For decades, commercial receiverships in Illinois operated under a patchwork of scattered statutes and changing case law, with practices varying significantly from county to county. The new Illinois Receivership Act, 765 ILCS 1090/1, replaces this fragmented system with a comprehensive statutory framework that brings predictability, uniformity, and expanded tools to the receivership process. It creates a state court remedy that mirrors many familiar federal bankruptcy practices.
Modeled explicitly on the Uniform Commercial Real Estate Receivership Act (UCRERA) and federal bankruptcy law, the Illinois Receivership Act applies broadly to nearly all commercial receiverships, including those involving limited liability companies, trusts, and non-profit organizations. This wide scope ensures that both financially distressed businesses and their creditors can now operate within a clear, predictable legal framework.
For court-appointed receivers, the Act clarifies and expands their powers in meaningful ways. Receivers now have express statutory authority to:
- account for real and personal property
- collect and manage receivership assets
- maintain detailed records of receipts and disbursements
- continue normal business operations (including leasing property)
- pay business debts
- incur secured debt
- represent the receivership in litigation
- settle claims
- seek ancillary receivership appointments in other states
Secured creditors also benefit from specific protections under the Act.
- Any stay imposed by the receivership does not prevent secured creditors from perfecting or maintaining the priority of their liens.
- Secured creditors retain the ability to maintain possession or control of their collateral.
These provisions ensure that secured parties’ rights remain intact even as a receiver takes control of distressed assets.
The Act does not apply universally. Key exceptions include:
- receiverships already governed by the Illinois Mortgage Foreclosure Law
- residential properties with one to six dwelling units
- commercial properties subject to the Nursing Home Care Act
- entities regulated under various banking and financial services statutes (e.g., Illinois Banking Act, Illinois Savings Bank Act, Illinois Currency Exchange Act, Corporate Fiduciary Act, and Illinois Transmitters of Money Act)