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Wisconsin Chapter 128 Receiverships
Wisconsin Chapter 128 Receivership for Business
If your business is organized in Wisconsin, receivership under Chapter 128 of the Wisconsin Statutes affords a unique opportunity for restructuring of your debts without the stigma of bankruptcy. A receiver is appointed to oversee your company’s reorganization. All collection activity stops. You have most of the benefits of chapter 11 reorganization at a fraction of the cost.
A Wisconsin business can make an assignment for the benefit of creditors under Chapter 128 of the Wisconsin Statutes. The assignee must be a resident of Wisconsin. Immediately upon accepting the assignment, the assignee must file a copy of the assignment with the Clerk of the Circuit Court of the county where the assignor resides or has had its principal place of business along with a statutory bond.
Once the assignment is made, the Chapter 128 assignee, or receiver, has the rights set out in the statute. The receiver is required to take an inventory of all assets and assemble a list of all creditors. Just as in bankruptcy, and even better than the Illinois common-law assignment for the benefit of creditors, a Wisconsin Chapter 128 receivership gives rise to an injunction against any creditor activity. As in bankruptcy, creditors are required to file proofs of claim to participate in any estate.
The receiver will liquidate the debtor’s assets, pursue any claims or rights the debtor might have and ultimately, after determining the validity of claims, will distribute property to creditors in accordance with their interests.
All of this is set out in Sections 128.01-128.20 of the Wisconsin Statutes.
Frequently Asked Questions about Wisconsin Chapter 128 for Business
Can I use Chapter 128 for a business not in Wisconsin?
No, chapter 128 is for businesses which have their principal place of business in Wisconsin.
Can anyone be my Chapter 128 Receiver for my business?
Anyone who is a Wisconsin resident can be a Chapter 128 receiver or Chapter 128 assignee. However, most chapter 128 receivers or chapter 128 assignees will be selected because of their particular experience in the field.
Can I use Chapter 128 to sell my business?
Chapter 128 is frequently used to sell a business, especially where there are lots of bank and creditor claims. This provides for a transparent process and an orderly market. Creditors’ claims can then be paid in an orderly fashion. Creditors have the comfort of knowing that an independent receiver/assignee has provided oversight to the process.
Can a Chapter 128 receiver avoid preferential transfers?
Yes, a chapter 128 receiver can avoid preferential transfers. However, this is not pursuant to the Bankruptcy Code. It is pursuant to a specific provision of Chapter 128, namely section 128.07 of the Wisconsin Statutes Unlike the Bankruptcy Code, the preference look-back period under Chapter 128 is 4 months, not 90 days. Unlike the Bankruptcy Code, there is no one-year look-back period for insider preferences. In addition, the Wisconsin preference action requires that the creditor know or have reason to believe that the debtor was insolvent when it received the preference.
Can a Chapter 128 receiver avoid fraudulent transfers?
Yes. The Wisconsin Statutes give the assignee the right to discovery and the right to pursue creditor actions. A fraudulent transfer in Wisconsin can be avoided for up to six years from the date of the transfer.
Can Lakelaw handle a Chapter 128 Assignment?
Lakelaw can represent a corporation in connection with a Chapter 128 assignment. Attorney Ryan Blay is a resident of Wisconsin and eligible to serve as a chapter 128 receiver or assignee. We also can recommend specific individuals who might be particularly well qualified to serve as receiver or assignee in your case.
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