Indiana Commercial Foreclosure Law has a timeline (with links) for the Premier Properties case I wrote about in Why We See Few Receiverships.
Thanks to Indiana Commercial Foreclosure Law for showing me the way to Bridgewater Falls put in receivership from The Cincinnati Enquirer. For some reason Ohio creditors had their receivership in place last month,
The Indianapolis Business Journal sums up the reason in the first line of Premier Properties retreats into bankruptcy:
"Premier Properties USA Inc. filed for bankruptcy protection yesterday, narrowly avoiding the appointment of a receiver to take control of the troubled Indianapolis company."Federal bankruptcy court serves as a refuge from state receivership statutes. Any state insolvency proceeding has federal bankruptcy law looming over it.
For those following this blog, I am playing catch up after a protracted illness. Which is why I am combining what might otherwise be two separate posts. In the past week, developments occurred in the General Assembly and with the Memory Gardens receivership.
The Indianapolis Star reports on new legislation concerning cemetery trusts. In Bill seeks to protect cemetery trusts, The Star has the following sidebar:
The reporting on the Memory Garden receivership came from WISH TV 8. The report, Testimony shows company in difficult position, millions lost has some interesting things to say about the running and powers of a receivership (if even only seen obliquely and partially).Cemetery bill
"JOHNSON COUNTY, Ind. (Johnson County Daily Journal) - A cemetery and funeral home managing company was struggling to make ends meet and could be short as much as $24.5 million in trust fund money."
Less than two months ago, Memory Gardens Management Corp. didn't have enough money coming in to pay all its bills, said Lynn Gray, who was appointed to oversee the company's finances and management.
Gray cut about $1.5 million out of the yearly budget, including projects the business could do without and the salary, benefits and vehicles of the company's owner and a former manager of a funeral home and cemetery the company operates on State Road 135.
Now, the company, which has a staff of more than 180, can pay its weekly bills, she said.
But concern remains over the future, such as what Gray believes is a shortage in the company's trust funds and larger bills, such as for caskets or other services and merchandise, which eventually need to be paid.
Gray testified in a hearing Monday about her work as court-appointed receiver of Memory Gardens, which includes Forest Lawn Memory Gardens and Funeral Home.
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The hearing that began Monday will determine whether Gray should stay in her role or whether those responsibilities should be turned back over to the company.
She testified that turning the company back over to Nelms could harm customer confidence in the business, which includes cemeteries and funeral homes in Indiana, Michigan and Ohio.
There also are other issues that need to be investigated, Gray said.
One of the main issues is whether the trust funds have the amount of money required by law.
The Indianapolis Star published articles yesterday on the Nelms cemetery/funeral home civil litigation.
Temporary receiver named for Nelms properties follows up directly on the report I blogged about in
A Johnson County judge ruled Friday that a Franklin attorney should continue to oversee the operations of an Indianapolis-based cemetery company after its owners' arrests on charges that they misused as much as $27 million in trust funds.Little surprise there and even less here:
Indiana Code 32-30-5-7 sets out the receiver's powers:"It's my understanding that business as usual is occurring," Loyd said in court. "Employees are getting paid, and they're doing their job.""It's my belief that it means nothing adversely to the people who either have plots or trust funds," he added. "I have no reason not to believe it's a very viable company."
The receiver may, under control of the court or the judge:From The Star's reporting, the receiver appears not to be liquidating the business. While I do not have benefit of the pleadings filed by the parties, I think it will be safe to assume that the receivership will continue until the litigation comes to an end. However, the receivership must file a report of her activities within the next year. That report must include the following:
(1) bring and defend actions;in the receiver's own name, and generally do other acts respecting the property as the court or judge may authorize.
(2) take and keep possession of the property;
(3) receive rents;
(4) collect debts; and
(5) sell property;
(1) receipts and disbursements to the date of the accounting; and
(2) other appropriate information relative to the:
(A) administration of the receivership;
(B) liquidation of the receivership; and
(C) declaration and payment of dividends.
Indiana Commercial Foreclosure Law blog continues to impress with its coverage of commercial law in the Indiana federal courts. Reading Potential Negligence Of An Indiana Receiver, I get the impression that our federal courts see more receivership cases than we do in the state courts.
"Judge Theresa Springmann of the Northern District of Indiana issued an opinion on November 5, 2007 in the case FTC v. Think Achievement, 2007 U.S. Dist. LEXIS 82621 (N.D. Ind. 2007) (ThinkAchievementOpinion.pdf). Think Achievement was a negligence case brought against a court-appointed receiver relating to the alleged failure to preserve and protect the assets of the receivership estate. The opinion addresses some of the general rules in Indiana and the Seventh Circuit that apply to receivers. Although the underlying case dealt with Federal Trade Commission Act violations, the opinion relates to secured lenders because of their interest in holding receivers accountable for the protection of the receivership estate."
Thanks to Masson's Blog for the link to Indiana Commercial Foreclosure Law: Indiana Receivers Can Sue For Damages Suffered By The Receivership Entity from Indiana Commercial Foreclosure Law blog.
The third parties (the defendants in Marwil) that allegedly participated in the fraud filed a motion to dismiss. They argued that the receiver did not have standing to bring suit because the suit, in reality, was for the benefit CEG’s creditors, not CEG itself. Judge Hamilton held, however, that the Complaint asserted CEG, the receivership entity (not the creditors), suffered actionable injuries. Based upon those assertions in the Complaint, he denied the motion to dismiss. Here are some of the general receivership rules that applied:As with assignments for benefit of creditors, I think receiverships are a tool for debtors and creditors overshadowed by the federal Bankruptcy Code.
The role of the receiver is to promote orderly and efficient management of property involved in a dispute for the benefit of the creditors. Id. at 10.
The benefit to creditors contemplated by receivership law, however, is only a derivative one. The general rule is that a receiver may pursue only the rights and claims that belong to the receivership entity itself. Id.
For a receivership entity to possess claims, the entity itself must have suffered a cognizable, redressable injury reasonably traceable to the challenged action of the defendants. Id. at 11.
Fraud on the receivership entity that operates to its damage is for the receiver to pursue (and to the extent that investors as the holders of equity interests in the entity may ultimately benefit from such pursuit, that does not alter the proposition that the receiver is the proper party to enforce the claim).
Judge Hamilton concluded that “so long as the claims themselves seek redress for injuries suffered by CEG, [the receiver] can assert and pursue them against the defendants.” Id. at 12.
