the person;

     (B) An officer, director, manager, member, partner, employee, or trustee or other

fiduciary of the person; or

     (C) A companion of, or an individual occupying the residence of, an individual described

in §§10-21-2(1)(i)(A) or (B).

     (2) "Collateral" means the property subject to a lien.

     (3) "Companion" means:

     (i) The spouse of an individual;

     (ii) The domestic partner of an individual; or

     (iii) Another individual in a civil union with an individual.

     (4) "Court" means the superior court.

     (5) "Debtor" means a person having an interest, other than a lien, in collateral, whether or

not the person is liable for the secured obligation. The term includes a mortgagor.

     (6) "Executory contract" means a contract, including a lease, under which each party has

an unperformed obligation and the failure of a party to complete performance would constitute a

material breach.

     (7) "Governmental unit" means an office, department, division, bureau, board,

commission, or other agency of this state or a subdivision of this state.

     (8) "Lien" means an interest in property which secures payment or performance of an

obligation.

     (9) "Mortgage" means a record, however denominated, that creates or provides for a

consensual lien on real property or rents, even if it also creates or provides for a lien on personal

property.

     (10) "Mortgagee" means a person entitled to enforce an obligation secured by a

mortgage.

     (11) "Mortgagor" means a person that grants a mortgage or a successor in ownership of

the real property described in the mortgage.

     (12) "Owner" means the person for whose property a receiver is appointed.

     (13) "Person" means an individual, estate, partnership, association, trust, business or

nonprofit entity, public corporation, government or governmental subdivision, agency, or

instrumentality, or other legal entity.

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     (14) "Proceeds" means the following property:

     (i) Whatever is acquired on the sale, lease, license, exchange, or other disposition of

receivership property;

     (ii) Whatever is collected on, or distributed on account of, receivership property;

     (iii) Rights arising out of receivership property;

     (iv) To the extent of the value of receivership property, claims arising out of the loss,

nonconformity, or interference with the use of, defects or infringement of rights in, or damage to

the property; or

     (v) To the extent of the value of receivership property and to the extent payable to the

owner or secured party, insurance payable by reason of the loss or nonconformity of, defects or

infringement of rights in, or damage to the property.

     (15) "Property" means all of a person's right, title, and interest, both legal and equitable,

in real and personal property, tangible and intangible, wherever located and however acquired.

The term includes proceeds, products, offspring, rents, or profits of or from the property.

     (16) "Receiver" means a person appointed by the court as the court's agent, and subject to

the court's direction, to take possession of, manage, and, if authorized by this chapter or court

order, transfer, sell, lease, license, exchange, collect, or otherwise dispose of receivership

property.

     (17) "Receivership" means a proceeding in which a receiver is appointed.

     (18) "Receivership property" means the property of an owner which is described in the

order appointing a receiver or a subsequent order. The term includes any proceeds, products,

offspring, rents, or profits of or from the property.

     (19) "Record", used as a noun, means information that is inscribed on a tangible medium

or that is stored on an electronic or other medium and is retrievable in perceivable form.

     (20) "Rents" means:

     (i) Sums payable for the right to possess or occupy, or for the actual possession or

occupation of, real property of another person;

     (ii) Sums payable to a mortgagor under a policy of rental-interruption insurance covering

real property;

     (iii) Claims arising out of a default in the payment of sums payable for the right to

possess or occupy real property of another person;

     (iv) Sums payable to terminate an agreement to possess or occupy real property of

another person;

     (v) Sums payable to a mortgagor for payment or reimbursement of expenses incurred in

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owning, operating, and maintaining real property or constructing or installing improvements on

real property; or

     (vi) Other sums payable under an agreement relating to the real property of another

person which constitute rents under law of this state other than this chapter.

     (21) "Secured obligation" means an obligation the payment or performance of which is

secured by a security agreement.

     (22) "Secured party" means a person entitled to enforce a secured obligation. The term

includes a mortgagee.

     (23) "Security agreement" means an agreement that creates or provides for a lien. The

term includes a mortgage.

     (24) "Sign" means, with present intent to authenticate or adopt a record:

     (i) To execute or adopt a tangible symbol; or

     (ii) To attach to or logically associate with the record an electronic sound, symbol, or

process.

     (25) "State" means a state of the United States, the District of Columbia, Puerto Rico, the

United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of

the United States.

     10-21-3. Notice and opportunity for hearing. -- (a) Except as otherwise provided in

subsection (b) of this section, the court may issue an order under this chapter only after notice and

opportunity for a hearing appropriate in the circumstances.

     (b) The court may issue an order under this chapter:

     (1) Without prior notice if the circumstances require issuance of an order before notice is

given;

     (2) After notice and without a prior hearing if the circumstances require issuance of an

order before a hearing is held; or

     (3) After notice and without a hearing if no interested party timely requests a hearing.

     10-21-4. Scope; Exclusions. -- (a) Except as otherwise provided in subsections (b) or (c)

of this section, this chapter applies to a receivership for an interest in any one or more of the

following:

     (1) Real property and any personal property related to or used in operating the real

property; or

     (2) Personal property and fixtures.

     (b) This chapter does not apply to a receivership for an interest in real property improved

by one to four (4) dwelling units unless:

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     (1) The interest is used for agricultural, commercial, industrial, or mineral-extraction

purposes, other than incidental uses by an owner occupying the property as the owner's primary

residence;

     (2) The interest secures an obligation incurred at a time when the property was used or

planned for use for agricultural, commercial, industrial, or mineral-extraction purposes;

     (3) The owner planned or is planning to develop the property into one or more dwelling

units to be sold or leased in the ordinary course of the owner's business; or

     (4) The owner is collecting or has the right to collect rents or other income from the

property from a person other than an affiliate of the owner.

     (c) This chapter does not apply to a receivership authorized by any other law of this state

in which the receiver is a governmental unit or an individual acting in an official capacity on

behalf of the unit except to the extent provided by the other law.

     (d) This chapter does not limit the authority of a court to appoint a receiver under any

other law of this state.

     (e) Unless displaced by a particular provision of this chapter, the principles of law and

equity supplement this chapter.

     10-21-5. Power of court. -- The court that appoints a receiver under this chapter has

exclusive jurisdiction to direct the receiver and determine any controversy related to the

receivership or receivership property.

     10-21-6. Appointment of receiver. -- (a) The court may appoint a receiver:

     (1) Before judgment, to protect a party that demonstrates an apparent right, title, or

interest in property that is the subject of the action, if the property or its revenue-producing

potential:

     (i) Is being subjected to or is in danger of waste, loss, dissipation, misapplication, or

impairment; or

     (ii) Has been or is about to be the subject of a voidable transaction;

     (2) After judgment:

     (i) To carry the judgment into effect; or

     (ii) To preserve nonexempt real property pending appeal or when an execution has been

returned unsatisfied and the owner refuses to apply the property in satisfaction of the judgment;

     (3) In an action against a person that is not an individual if:

     (i) The object of the action is the dissolution of the person;

     (ii) The person has been dissolved;

     (iii) The persons responsible for management of the person are deadlocked in the

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management of the person's affairs;

     (iv) The acts of the persons in control of the person are illegal, oppressive, or fraudulent;

or

     (v) The person is insolvent or generally is not paying the person's debts as those debts

become due.

     (4) In an action in which a receiver may be appointed on equitable grounds.

     (b) In connection with the foreclosure or other enforcement of a security agreement, the

court may appoint a receiver for the collateral if:

     (1) Appointment is necessary to protect the property from waste, loss, transfer,

dissipation, or impairment;

     (2) The debtor agreed in a signed record to appointment of a receiver on default;

     (3) The owner agreed, after default and in a signed record, to appointment of a receiver;

     (4) The property and any other collateral held by the secured party are not sufficient to

satisfy the secured obligation;

     (5) The owner fails to turn over to the secured party proceeds or rents the secured party

was entitled to collect; or

     (6) The holder of a subordinate lien obtains appointment of a receiver for the property.

     (c) The court may condition appointment of a receiver without prior notice under §10-21-

3(b)(1) or without a prior hearing under §10-21-3(b)(2) on the giving of security by the person

seeking the appointment for the payment of damages, reasonable attorney's fees, and costs

incurred or suffered by any person if the court later concludes that the appointment was not

justified. If the court later concludes that the appointment was justified, the court shall release the

security.

     10-21-7. Disqualification from appointment as receiver; Disclosure of interest. -- (a)

The court may not appoint a person as receiver unless the person submits to the court a statement

under penalty of perjury that the person is not disqualified.

     (b) Except as otherwise provided in subsection (c) of this section, a person is disqualified

from appointment as receiver if the person:

     (1) Is an affiliate of a party;

     (2) Has an interest materially adverse to an interest of a party;

     (3) Has a material financial interest in the outcome of the action, other than compensation

the court may allow the receiver;

     (4) Has a debtor-creditor relationship with a party; or

     (5) Holds an equity interest in a party, other than a non-controlling interest in a publicly-

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traded company.

     (c) A person is not disqualified from appointment as receiver solely because the person:

     (1) Was appointed receiver or is owed compensation in an unrelated matter involving a

party or was engaged by a party in a matter unrelated to the receivership;

     (2) Is an individual obligated to a party on a debt that is not in default and was incurred

primarily for personal, family, or household purposes; or

     (3) Maintains with a party a deposit account as defined in §6A-9-102(a)(29).

     (d) A person seeking appointment of a receiver may nominate a person to serve as

receiver, but the court is not bound by the nomination.

     10-21-8. Receiver's bond; Alternative security. -- (a) Except as otherwise provided in

subsection (b) of this section, a receiver shall post with the court a bond that:

     (1) Is conditioned on the faithful discharge of the receiver's duties;

     (2) Has one or more sureties approved by the court;

     (3) Is in an amount the court specifies; and

     (4) Is effective as of the date of the receiver's appointment.

     (b) The court may approve the posting by a receiver with the court of alternative security,

such as a letter of credit or deposit of funds. The receiver may not use receivership property as

alternative security. Interest that accrues on deposited funds must be paid to the receiver on the

receiver's discharge.

     (c) The court may authorize a receiver to act before the receiver posts the bond or

alternative security required by this section.

     (d) A claim against a receiver's bond or alternative security must be made not later than

one year after the date the receiver is discharged.

     10-21-9. Status of receiver as lien creditor. -- On appointment of a receiver, the

receiver has the status of a lien creditor under:

     (1) Chapter 9 of title 6A as to receivership property that is personal property or fixtures;

and

     (2) Section 34-13-2 as to receivership property that is real property.

     10-21-10. Security interest covering after-acquired property. -- Except as otherwise

provided by any other law of this state, property that a receiver or owner acquires after

appointment of the receiver is subject to a security agreement entered into before the appointment

to the same extent as if the court had not appointed the receiver.

     10-21-11. Collection and turnover of receivership property. -- (a) Unless the court

orders otherwise, on demand by a receiver:

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     (1) A person that owes a debt that is receivership property and is matured or payable on

demand or on order shall pay the debt to or on the order of the receiver, except to the extent the

debt is subject to setoff or recoupment; and

     (2) Subject to subsection (c) of this section, a person that has possession, custody, or

control of receivership property shall turn the property over to the receiver.

     (b) A person that has notice of the appointment of a receiver and owes a debt that is

receivership property may not satisfy the debt by payment to the owner.

     (c) If a creditor has possession, custody, or control of receivership property and the

validity, perfection, or priority of the creditor's lien on the property depends on the creditor's

possession, custody, or control, the creditor may retain possession, custody, or control until the

court orders adequate protection of the creditor's lien.

     (d) Unless a bona fide dispute exists about a receiver's right to possession, custody, or

control of receivership property, the court may sanction as civil contempt a person's failure to

turn the property over when required by this section.

     10-21-12. Powers and duties of receiver. -- (a) Except as limited by court order or by

any other law of this state, a receiver may:

     (1) Collect, control, manage, conserve, and protect receivership property;

     (2) Operate a business constituting receivership property, including preservation, use,

sale, lease, license, exchange, collection, or disposition of the property in the ordinary course of

business;

     (3) In the ordinary course of business, incur unsecured debt and pay expenses incidental

to the receiver's preservation, use, sale, lease, license, exchange, collection, or disposition of

receivership property;

     (4) Assert a right, claim, cause of action, or defense of the owner which relates to

receivership property;

     (5) Seek and obtain instruction from the court concerning receivership property, exercise

of the receiver's powers, and performance of the receiver's duties;

     (6) On subpoena, compel a person to submit to examination under oath, or to produce and

permit inspection and copying of designated records or tangible things, with respect to

receivership property or any other matter that may affect administration of the receivership;

     (7) Engage a professional as provided in §10-21-15;

     (8) Apply to a court of another state for appointment as ancillary receiver with respect to

receivership property located in that state; and

     (9) Exercise any power conferred by court order, this chapter, or law of this state other

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than this chapter.

     (b) With court approval, a receiver may:

     (1) Incur debt for the use or benefit of receivership property other than in the ordinary

course of business;

     (2) Make improvements to receivership property;

     (3) Use or transfer receivership property other than in the ordinary course of business as

provided in §10-21-16;

     (4) Adopt or reject an executory contract of the owner as provided in §10-21-17;

     (5) Pay compensation to the receiver as provided in §10-21-21, and to each professional

engaged by the receiver as provided in §10-21-15;

     (6) Recommend allowance or disallowance of a claim of a creditor as provided in §10-

21-20; and

     (7) Make a distribution of receivership property as provided in §10-21-20.

     (c) A receiver shall:

     (1) Prepare and retain appropriate business records, including a record of each receipt,

disbursement, and disposition of receivership property;

     (2) Account for receivership property, including the proceeds of a sale, lease, license,

exchange, collection, or other disposition of the property;

     (3) Record with the land evidence records of each city or town in which the property is

located a copy of the order appointing the receiver and, if a legal description of the real property

is not included in the order, the legal description;

     (4) Disclose to the court any fact arising during the receivership which would disqualify

the receiver under §10-21-7; and

     (5) Perform any duty imposed by court order, this chapter, or any other law of this state.

     (d) The powers and duties of a receiver may be expanded, modified, or limited by court

order.

     10-21-13. Duties of owner. -- (a) An owner shall:

     (1) Assist and cooperate with the receiver in the administration of the receivership and

the discharge of the receiver's duties;

     (2) Preserve and turn over to the receiver all receivership property in the owner's

possession, custody, or control;

     (3) Identify all records and other information relating to the receivership property,

including a password, authorization, or other information needed to obtain or maintain access to

or control of the receivership property, and make available to the receiver the records and

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information in the owner's possession, custody, or control;

     (4) On subpoena, submit to examination under oath by the receiver concerning the acts,

conduct, property, liabilities, and financial condition of the owner or any matter relating to the

receivership property or the receivership; and

     (5) Perform any duty imposed by court order, this chapter, or any other law of this state.

     (b) If an owner is a person other than an individual, this section applies to each officer,

director, manager, member, partner, trustee, or other person exercising or having the power to

exercise control over the affairs of the owner.

     (c) If a person knowingly fails to perform a duty imposed by this section, the court may:

     (1) Award the receiver actual damages caused by the person's failure, reasonable

attorney's fees, and costs; and

     (2) Sanction the failure as civil contempt.

     10-21-14. Stay; Injunction. -- (a) Except as otherwise provided in subsection (d) of this

section or ordered by the court, an order appointing a receiver operates as a stay, applicable to all

persons, of an act, action, or proceeding:

     (1) To obtain possession of, exercise control over, or enforce a judgment against

receivership property; and

     (2) To enforce a lien against receivership property to the extent the lien secures a claim

against the owner which arose before entry of the order.

     (b) Except as otherwise provided in subsection (d) of this section, the court may enjoin an

act, action, or proceeding against or relating to receivership property if the injunction is necessary

to protect the property or facilitate administration of the receivership.

     (c) A person whose act, action, or proceeding is stayed or enjoined under this section may

apply to the court for relief from the stay or injunction for cause.

     (d) An order under subsection (a) or (b) of this section does not operate as a stay or

injunction of:

     (1) An act, action, or proceeding to foreclose or otherwise enforce a security agreement

by the person seeking appointment of the receiver;

     (2) An act, action, or proceeding to perfect, or maintain or continue the perfection of, an

interest in receivership property;

     (3) Commencement or continuation of a criminal proceeding;

     (4) Commencement or continuation of an action or proceeding, or enforcement of a

judgment other than a money judgment in an action or proceeding, by a governmental unit to

enforce its police or regulatory power; or

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     (5) Establishment by a governmental unit of a tax liability against the owner or

receivership property or an appeal of the liability.

     (e) The court may void an act that violates a stay or injunction under this section.

     (f) If a person knowingly violates a stay or injunction under this section, the court may:

     (1) Award actual damages caused by the violation, reasonable attorney's fees, and costs;

and

     (2) Sanction the violation as civil contempt.

     10-21-15. Engagement and compensation of professional. -- (a) With court approval, a

receiver may engage an attorney, accountant, appraiser, auctioneer, broker, or other professional

to assist the receiver in performing a duty or exercising a power of the receiver. The receiver shall

disclose to the court:

     (1) The identity and qualifications of the professional;

     (2) The scope and nature of the proposed engagement;

     (3) Any potential conflict of interest; and

     (4) The proposed compensation.

     (b) A person is not disqualified from engagement under this section solely because of the

person's engagement by, representation of, or other relationship with the receiver, a creditor, or a

party. This chapter does not prevent the receiver from serving in the receivership as an attorney,

accountant, auctioneer, or broker when authorized by law.

     (c) A receiver or professional engaged under subsection (a) of this section shall file with

the court an itemized statement of the time spent, work performed, and billing rate of each person

that performed the work and an itemized list of expenses. The receiver shall pay the amount

approved by the court.

     10-21-16. Use or transfer of receivership property not in the ordinary course of

business. -- (a) In this section, "good faith" means honesty in fact and the observance of

reasonable commercial standards of fair dealing.

     (b) With court approval, a receiver may use receivership property other than in the

ordinary course of business.

     (c) With court approval, a receiver may transfer receivership property other than in the

ordinary course of business by sale, lease, license, exchange, or other disposition. Unless the

agreement of sale provides otherwise, a sale under this section is free and clear of a lien of the

person that obtained appointment of the receiver, any subordinate lien, and any right of

redemption but is subject to a senior lien.

     (d) A lien on receivership property which is extinguished by a transfer under subsection

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(c) of this section attaches to the proceeds of the transfer with the same validity, perfection, and

priority the lien had on the property immediately before the transfer, even if the proceeds are not

sufficient to satisfy all obligations secured by the lien.

     (e) A transfer under subsection (c) of this section may occur by means other than a public

auction sale. A creditor holding a valid lien on the property to be transferred may purchase the

property and offset against the purchase price part or all of the allowed amount secured by the

lien, if the creditor tenders funds sufficient to satisfy in full the reasonable expenses of transfer

and the obligation secured by any senior lien extinguished by the transfer.

     (f) A reversal or modification of an order approving a transfer under subsection (c) of this

section does not affect the validity of the transfer to a person that acquired the property in good

faith or revive against the person any lien extinguished by the transfer, whether the person knew

before the transfer of the request for reversal or modification, unless the court stayed the order

before the transfer.

     10-21-17. Executory contract. -- (a) In this section, "timeshare interest" means a "time

share" as defined in §34-41-1.02.

     (b) Except as otherwise provided in subsection (h) of this section, with court approval, a

receiver may adopt or reject an executory contract of the owner relating to receivership property.

The court may condition the receiver's adoption and continued performance of the contract on

terms appropriate under the circumstances. If the receiver does not request court approval to

adopt or reject the contract within a reasonable time after the receiver's appointment, the receiver

is deemed to have rejected the contract.

     (c) A receiver's performance of an executory contract before court approval under

subsection (b) of this section is not an adoption of the contract and does not preclude the receiver

from seeking approval to reject the contract.

     (d) A provision in an executory contract which requires or permits a forfeiture,

modification, or termination of the contract because of the appointment of a receiver or the

financial condition of the owner does not affect a receiver's power under subsection (b) of this

section to adopt the contract.

     (e) A receiver's right to possess or use receivership property pursuant to an executory

contract terminates on rejection of the contract under subsection (b) of this section. Rejection is a

breach of the contract effective immediately before appointment of the receiver. A claim for

damages for rejection of the contract must be submitted by the later of:

     (1) The time set for submitting a claim in the receivership; or

     (2) Thirty (30) days after the court approves the rejection.

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     (f) If at the time a receiver is appointed, the owner has the right to assign an executory

contract relating to receivership property under any other law of this state, the receiver may

assign the contract with court approval.

     (g) If a receiver rejects under subsection (b) of this section an executory contract for the

sale of receivership property that is real property in possession of the purchaser or a real-property

timeshare interest, the purchaser may:

     (1) Treat the rejection as a termination of the contract, and in that case the purchaser has a

lien on the property for the recovery of any part of the purchase price the purchaser paid; or

     (2) Retain the purchaser's right to possession under the contract, and in that case the

purchaser shall continue to perform all obligations arising under the contract and may offset any

damages caused by nonperformance of an obligation of the owner after the date of the rejection,

but the purchaser has no right or claim against other receivership property or the receiver on

account of the damages.

     (h) A receiver may not reject an unexpired lease of real property under which the owner

is the landlord if:

     (1) The tenant occupies the leased premises as the tenant's primary residence;

     (2) The receiver was appointed at the request of a person other than a mortgagee; or

     (3) The receiver was appointed at the request of a mortgagee and:

     (i) The lease is superior to the lien of the mortgage;

     (ii) The tenant has an enforceable agreement with the mortgagee or the holder of a senior

lien under which the tenant's occupancy will not be disturbed as long as the tenant performs its

obligations under the lease;

     (iii) The mortgagee has consented to the lease, either in a signed record or by its failure

timely to object that the lease violated the mortgage; or

     (iv) The terms of the lease were commercially reasonable at the time the lease was agreed

to and the tenant did not know or have reason to know that the lease violated the mortgage.

     10-21-18. Defenses and immunities of receiver. -- (a) A receiver is entitled to all

defenses and immunities provided by any other law of this state for an act or omission within the

scope of the receiver's appointment.

     (b) A receiver may be sued personally for an act or omission in administering

receivership property only with approval of the court that appointed the receiver.

     10-21-19. Interim report of receiver. -- A receiver may file or, if ordered by the court,

shall file an interim report that includes:

     (1) The activities of the receiver since appointment or a previous report;

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     (2) Receipts and disbursements, including a payment made or proposed to be made to a

professional engaged by the receiver;

     (3) Receipts and dispositions of receivership property;

     (4) Fees and expenses of the receiver and, if not filed separately, a request for approval of

payment of the fees and expenses; and

     (5) Any other information required by the court.

     10-21-20. Notice of appointment; Claim against receivership; Distribution to

creditors. -- (a) Except as otherwise provided in subsection (f) of this section, a receiver shall

give notice of appointment of the receiver to creditors of the owner by:

     (1) Deposit for delivery through first-class mail or other commercially reasonable

delivery method to the last known address of each creditor; and

     (2) Publication as directed by the court.

     (b) Except as otherwise provided in subsection (f) of this section, the notice required by

subsection (a) must specify the date by which each creditor holding a claim against the owner

which arose before appointment of the receiver must submit the claim to the receiver. The date

specified must be at least four (4) months after the later of notice under subsection (a)(1) of this

section or last publication under subsection (a)(2) of this section. The court may extend the period

for submitting the claim. Unless the court orders otherwise, a claim that is not submitted timely is

not entitled to a distribution from the receivership.

     (c) A claim submitted by a creditor under this section must:

     (1) State the name and address of the creditor;

     (2) State the amount and basis of the claim;

     (3) Identify any property securing the claim;

     (4) Be signed by the creditor under penalty of perjury; and

     (5) Include a copy of any record on which the claim is based.

     (d) An assignment by a creditor of a claim against the owner is effective against the

receiver only if the assignee gives timely notice of the assignment to the receiver in a signed

record.

     (e) At any time before entry of an order approving a receiver's final report, the receiver

may file with the court an objection to a claim of a creditor, stating the basis for the objection.

The court shall allow or disallow the claim according to law of this state other than this chapter.

     (f) If the court concludes that receivership property is likely to be insufficient to satisfy

claims of each creditor holding a perfected lien on the property, the court may order that:

     (1) The receiver need not give notice under subsection (a) of this section of the

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appointment to all creditors of the owner, but only such creditors as the court directs; and

     (2) Unsecured creditors need not submit claims under this section.

     (g) Subject to §10-21-21:

     (1) A distribution of receivership property to a creditor holding a perfected lien on the

property must be made in accordance with the creditor's priority under law of this state other than

this chapter; and

     (2) A distribution of receivership property to a creditor with an allowed unsecured claim

must be made as the court directs according to law of this state other than this chapter.

     10-21-21. Fees and expenses. -- (a) The court may award a receiver from receivership

property the reasonable and necessary fees and expenses of performing the duties of the receiver

and exercising the powers of the receiver.

     (b) The court may order one or more of the following to pay the reasonable and necessary

fees and expenses of the receivership, including reasonable attorney's fees and costs:

     (1) A person that requested the appointment of the receiver, if the receivership does not

produce sufficient funds to pay the fees and expenses; or

     (2) A person whose conduct justified or would have justified the appointment of the

receiver under §10-21-6(a)(1).

     10-21-22. Removal of receiver; Replacement; Termination of receivership. -- (a) The

court may remove a receiver for cause.

     (b) The court shall replace a receiver that dies, resigns, or is removed.

     (c) If the court finds that a receiver that resigns or is removed, or the representative of a

receiver that is deceased, has accounted fully for and turned over to the successor receiver all

receivership property and has filed a report of all receipts and disbursements during the service of

the replaced receiver, the replaced receiver is discharged.

     (d) The court may discharge a receiver and terminate the court's administration of the

receivership property if the court finds that appointment of the receiver was improvident or that

the circumstances no longer warrant continuation of the receivership. If the court finds that the

appointment was sought wrongfully or in bad faith, the court may assess against the person that

sought the appointment:

     (1) The fees and expenses of the receivership, including reasonable attorney's fees and

costs; and

     (2) Actual damages caused by the appointment, including reasonable attorney's fees and

costs.

     10-21-23. Final report of receiver; Discharge. -- (a) On completion of a receiver's

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duties, the receiver shall file a final report including:

     (1) A description of the activities of the receiver in the conduct of the receivership;

     (2) A list of receivership property at the commencement of the receivership and any

receivership property received during the receivership;

     (3) A list of disbursements, including payments to professionals engaged by the receiver;

     (4) A list of dispositions of receivership property;

     (5) A list of distributions made or proposed to be made from the receivership for creditor

claims;

     (6) If not filed separately, a request for approval of the payment of fees and expenses of

the receiver; and

     (7) Any other information required by the court.

     (b) If the court approves a final report filed under subsection (a) of this section and the

receiver distributes all receivership property, the receiver is discharged.

     10-21-24. Receivership in another state; Ancillary proceeding. -- (a) The court may

appoint a receiver appointed in another state, or that person's nominee, as an ancillary receiver

with respect to property located in this state or subject to the jurisdiction of the court for which a

receiver could be appointed under this chapter, if:

     (1) The person or nominee would be eligible to serve as receiver under this chapter; and

     (2) The appointment furthers the person's possession, custody, control, or disposition of

property subject to the receivership in the other state.

     (b) The court may issue an order that gives effect to an order entered in another state

appointing or directing a receiver.

     (c) Unless the court orders otherwise, an ancillary receiver appointed under subsection (a)

of this section has the rights, powers, and duties of a receiver appointed under this chapter.

     10-21-25. Effect of enforcement by mortgagee. -- A request by a secured party for

appointment of a receiver, the appointment of a receiver, or application by a secure party of

receivership property or proceeds to the secured obligation does not:

     (1) Make the secured party a mortgagee in possession of the real property;

     (2) Impose any duty on the secured party under §6A-9-207;

     (3) Make the mortgagee an agent of the owner;

     (4) Constitute an election of remedies that precludes a later action to enforce the secured

obligation;

     (5) Make the secured obligation unenforceable; or

     (6) Limit any right available to the secured party with respect to the secured obligation.

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     10-21-26. Uniformity of application and construction. -- In applying and construing

this uniform act, consideration must be given to the need to promote uniformity of the law with

respect to its subject matter among states that enact it.

     10-21-27. Relation to electronic signatures in global and national commerce act. --

This chapter modifies, limits, or supersedes the Electronic Signatures in Global and National

Commerce Act, 15 U.S.C. §7001 et seq., but does not modify, limit, or supersede §101(c) of that

act, (15 U.S.C. §7001(c)), or authorize electronic delivery of any of the notices described in

§103(b) of that act, (15 U.S.C. §7003(b)).

     10-21-28. Transition. -- This chapter does not apply to a receivership for which the

receiver was appointed before the effective date of this chapter.

     10-21-29. Official comments. -- It is the intention of the general assembly that the

official comments to Uniform Commercial Real Estate Receivership Act as approved and

recommended for enactment in all the States by the National Conference of Commissioners on

Uniform State Laws in 2015 represent the express legislative intent of the general assembly and

shall be used as a guide for interpretation of this chapter.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO COURTS AND CIVIL PROCEDURE--PROCEDURE IN PARTICULAR

ACTIONS

***

     This act would establish the uniform commercial receivership act, in order to provide

uniformity with respect to the powers, rights, and duties of receivers appointed over commercial

property.

     This act would take effect upon passage.

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