128.01 Annotation
Chapter 128 does not encroach upon field occupied by Bankruptcy Act merely because ch. 128 provides for a distribution, either voluntary or not, of assets of an insolvent corporation among its creditors. Gelatt v. DeDakis, 77 W (2d) 578, 254 NW (2d) 171.
128.02
128.02
Assignment; mistakes; amendments. 128.02(1)
(1) Voluntary assignments for the benefit of creditors may be made to an assignee who is a resident of this state, who shall, before taking possession of the property assigned and before taking upon himself or herself any trust conferred by the assignment, file the assignment and deliver to the clerk of the circuit court of the county in which such assignor resides or has his or her principal place of business at the time of the assignment, a bond as required by
s. 128.09.
128.02(2)
(2) No assignment shall be void because of any defect, informality or mistake in the assignment or in the bond, inventory or list of creditors accompanying the assignment. The court may direct the amendment of the assignment or of any other document to effect the intention of the assignor or assignee, or to obtain a distribution of the assignor's assets as provided in this chapter, and any such amendment shall relate back to the time of the execution of the document. No mistake in filing a copy instead of an original or any like mistake or inadvertent failure to comply with this chapter shall void the assignment.
128.02(3)(a)(a) No creditor shall, in case a debtor has attempted to make an assignment for the benefit of creditors, or in case of the insolvency of any debtor, by attachment, garnishment or otherwise, obtain priority over other creditors upon the assignment being adjudged void, or in consequence of any sale, lien or security being adjudged void.
128.02(3)(b)
(b) In all cases described in
par. (a), the property of the debtor shall be administered for the ratable benefit of all of the debtor's creditors under the direction of the court by the assignee or by a receiver.
128.02 History
History: 1993 a. 492;
1997 a. 253.
128.03
128.03
Liens by legal proceedings; assignment. When a lien has been obtained by legal proceedings against the property of a debtor the debtor may, within 30 days thereafter, make an assignment of all of the debtor's nonexempt property for the benefit of all of the debtor's creditors, whereupon the lien shall be dissolved and the property shall be turned over to the assignee.
128.03 History
History: 1993 a. 492;
1997 a. 253.
128.05
128.05
Assignee's consent, recording copy of assignment. 128.05(1)(1) The assignee shall endorse in writing the assignee's acceptance of the assignment, and shall file the assignment with the clerk of circuit court in the county where the debtor has his or her residence or principal place of business. The court shall, upon the filing of the assignment, order the assignee to administer the debtor's estate pursuant to this chapter, and the assignee shall be vested with the powers of a receiver.
128.05(2)
(2) A certified copy of an assignment filed under
sub. (1) may be recorded in the office of the register of deeds of any county wherein lands are conveyed by the assignment in the same manner and with the same effect as other conveyances.
128.05 History
History: 1993 a. 492;
1997 a. 253.
128.05 Annotation
Assignee is trustee for both debtor and creditors, but must look primarily to interests of creditors. Voluntary Assignment of Linton v. Schmidt, 88 W (2d) 183, 277 NW (2d) 136 (1979).
128.06
128.06
Assignee required to comply, when. 128.06(1)
(1) The assignee under a voluntary assignment not previously filed under the provisions of this chapter shall upon petition of any creditor without proof of the insolvency of the assignor be required to file the assignment and comply with the provisions of this chapter.
128.07
128.07
Preferred creditors. 128.07(1)(a)
(a) A person shall be considered to have given a preference if, being insolvent, the person has made a transfer of any of his or her property, or has procured or permitted a judgment to be entered against him or her in favor of any other person, and the effect of the transfer or the enforcement of the judgment will be to enable any creditor to obtain a greater percentage of his or her debt than any other creditor of the same class.
128.07(1)(b)
(b) "Recipient" means a person who receives a preference, or benefits from a preference, or that person's agent.
128.07(1)(c)1.1. "Transfer" means any of the following, whether made absolutely or conditionally, voluntarily or involuntarily, by or without judicial proceedings, as a conveyance, sale, assignment, payment, pledge, mortgage, lien, encumbrance, gift, security or otherwise:
a. The sale or other disposal of or parting with property, an interest in property or the possession of property.
b. The fixing of a lien upon property or upon an interest in property.
128.07(1)(c)2.
2. The retention of a security title to property delivered to a debtor shall be considered a transfer permitted by the debtor.
128.07(2)
(2) If the debtor has given a preference within 4 months before the filing of a petition, or an assignment, after the filing of the petition and before the appointment of a receiver, or after the filing of an assignment and before the qualification of the assignee, and the recipient has reasonable cause to believe that the enforcement of the judgment or transfer would effect a preference, the judgment shall be voidable by the receiver or assignee, and the receiver or assignee may recover the property or its value from the recipient.
128.07(4)
(4) A transfer of property other than real property shall be considered to have been made or permitted at the time when it became so far perfected that no subsequent lien upon the property obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee. A transfer of real property shall be considered to have been made or permitted when it became so far perfected that no subsequent bona fide purchase from the debtor could create rights in the property superior to the rights of the transferee. If any transfer of real property is not so perfected against a bona fide purchase, or if any transfer of other property is not so perfected against such liens by legal or equitable proceedings prior to the filing of a petition initiating a proceeding in insolvency, it shall be considered to have been made immediately before the filing of the petition.
128.07 History
History: 1993 a. 492;
1997 a. 253.
128.08
128.08
Receiver; custodian. 128.08(1)(1) The court within the proper county may sequestrate the property of a debtor and appoint a receiver therefor:
128.08(1)(a)
(a) When an execution against a judgment debtor is returned unsatisfied in whole or in part.
128.08(1)(b)
(b) When a corporation has been dissolved or is insolvent or is in imminent danger of insolvency or has forfeited its corporate rights.
128.08(2)
(2) Upon application duly made, the court shall appoint as receiver the person nominated by the petitioning creditor or creditors, subject to
s. 128.10.
128.08 Annotation
Where defendant was notified of the proceeding to appoint a receiver and participated in the proceedings, he cannot after the lapse of one year object to irregularities. Home Bank v. Becker, 48 W (2d) 1, 179 NW (2d) 855.
128.08 Annotation
Due process procedures required for determination of receivership are not required for selection of receiver. Anchor Coatings, Inc. v. De Gelleke Co. 71 W (2d) 333, 237 NW (2d) 725.
128.08 Annotation
Power recognized by (1) is inherent power of courts. Northridge Bank v. Community Eye Care Center, 91 W (2d) 298, 282 NW (2d) 632 (Ct. App. 1979).
128.09
128.09
Bond. In order to qualify, the receiver or assignee shall give to and file with the clerk of the court a bond sufficient to cover all property likely to come into the receiver's or assignee's hands, conditioned in the usual manner with surety to be approved by the judge having supervision of the proceedings.
128.09 History
History: 1993 a. 492.
128.10
128.10
Meetings of creditors; removal or death of receiver. 128.10(1)(1) The court may provide for hearings and meetings of creditors to elect a receiver or to pass upon matters submitted to creditors by a majority vote in number and amount of claims.
128.10(2)
(2) The court may, upon notice and hearing, remove any receiver or assignee who is shown to be incompetent or to have become disqualified, or to have wasted or misapplied any of the trust estate; and shall remove any assignee or receiver upon the application of a majority of the creditors who shall represent a majority in number and amount of claims against said estate, and order a settlement of the receiver's or assignee's account and the surrender of all the estate to a successor, and shall appoint the person named in such petition or some suitable person as the receiver's or assignee's successor, who shall qualify in the manner provided by this chapter; and in place of any receiver or assignee who shall die or be removed, may appoint another who shall give bond and administer said estate pursuant to the provisions of this chapter.
128.10 History
History: 1993 a. 492.
128.11
128.11
Provisional remedies. In all actions authorized by this chapter, appropriate provisional remedies may be had and final relief administered to the equal distribution of all assets recovered among the creditors of the debtor, and the court may make such orders for the payment of costs and expenses as may be just. An action or proceeding authorized by this chapter for the benefit of all creditors may be taken by a creditor although the creditor's demand is not due at the commencement thereof.
128.11 History
History: 1993 a. 492;
1997 a. 253.
128.12
128.12
Dismissal; intervention. 128.12(1)
(1) After the designation of a receiver or custodian by the court, proceedings under this chapter shall not be dismissed for want of prosecution or by consent of parties until after notice to creditors, and the court shall, before entertaining an application for dismissal, require the debtor to file a list, under oath, of all of the debtor's creditors, with their addresses, and shall cause notice to be sent to all such creditors of the pendency of the application and shall fix a date for such hearing so as to allow parties in interest an opportunity to be heard.
128.12(2)
(2) When proceedings have been commenced under this chapter and are not diligently prosecuted or are so delayed as to cause possible injury to other creditors, any creditor may intervene for the purpose of obtaining a continuance of the administration or dismissal of the proceedings.
128.12 History
History: 1993 a. 492.
128.13
128.13
Inventory of assets and list of creditors. With the filing of an assignment or within 10 days after the appointment of a receiver, the debtor shall file with the clerk of circuit court a correct inventory of the debtor's assets and a list of the debtor's creditors, stating the place of residence of each and the amount due each. The inventory and list shall be verified by the debtor's oath. No mistake in the inventory or list shall affect the rights of any creditor.
128.13 History
History: 1993 a. 492;
1997 a. 253.
128.14
128.14
Notice; injunction; time of filing claims. 128.14(1)
(1) The court shall require creditors to file their verified claims within 3 months from the date of the filing of an assignment or the appointment of a receiver and may enjoin proceedings by any other creditor against the insolvent. The receiver or assignee shall be required to give notice promptly to the department of revenue and to all creditors of the pendency of the proceeding, the injunction against other actions and the time within which creditors are required to file claims. The notice shall be mailed to the department of revenue and to each creditor at the creditor's last-known address and shall be published in the county as a class 3 notice under
ch. 985.
128.14(2)
(2) Creditors not filing claims within the time limited may be precluded from participation in any dividend which may be declared.
128.14 History
History: 1993 a. 492.
128.15
128.15
Objections to claims; appeal; secured claims. 128.15(1)(a)(a) At the expiration of the period of time limited for the filing of claims, the receiver or assignee shall file all of the following with the clerk of circuit court:
128.15(1)(a)2.
2. A list of the creditors to whom the notice was given that includes the debts owed to the creditors, verified by an affidavit.
128.15(1)(a)3.
3. A list of claims filed stating the name and residence of and amount claimed by each creditor who has filed a claim.
128.15(1)(b)
(b) At any time after the expiration of the period of time limited for the filing of claims, the receiver or assignee or, upon the receiver's or assignee's refusal or failure to act, any creditor may file written objections to any claim specifying the grounds for the objection. The party filing the objection shall serve a copy of the objection upon the claimant as ordered by the court. Depositions may thereafter be taken as in civil actions. The court, on the application of either party, shall enter an order fixing a time when the objections shall be heard, which shall be served upon the adverse party as prescribed in the order. Upon the final hearing the court shall make such order as shall be just and may compel the payment of costs.
128.15(2)
(2) Claims of secured creditors may be allowed to enable such creditors to participate in the proceedings but shall be allowed for such sums only as shall be proved to be due, over and above the value of the securities, and dividends shall be paid only upon the excess of the claim over the value of the security at the time of the commencement of the proceedings.
128.15 History
History: 1983 a. 219;
1997 a. 253.
128.15 Note
Judicial Council Note, 1983: The last sentence of sub. (1), providing an appeal deadline of 30 days after entry of order, is repealed for greater uniformity. An appeal must be initiated within the time specified in s. 808.04 (1), stats. [Bill 151-S]
128.15 Annotation
The 30-day limitation does not apply to claims for taxes asserted by the government. Section 274.01 controls as to such claims. United States v. Burczyk, 54 W (2d) 67, 194 NW (2d) 608.
128.15 Annotation
While under this section a secured creditor may become a party by general appearance or by filing a claim for a deficiency on his secured claim and thus be allowed to participate, he cannot have his security taken away from him without his consent, and the court adjudicating the ch. 128 proceeding can do no more than value the security for the purpose of allowing the unsecured part of the claim. Wis. Brick and Block Corp. v. Vogel, 54 W (2d) 321, 195 NW (2d) 664.
128.15 Annotation
Trial court erred in subordinating shareholder's claim on grounds that shareholder's advance to corporation was capital contribution rather than debt where court failed to evaluate sufficiency of corporation's stated capital and relied entirely on corporation's inability to obtain commercial financing. Gelatt v. DeDakis, 77 W (2d) 578, 254 NW (2d) 171.
128.16(1)(1) The court may compel the debtor to discover any property alleged to belong or to have belonged to him or her, the disposition of the property and the consideration and all the circumstances of the disposition. Every officer, agent or stockholder of a corporation, every manager or member of a limited liability company and every person to whom it shall be alleged that any transfer of property has been made, or in whose possession or control the property is alleged to be, may be compelled to testify in relation to the property and to the transfer or possession of the property; but the witness shall not be liable to criminal prosecution or proceeding for or on account of his or her testimony.
128.16(2)
(2) The immunity provided under
sub. (1) is subject to the restrictions under
s. 972.085.
128.16 Annotation
Debtor compelled to discovery may be granted immunity without request from district attorney. Refusal to answer interrogatory without order under this section was sufficient invocation of privilege against self-incrimination. State v. Worgull, 128 W (2d) 1, 381 NW (2d) 547 (1986).
128.17
128.17
Order of distribution. 128.17(1)
(1) The order of distribution out of the debtor's estate shall be as follows:
128.17(1)(a)
(a) The actual and necessary costs of preserving the estate subsequent to the commencement of the proceedings.
128.17(1)(b)
(b) Costs of administration including a reasonable attorney's fee for the representation of the debtor.
128.17(1)(d)
(d) Wages, including pension, welfare and vacation benefits, due to workmen, clerks, traveling or city salesmen or servants, which have been earned within 3 months before the date of the commencement of the proceedings, not to exceed $600 to each claimant.
128.17(1)(e)
(e) Taxes, assessments and debts due the United States, this state or any county, district or municipality.
128.17(1)(g)
(g) Debts due to creditors generally, in proportion to the amount of their claims, as allowed.
128.17(1)(h)
(h) After payment of the foregoing, the surplus, if any, shall be returned to the debtor.
128.17(2)
(2) Debts to become due as well as debts due may be proved, but a lessor's claim shall be limited to past due rent, and to any actual damage caused the lessor by a rejection of the lease on the part of the debtor or by its termination by force of its provisions. The lessor shall be entitled to payment in full, at the rate specified in the lease, for the period of any actual occupancy by the receiver or assignee.
128.17(3)
(3) The receiver or assignee may pay or the court may order a dividend to be paid at any time, making such provision as shall be necessary for the protection of claims in dispute.
128.17(4)
(4) The receiver or assignee shall, as soon as practicable, report to the court the amount due the employes of the debtor and the court shall order the receiver or assignee to promptly pay, if practicable, such wage claims as have priority under this chapter.
128.18(1)(1) Claims which for want of record or for other reasons would not have been valid liens as against creditors of the debtor armed with process, pursuant to which such property has been attached or levied upon, shall not be liens against the estate.
128.18(2)
(2) Whenever a creditor is prevented from enforcing his or her rights as against a lien created or attempted to be created by his or her debtor, the receiver or assignee shall be subrogated to and may enforce such rights of such creditors for the benefit of the estate.
