Register March 2012 No. 675
Chapter Trans 140
MOTOR VEHICLE DEALER FINANCIAL ELIGIBILITY AND BOND CLAIM REQUIREMENTS
Subchapter I — Dealer Security and Financial Eligibility Requirements
Purpose and scope.
Security; forms and types.
Criteria for supplemental security.
When financial information is required.
Balance sheet information.
Net worth reporting.
Types of entities.
Subchapter II — Claims Against Bonds of Department Licensees
Priority of claims.
Payments on allowed claims.
Payment by surety or financial institution.
Procedure for determination of claims against the dealer bond or letter of credit.
Alternative procedure for determination of claims.
As authorized by ss. 218.0152
, and 227.11
, Stats., the purpose of this chapter is to establish the department's administrative interpretation of ss. 218.0114 (4)
, 218.0116 (1) (a)
, Stats., relating to the security requirements and financial qualifications of motor vehicle wholesaler, dealer, and salesperson license applicants, s. 218.11 (3)
and (6) (a)
, Stats., relating to the financial qualifications of mobile home dealer license applicants to engage in the sale of recreational vehicles, and ss. 218.21 (1)
, and 218.22 (1)
and (3) (a)
, Stats., relating to the financial qualifications of motor vehicle salvage dealer license applicants, and s. 218.41 (2) (c)
and (3) (a)
, Stats., relating to the financial qualifications of moped dealer license applicants.
This chapter applies to any sole proprietorship, partnership or corporate entity applying for or holding a Wisconsin dealer's license under any of the statute sections cited in sub. (1)
The provisions of subch. II
apply to all applicants for a license issued by the department under ch. 218, Stats.
, and to all such licensees, who furnish a bond or letter of credit pursuant to s. 218.0114 (5)
, 218.11 (3)
or (6) (g)
, 218.21 (4)
, or 218.33 (1)
, Stats. The provisions of subch. II
also apply to all sureties and financial institutions that issue such bonds or letters of credit, and to all claimants against such bonds or letters of credit.
Trans 140.01 Note
Note: Forms used in this chapter are: MVD-2195 Financial Statement, MVD-2077 Motor Vehicle Dealer, Mobile Home Dealer or Salesperson Bond, MVD-2077A Moped Dealer Bond, MVD 2511 Motor Vehicle Dealer Bond and MVD 2497 Motor Vehicle Salvage Dealer Bond.
Trans 140.01 History
Cr. Register, March, 1985, No. 351
, eff. 4-1-85; cr. (2) (am) and am. (2) (b), Register, July, 1986, No. 367
, eff. 8-1-86; correction in (1) made under s. 13.93 (2m) (b) 7., Stats., Register, December, 1987, No. 384
; am. (1), renum. (2) (am) to be (2) (b) and am., r. (2) (b), Register, February, 1996, No. 482
, eff. 3-1-96; corrections in (1), (2) (b) made under s. 13.92 (4) (b) 7., Stats., Register March 2012 No. 675
"Asset" means anything of value owned by the corporation, limited liability company, partner or sole proprietor.
"Current assets" means cash and assets, including trade or investment items, which may be readily converted into cash in the ordinary course of business within one year from the date of the balance sheet and include, but are not limited to, cash and equivalent, customer and factory receivables, inventories, last in first out reserves and marketable securities.
"Current liabilities" means liabilities which are due and payable within one year from the date of the balance sheet.
"Discounted" means an asset which is not considered at full value when determining the financial statement net worth.
"Financial statement" means a balance sheet showing assets, liabilities, and net worth on a fixed date.
"Intangible asset" means an asset which does not have a readily determined value, such as goodwill, and is not generally offered for sale.
"Letter of credit" means an irrevocable instrument issued by a financial institution guaranteeing payment on behalf of its customer to a beneficiary for a stated period of time and when certain conditions are met.
"Liability" means an obligation to pay money or other assets or to render a service to another person.
"Major liability" means a liability equal to or greater than 10% of the total liabilities listed on the financial statement.
"Net worth" means the difference between the asset and liability values on a balance sheet. Negative net worth is the excess of liabilities over assets.
"Pro-forma statement" means a financial statement that presents information that anticipates some event or events which will occur in the future.
"Substantial portion of the assets" means a value greater than 30% of all assets.
Trans 140.02 History
Cr. Register, March, 1985, No. 351
, eff. 4-1-85; renum. (1) to (7) to be (4), (6), (7), (10), (11), (12) and (14) and am. (6) and (12), cr. (1) to (3), (5), (8), (9) and (13), Register, February, 1996, No. 482
, eff. 3-1-96.
Forms of security.
The only acceptable forms of security to fulfill the security requirements of ss. 218.0101
, Stats., are as follows:
(a) Surety bonds.
The bond shall be filed on a form prescribed by the department and issued by a bonding company licensed by this state and acceptable to the department. The bond shall be payable in the name of the department for the benefit of any person who sustains a loss because of an act of the licensee constituting grounds for the suspension or revocation of a license under ss. 218.0101
Trans 140.022 Note
Under ss. 632.14
, Stats., surety insurance is regulated by the Commissioner of Insurance.
(b) Letters of credit.
The letter of credit shall be filed on a form prescribed by the department and issued by a financial institution acceptable to the department. The issuer shall waive the right to revoke the credit before its expiration date, which shall be no earlier than 3 years after the last day of the period covered by the letter. The letter of credit shall be payable in the name of the department and upon a written statement by the department that one or more persons have sustained a loss because of acts by the licensee constituting grounds for the suspension or revocation of a license under s. 218.0116
Trans 140.022 Note
Note: These forms may be obtained by contacting the Dealer Section's Business Licensing Unit at (608) 266-1425.
(2) Minimum security.
A motor vehicle dealer or applicant for a motor vehicle dealer license shall provide and maintain in force a bond or letter of credit of not less than $25,000, or if the dealer or applicant sells or proposes to sell motorcycles and not other types of motor vehicles, a bond or irrevocable letter of credit of not less than $5,000.
(3) Supplemental security.
In addition to the security required under sub. (2)
, the department may require a motor vehicle dealer, or applicant for a motor vehicle dealer license, to provide and maintain in force a supplemental bond in an amount not less than $5,000 nor more than $100,000. The department may also require such securities of wholesalers and motor vehicle salespersons and applicants for such licenses. The department shall require such bonds according to the criteria described in s. Trans 140.027