When a corporation has been dissolved or is insolvent or is in imminent danger of insolvency or has forfeited its corporate rights.
Upon application duly made, the court shall appoint as receiver the person nominated by the petitioning creditor or creditors, subject to s. 128.10
A defendant who was notified of the proceeding to appoint a receiver and participated in the proceedings cannot, after the lapse of one year, object to irregularities. Home Bank v. Becker, 48 Wis. 2d 1
, 179 N.W.2d 855
Due process procedures required for determination of receivership are not required for selection of a receiver. Anchor Coatings, Inc. v. De Gelleke Co., 71 Wis. 2d 333
, 237 N.W.2d 725
The power recognized by sub. (1) is inherent in the courts. Northridge Bank v. Community Eye Care Center, 91 Wis. 2d 298
, 282 N.W.2d 632
(Ct. App. 1979).
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.
History: 1993 a. 492
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.
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.
History: 1993 a. 492
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.
History: 1993 a. 492
; 1997 a. 253
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.
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.
History: 1993 a. 492
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.
History: 1993 a. 492
; 1997 a. 253
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
Creditors not filing claims within the time limited may be precluded from participation in any dividend which may be declared.
History: 1993 a. 492
Objections to claims; appeal; secured claims. 128.15(1)(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:
A list of the creditors to whom the notice was given that includes the debts owed to the creditors, verified by an affidavit.
A list of claims filed stating the name and residence of and amount claimed by each creditor who has filed a claim.
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.
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.
History: 1983 a. 219
; 1997 a. 253
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]
Under this section, a secured creditor may become a party by general appearance or by filing a claim for a deficiency on a secured claim and thus be allowed to participate. The creditor's security cannot be taken away without consent, and the court adjudicating a ch. 128 proceeding can do no more than value the security for the purpose of allowing the unsecured part of the claim. Wisconsin Brick & Block Corp. v. Vogel, 54 Wis. 2d 321
, 195 N.W.2d 664
The trial court erred in subordinating a shareholder's claim on the grounds that the shareholder's advance to the corporation was a capital contribution rather than a debt when the court did not evaluate the sufficiency of the corporation's stated capital and relied entirely on the corporation's inability to obtain commercial financing. Gelatt v. DeDakis, 77 Wis. 2d 578
, 254 N.W.2d 171
Under Wisconsin Brick & Block
a secured creditor's participation in the receivership proceeding is necessary to establish consent. That case does not suggest that the secured creditor's participation is sufficient, by itself, to establish consent nor does it suggest that the creditor's participation in the proceedings trumps the secured creditor's express objection to the sale of its collateral. BNP Paribas v. Olsen's Mill, Inc., 2011 WI 61
, 335 Wis. 2d 427
, 799 N.W.2d 792
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.
The immunity provided under sub. (1)
is subject to the restrictions under s. 972.085
A debtor who is compelled to answer an interrogatory may be granted immunity without a request from the district attorney. A refusal to answer the interrogatory without an order under this section was sufficient invocation of the privilege against self-incrimination. State v. Worgull, 128 Wis. 2d 1
, 381 N.W.2d 547
Order of distribution. 128.17(1)(1)
The order of distribution out of the debtor's estate shall be as follows:
The actual and necessary costs of preserving the estate subsequent to the commencement of the proceedings.
Costs of administration including a reasonable attorney's fee for the representation of the debtor.
Wages, including pension, welfare and vacation benefits, due to workmen, clerks, traveling or city salespersons 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.
Taxes, assessments and debts due the United States, this state or any county, district or municipality.
Debts due to creditors generally, in proportion to the amount of their claims, as allowed.
After payment of the foregoing, the surplus, if any, shall be returned to the debtor.
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.
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.
The receiver or assignee shall, as soon as practicable, report to the court the amount due the employees 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.
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.
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.
A lien created by, or obtained in or pursuant to any action that was begun against, a person within 4 months before the commencement of proceedings for the appointment of a receiver or the filing of an assignment under this chapter shall be dissolved by the appointment of a receiver or the qualification of the assignee, and the receiver or assignee shall be subrogated to the rights of the holder of the lien for the benefit of all creditors, if:
It appears that said lien was obtained and permitted while the debtor was insolvent, and that its existence or enforcement will work a preference, or
That such lien was sought and permitted in fraud of the provisions of this chapter.
Liens given or accepted in good faith and for a present consideration which have been properly recorded or filed shall, to the extent of such present consideration only, not be affected by the provisions of this chapter.
All conveyances, transfers, assignments or encumbrances of a debtor's property, or any part of a debtor's property, made or given by the debtor within 4 months prior to the filing of a petition or assignment under this chapter with the intent and purpose on the debtor's part to hinder, delay or defraud any of the debtor's creditors shall be void as against the debtor's creditors except as to purchasers in good faith and for a present fair consideration.
All property which is the subject of a conveyance, transfer, assignment or encumbrance rendered null and void under sub. (5)
shall, if the property is not exempt from execution, be and remain a part of the assets and estate of the debtor and shall pass to the debtor's receiver or assignee, whose duty it shall be to recover and retain the same for the benefit of the creditors.
All conveyances, transfers or encumbrances of a debtor's property made by the debtor at any time within 4 months prior to the filing of a petition or assignment hereunder, and while insolvent, which are null and void as against creditors by the laws of this state, shall pass to the receiver or assignee and be by him or her recovered for the benefit of the creditors.
All levies, judgments, attachments or other liens obtained through legal proceedings against a person who is insolvent at any time within 4 months prior to the filing of a petition or assignment under this chapter are void in case a receiver is appointed or an assignee qualifies. The property affected by the levy, judgment, attachment or other lien shall be wholly discharged and released from the levy, judgment, attachment or lien, and shall pass to the receiver or assignee as a part of the estate of the debtor unless the court shall, on due notice, order that the right under the levy, judgment, attachment or lien shall be preserved for the benefit of the estate. In that case, the right under the levy, judgment, attachment or lien may pass to and shall be preserved by the receiver or assignee for the benefit of the estate.
Title to property. 128.19(1)(1)
The receiver or assignee upon qualifying shall be vested by operation of law with the title of the debtor as of the date of the filing of the petition or assignment hereunder, except so far as it is property which is exempt, including:
Property transferred by the debtor in fraud of the debtor's creditors.
Property which prior to the filing of the petition or assignment the debtor could by any means have transferred or which might have been levied upon and sold under judicial process against the debtor.
Rights of action arising upon contracts or from the unlawful taking or detention of or injury to the debtor's property.
The receiver or assignee may avoid any transfer by the debtor of the debtor's property which any creditor might have avoided and may recover the property so transferred or its value from the person to whom it was transferred unless the transferee was a bona fide holder for value prior to the filing of the petition or assignment hereunder.
History: 1993 a. 492
; 1995 a. 225
Settlement of receiver's or assignee's accounts. 128.20(1)(a)
Every receiver or assignee shall, within 6 months after the time limited for filing claims or within any further time that the court allows, file with the clerk of circuit court a full and itemized statement, verified by the receiver's or assignee's oath, showing all of the following in regard to the receivership or assignment:
The manner of the receiver's or assignee's dealing with the property received.
The amount of money realized by the receiver or assignee.
The condition of the property and funds in the receiver's or assignee's possession.
The receiver's or assignee's receipts and disbursements.
The receiver's or assignee's claim for compensation and administration expenses.
If any receiver or assignee neglects to apply promptly for a settlement of his or her account, the court may, upon application of any creditor, compel the making and filing of the account or settlement of the account and in that case the receiver or assignee may be denied compensation.
Upon filing the report described in sub. (1) (a)
, the receiver or assignee may apply to the court upon not less than 10 days' notice by mail to the respective creditors named in the report, for a final settlement of the account. The court shall fix a time and place for the hearing of objections or taking of evidence and by order settle and adjust the accounts and the compensation and expenses of the receiver or assignee, regardless of whether objection is made. The order shall be conclusive upon all parties including the sureties of the receiver or assignee. The receiver or assignee or any creditor may appeal from the order in the manner prescribed for appeals in civil actions except that the receiver or assignee may file a notice and undertaking with the clerk without other service of the notice and undertaking. The receiver or assignee shall be discharged of the trust and the bond canceled upon compliance with the final order of the court.