Illinois Compiled Statutes
ILCS Listing
Public
Acts Search
Guide
Disclaimer
Information maintained by the Legislative
Reference Bureau
Updating the database of the Illinois Compiled Statutes (ILCS) is an ongoing process.
Recent laws may not yet be included in the ILCS database, but they are found on this site as Public
Acts soon after they become law. For information concerning the relationship between statutes and Public Acts, refer to the
Guide.
Because the statute database is maintained primarily for legislative drafting purposes,
statutory changes are sometimes included in the statute database before they take effect.
If the source note at the end of a Section of the statutes includes a Public Act that has
not yet taken effect, the version of the law that is currently in effect may have already
been removed from the database and you should refer to that Public Act to see the changes
made to the current law.
215 ILCS 5/204
(215 ILCS 5/204) (from Ch. 73, par. 816)
Sec. 204. Prohibited and voidable transfers and liens.
(a)(1) A preference is a transfer of any of the property of a company
to or for the benefit of a creditor, for or on account of an antecedent
debt, made or suffered by the company within 2 years before
the
filing of
a complaint under this Article, the effect of which may be to
enable the creditor to obtain a greater percentage of this debt than
another creditor of the same class would receive.
(2) Any preference may be avoided by the Director as rehabilitator,
liquidator, or conservator if:
(A) the company was insolvent at the time of the | |
(B) the transfer was made within 4 months before the
| | filing of the complaint; or the creditor receiving it was (i) an officer, or any employee or attorney or other person who was in fact in a position of comparable influence in the company to an officer whether or not that person held such a position, (ii) any shareholder holding, directly or indirectly, more than 5% of any class of any equity security issued by the company, or (iii) any other person, firm, corporation, association, or aggregation of individuals with whom the company did not deal at arm's length.
|
|
(3) Where the preference is voidable, the Director as rehabilitator,
liquidator, or conservator may recover the property or, if it has been
converted, its value from any person who has received or converted the
property; except where a bona fide purchaser or lienor has given less than
fair equivalent value, the purchaser or lienor shall have a lien upon the
property to the extent of the consideration actually given. Where a
preference by way of lien or security title is voidable, the court may on
due notice order the lien or title to be preserved for the benefit of the
estate, in which event the lien or title shall pass to the Director as
rehabilitator or liquidator.
(b)(1) A transfer of property other than real property shall be deemed
to be made or suffered when it becomes so far perfected that no subsequent
lien obtainable by legal or equitable proceedings on a simple contract
could become superior to the rights of the transferee.
(2) A transfer of real property shall be deemed to be made or suffered
when it becomes so far perfected that no subsequent bona fide purchaser
from the company could obtain rights superior to the rights of the transferee.
(3) A transfer that creates an equitable lien shall not be deemed to be
perfected if there are available means by which a legal lien could be created.
(4) A transfer not perfected before the filing of a complaint shall
be deemed to be made immediately before the filing of the complaint.
(5) The provisions of this subsection apply whether or not there are or
were creditors who might have obtained liens or persons who might have
become bona fide purchasers.
(c) For purposes of this Section:
(1) A lien obtainable by legal or equitable
| | proceedings upon a simple contract is one arising in the ordinary course of the proceedings upon the entry or docketing of a judgment or decree, or upon attachment, garnishment, execution, or like process, whether before, upon, or after judgment or decree and whether before or upon levy. It does not include liens that, under applicable law, are given a special priority over other liens that are prior in time.
|
|
(2) A lien obtainable by legal or equitable
| | proceedings could become superior to the rights of a transferee, or a purchaser could obtain rights superior to the rights of a transferee within the meaning of subsection (b) of this Section, if such consequences would follow only from the lien or purchase itself, or from the lien or purchase followed by any step wholly within the control of the respective lienholder or purchaser, with or without the aid of ministerial action by public officials. A lien could not, however, become superior and a purchase could not create superior rights for the purpose of subsection (b) of this Section through any acts subsequent to an obtaining of the lien or subsequent to a purchase that requires the agreement or concurrence of any third party or that requires any further judicial action or ruling.
|
|
(d) A transfer of property for or on account of a new and
contemporaneous consideration which is deemed under subsection (b) of this
Section to be made or suffered after the transfer because of delay in
perfecting it does not thereby become a transfer for or on account of an
antecedent debt if any acts required by the applicable law to be performed
in order to perfect the transfer as against liens or bona fide purchasers'
rights are performed within 21 days or any period expressly allowed
by the law, whichever is less. A transfer to secure a future loan, if the
loan is actually made, or a transfer that becomes security for a future
loan, shall have the same effect as a transfer for or on account of a new
and contemporaneous consideration.
(e) If any lien deemed voidable under part (2) of subsection
(a) of this Section has been dissolved by the furnishing of a bond or other
obligation, the surety on which has been indemnified directly or indirectly
by the transfer of or the creation of a lien upon any property of a company
before the filing of a complaint under this Article, the indemnifying
transfer or lien shall also be deemed voidable.
(f) The property affected by any lien deemed voidable under subsections
(a) and (e) of this Section shall be discharged from the lien, and that
property and any of the indemnifying property transferred to or for the
benefit of a surety shall pass to the Director as rehabilitator or
liquidator, except that the court may, on due notice, order any such lien to
be preserved for the benefit of the estate and the court may direct that
such conveyance be executed as may be proper or adequate to
evidence the title of the Director as
rehabilitator or liquidator.
(g) The court shall have summary jurisdiction over any proceeding by the
Director as rehabilitator, liquidator, or conservator to hear and determine
the rights of any parties under this Section. Reasonable notice of any
hearings in the proceeding shall be given to all parties in interest,
including the obligee of a releasing bond or other life obligation. Where an
order is entered for the recovery of indemnifying property in kind
or for the avoidance of
an indemnifying lien, the court, upon application of any party in interest,
shall in the same proceeding ascertain the value of the property or lien,
and if the value is less than the amount for which the property is
indemnity or than the amount of the lien, the transferee or lienholder may
elect to retain the property or lien upon payment of its value, as
ascertained by the court, to the Director as rehabilitator, liquidator, or
conservator, within such reasonable times as the court shall fix.
(h) The liability of the surety under the releasing bond or other similar
obligation shall be discharged to the extent of the value of the
indemnifying property recovered or the indemnifying lien nullified and
avoided by the Director as
rehabilitator, liquidator, or conservator. Where the property is retained
under subsection (g) of this Section, the liability shall be discharged to
the extent of the amount paid to the
Director as rehabilitator, liquidator, or conservator.
(i) If a creditor has been preferred and thereafter in good faith gives
the company further credit without security of any kind, for property which
becomes a part of the company's estate, the amount of the new credit
remaining unpaid at the time of the petition may be set off against the
preference which would otherwise be recoverable from the creditor.
(j) If a company shall, directly or indirectly, within 4 months
before the filing of a complaint under this Article, or at any time in
contemplation of such a proceeding, pay money or transfer property to any
attorney for services rendered or to be rendered, the transactions may be
examined by the court on its own motion or shall be examined by the court
on petition of the
Director as rehabilitator, liquidator, or conservator and shall be held
valid only to the extent of a reasonable amount to be determined by the
court, and the excess may be recovered by the Director as rehabilitator,
liquidator, or conservator for the benefit of the estate provided that where
the attorney is in a position of influence in the company or an affiliate
thereof payment of any money or the transfer of any property to the
attorney for services rendered or to be rendered shall be governed by
item (B) of part (2) of subsection (a) of this Section.
(k)(1) An officer, director, manager, employee,
shareholder,
member, subscriber,
attorney, or other person acting on behalf of the company who
knowingly
participates in giving any preference when that officer, director, manager,
employee,
shareholder, member, subscriber, attorney, or other person has reasonable
cause to believe the company is or is about to become insolvent at the time
of the preference shall be personally liable to the Director as
rehabilitator, liquidator, or conservator for the amount of the preference.
There is a reasonable cause to so believe
if the transfer was made within 4 months before the date of filing of the
complaint.
(2) A person receiving any property from the company or the
benefit
thereof as a preference voidable under subsection (a) of this Section
shall be personally liable therefor and shall be bound to account to the
Director as rehabilitator, liquidator, or conservator.
(3) Nothing in this Section shall prejudice any other claim by the
Director as rehabilitator, liquidator, or conservator against any person.
(l) For purposes of this Section, the company is presumed to have been
insolvent on and during the 4 month period immediately preceding the date
of the filing of the complaint.
(m) The Director as rehabilitator, liquidator, or conservator may not
avoid a transfer under this Section to the extent that the transfer was:
(A) Intended by the company and the creditor to or
| | for whose benefit the transfer was made to be a contemporaneous exchange for new value given to the company, and was in fact a substantially contemporaneous exchange; or
|
|
(B) In payment of a debt incurred by the company in
| | the ordinary course of business or financial affairs of the company and the transferee; made in the ordinary course of business or financial affairs of the company and the transferee; and made according to ordinary business terms;
|
|
(C) In the case of a transfer by a company where the
| | Director has determined that an event described in Section 35A-25 or 35A-30 has occurred, specifically approved by the Director in writing pursuant to this subsection, whether or not the company is in receivership under this Article. Upon approval by the Director, such a transfer cannot later be found to constitute a prohibited or voidable transfer based solely upon a deviation from the statutory payment priorities established by law for any subsequent receivership; or
|
| (D) Of money or other property arising under or
| | in connection with any Federal Home Loan Bank security agreement or any pledge, security, collateral or guarantee agreement, or any other similar arrangement or credit enhancement relating to a Federal Home Loan Bank security agreement.
|
| (n) The Director as rehabilitator, liquidator, or conservator may avoid
any transfer of or lien upon the property of a company that the estate of the
company or a policyholder, creditor, member, or stockholder of the company
may have avoided, and the Director as rehabilitator, liquidator, or conservator
may recover and collect the property so transferred or its value from the
person to whom it was transferred unless the property was transferred to a
bona fide holder for value before the filing of the complaint. The Director
as rehabilitator, liquidator, or conservator shall be deemed a creditor for
purposes of pursuing claims under the Uniform Fraudulent Transfer Act.
(o) Notwithstanding any provision of this Article to the contrary, a Federal Home Loan Bank shall not be stayed, enjoined, or prohibited from exercising or enforcing any right or cause of action regarding collateral pledged under any security agreement or any pledge, security, collateral or guarantee agreement, or any other similar arrangement or credit enhancement relating to a Federal Home Loan Bank security agreement.
(Source: P.A. 100-89, eff. 8-11-17.)
|
|