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good afternoon welcome to the tea CLE webinar entitled 7 things you should know about the new Missouri commercial receivership Act my name is David Warfield and I'm the co-chair of Thompson Coburn's financial structuring practice group with me today are sheryl kelly and brian Hockett both of whom are partners in our financial restructuring group Cheryl and Brian also served on the committee the draft of this legislation receiverships have existed for centuries dating back at least until 17th century England originally they were a creature of equity but receivership statutes were passed in many states during the 1800s and at least in this country that was probably because there was no federal bankruptcy statute during most of the 1800s three different temporary bankruptcy statutes were passed that century all in response to economic panics but all of them were eventually in fairly quickly repealed the bankruptcy act of 1898 was the first real permanent bankruptcy statute the state stepped into this breach and passed their own receivership statutes to deal with insolvent enterprises railroad receiverships were quite common during the 19th century and even the first part of the 20th century Missouri's experience was typical it had receivership statutes dating back to the 1800s but the current formulation of the statute at least until this new bill is it becomes effective was enacted in eighteen I'm sorry 1939 this statute is - but is embodied in three short sections in chapter v 515 these sections in the aggregate total only 155 words rule 68 point O 2 mirrors the statute and offers very little additional guidance the use of receiverships throughout the country dwindled during the 20th century the bankruptcy Act and later the code offered more certainty in greater protections Missouri like many states developed little case law that fleshed out the meeting of those 155 words the Lynch case upon the screen now is typical of the generalities you normally see in the reported cases of that era about 15 years or so ago however receiverships became much more in vogue particularly in single asset real estate cases many participants were growing tired of the burgeoning cost of chapter 11 and instead began to file and pursue receiverships all over the country states began to reexamine their old statutes and consider new legislations to modernize them so Bryan when and how did the movement to modernize the Missouri receivership statute again we started looking at the receivership statute at least at least three maybe even four years ago when the Missouri Bar formed up a subcommittee I mean we started talking about it before the missouri former four subcommittee but then the Missouri bar did form up a subcommittee to study the potential drafting of a more comprehensive and robust receivership statute and this was done the end probably in 2013 I think end of 2012 the group was formed with populated with attorneys who are both on the debtor and creditor side of representation and various other parties that might be impacted by the receivership such as utility regulators utility providers the insurance industry Missouri bankers were certainly consulted and various other parties and interests were consulted about the process and I know we spent a lot of time on and I mean there were over 50 meetings probably and we spent hundreds if not thousands of hours working on putting together the statute or the draft bill I guess I should call it now the in early May the Missouri General Assembly finally passed the MC ra and the bill has been forwarded to the governor for signature it's not been signed yet at least as as of when I checked this morning I'm not sure when it is scheduled to be signed but given that it was universally supported in the General Assembly I would expect that it will be signed and it should go effective in late August so what the MC ra provides then we're going to go through you know some of the provisions that the MC ra provides just to provide you you know people with additional information about where this statute is going from where it from where it came and the first step we're going to go through is the appointment of a receiver and the MC RA still preserves the existing standards and in fact it literally lifted the existing statute and placed it into section 15 a five fifteen point five one zero so it does preserve those existing standards but also adds specific instances in which the appointment of a receiver might be appropriate and it is a you know it is a permissive standard it empowers the judge to appoint a receiver it doesn't require the judge to appoint a receiver in any of these instances but it does empower the judge and it makes clear that certain instances are appropriate for the appointment of a receivership including dissolution of a company I'm the enforcement of a lien on property enforcement of judgment also includes you know specifically where the terms of a contract provide for the appointment of a receiver upon a default then it's that's a appropriate instance in which receiver could be appointed the statute specifically provides for at least seven days notice for a hearing on getting the appointment of a receiver that time can be shortened for a good cause but typically you're going to be required to give notice unless you have a good reason not to on a prior law the appointment of a receiver was required to be ancillary to other relief that is typically you would file it is a part of your relief that you were seeking in connection with like a breach of contract usually agree to a note or something like that in order to enforce your security interest in property and you would seek the relief ancillary to that that was a requirement under the M CRA the request for a receiver can actually be the primary relief sought in an action although in most instances you're always going to be you know seeking to enforce your your rights and property or otherwise seek to protect your rights with respect to property of the of the of the better and I would say this is ability to bring an original action for the appointment of a receiver as a cause of action is one of the unique aspects of the statute that's a change from the original um you know receive body of receivership law and Missouri it could be helpful if you have a non-recourse loan and can't find a claim to upend your receiverships do potentially you can move to have the appointment of a receiver to protect the collateral and possibly the solidus will discuss as an original receivership action I think also it may also be important to have that that in there when there is going to be a provision we'll discuss briefly later where receiverships and foreign jurisdictions will be recognized here so if you needed to have a receivership recognized here you could file it that way under the Missouri commercial receivership Act there's two types of receivers a receiver is either as general receiver or limited receiver and the distinction of the type of receiver makes a difference as far as the scope of the duties and powers and obligations of the receiver the court is under the act of host to identify whether the receivership is general or limited in nature but if for some reason that doesn't happen then be the fault is that the receivership is a general receive worship basically the differences between the two types of receiverships is that the general receiver takes control of substantially all of the debtors assets and has broad duties and power to operates of business a limited receiver is going to take control over pacific and assets and where the receivership is intended to cover only specific assets the order appointing the receiver really should specify that in fact it's a default position that it's a general receivership unless it's unless it's for a specific limited receiver and as a good practice that you want a limited receivership you should really say what the assets are that are under the control of the receiver it's possible to convert one form of receiverships to another on good cause shown with emotions of the court and if a creditor has a lien on substantially all the debtors assets there's still an option under the ask you have a limited receivership which might be helpful depending on the circumstances because the general receiver has a lot more duties as far as noticing up the receivership and filing reports and doing certain other things so you'll find throughout the Act that when you read about a general receiver that receiver has more responsibilities including claims administration process which we'll talk about of later on so we were talking a little bit about duties and powers and so with respect to duties of the receiver there are certainly a lot it's more duties for a general receiver than there are for a limited receiver and some of the duties that may apply to to all receivers I mean in particular sending notices it within 10 days after the appointment receivers required to send notices to all creditors the debtor is required to cooperate with the receiver in providing information and to enable the receiver to send out those is required to notify state and federal taxing authorities a general receiver is required to send out to publish notices in newspapers in the county or counties where property is known to be located so that's obviously a significant additional duty that a general receiver has receivers should record notices in the land records or is permitted and actually required to file notices in the land records where where real property is at issue in the receivership there are the receiver is required to prepare an initial report or schedules of assets and liabilities at the beginning of the case X within 30 days the debtor is required to provide information to the receiver to help them do that and then throughout the course of the receivership the a general receiver is required to provide reports regular reports on assets and activities of the receivership this enables the court and other parties to know what's going on with the receivership a limited receivership may be required to also do reporting but it's not specifically in the statute that's it's just the court can the authority of the court to require reporting from a limited receiver is in the statute now with respect to powers of the receiver prior to the mtra going into effect receivers are specifically empowered really in the orders of appointment the orders of employment that really are the the central controlling factor in determining what a receivers powers are and this enabled some parties to probably overreach with respect to their authority or the that a receiver might have and sometimes it's also possible that every an appointed order might be short of what a receiver might run into and the purpose of the MC ras really be a gap filler for a lot of those situations I think the intention was to empower receiver to be able to do the things that are fairly typical that you would want to receiver to be empowered to but also to enhance some of the authorities that he might have as well as kind of fill in the gaps again to kind of make sure that a court knows what powers are and aren't appropriate I do want to stress that the flexibility that was under the previous Act I think still exists under this act I mean the Poynting Court can really be very flexible in the appointing order in order to make sure that it fits a particular situation and I think it would be important to carry over practice from pre commercial receivership acts to outline what powers you want your receiver to have especially since there's now a formula for what are appropriate powers you might as well import that into your order so Brian was saying there those statutes the EM CRA does provide guidance to the court and to movements and other parties and interests as to what sorts of powers and authorities a receiver would have once appointed and essentially those powers and authorizations are what you would expect for any party who's taking and testing control of assets to preserve and manage those assets and protect them and then to operate the business in the ordinary course and to marshal assets pursue claims pay expenses hire professionals as appropriate and all these things that their ordinary course can generally take place outside the approval of the court and the statute does contemplate all of that in addition the Act allows the receiver to recover assets specifically is there is a statute that covers the concept of turnover which many of you may be familiar with as a bankruptcy concept as well and essentially a receiver or the debtor who is the subject of the receivership can demand her know of property of the receivership estates that might be in the custody of control of someone else unless the court orders otherwise the receivers also given consump to compel or excuse me powers to compel turnover where a person over whom the court has jurisdiction as fails to respond to the demand the receiver can first do them and compel turnover if there's a determination by the court that that demands and was proper and the compelling is proper then a party who fails to respond to the receiver and the demands of turnover property can be held in contempt there's also a process by which the party upon whom the demand is made can post bond to preserve the status flows and protect the rights of both parties maintain possession of the property but post some security and lieu of the turnover and the answer process that would require the fort's involvement the receiver can also sue and be sued in certain circumstances and can intervene in actions that the debtor may have been a proper parties do they may substitute in for actions of the debtor they may also pursue fraudulent transfers action under the Missouri Uniform fraudulent transfer Act which I think the law was certainly there was some support for that but now it's been expressly stated in this Missouri commercial receivership Act an additional power of the receiver that's worth noting is that the receiver can when operating a business obtain unsecured credit the ordinary course of business which makes sense the receiver can also seek the extension of credit outside the ordinary port and pledged assets of the receivership when that makes sense to do with with approval of the court so in thinking about some of the powers of a receiver I think it's important to talk some about the jurisdictional limitations here that a Missouri state court could exercise certainly prior to the enactment of the MCA state court receivers are limited to the jurisdictional limits of a Missouri Court that is geographic borders I have to say that's still still true to a large degree however the Missouri commercial receivership Act now authorizes a Missouri appointed receiver to go to another state that might recognize the receiver and seek and seek recognized recognition of the receivership in that other state and on the flip side of that the EM CRA also provides for mechanism by which Missouri courts are required to recognize the appointment of receivers from out of state that is an out of state receiver could come into the state of Missouri and the Missouri courts are required to recognize that that's why I suggested that a cause of action that might be filed is just a cause of action by an out-of-state receiver for the appointment of a receiver for recognition of that receivers duties and and the courts as well as long as it's not going to lead to a a manifest injustice the Missouri courts are required to recognize that that out of Courts abortion and I think these flexibilities and efforts to be extraterritorial can be helpful in certain cases but it's always useful to keep in mind other remedies that the federal bankruptcy law and other multi territorial laws might provide it may not always be practical to be extraterritorial in a receivership but certainly there's now a more flexible process to do that there's an opportunity for I mean the receiver has authority to go to another state that doesn't mean the other state has to recognize it that's why you know for you know multi jurisdictional type receivership certainly federal a federal court receivership is probably preferable that's only av ilable where you can get subject matter jurisdiction in the federal court certainly bankruptcy always provides for for jurisdiction over property but then you know within the state so bankruptcy is probably the best remedy for that but where it's not ideal federal court receivership and where you can't get federal court receivership then this is available so I think one of the most important powers that is branded to the receiver under the Missouri commercial receivership and it's the power to sell assets and under the acts a receiver can use sell or lease property outside the ordinary course of business following notice than an opportunity to be heard there has to be parties and interest who might be impacted by the sale needs to be given notice than the opportunity to of Stax there are some limitations on what can be sold through a receivership for example farm lands or personal residence if the party owning the property does not consent to those sales and you cannot sell the property over that party's objection but essentially in most instances where it seems appropriate to do a sale or some other lease or use of the property the receiver can petition the court and seek opportunity to sell that property and and most instances that sale could be free and clear of liens if certain conditions are met worth noting as well that the receiver laws specifically authorizes a predator as lien holder to credit that it's debt as part of the purchase price in a sale where the asset is subject to liens and then when the property is sold the liens will attach to the proceeds that fails in the order of the priority of the lien so basically the way the or B of Act authorizes the sale is that the receiver will again move to sell the property we'll need to explain this time in terms and conditions of the sale provide an opportunity to of stock and then any objections will be taken up at the hearing a receiver can sell the property for less than the amount owed to the lien holder the properly perfected holders of liens if essentially the court can be convinced that the receiver sale is going to bring a fair price or a better price then a sale outside of the receiver shows and I think most of us can envision a circumstance where a receiver sale where there's an opportunity to market property and to give parties the opportunity to see the assets and and actually a competitive bidding would be a better price than a non-judicial Missouri foreclosure sale which takes place very quickly and with very few opportunities to really inspect the assets been bid for those assets the other thing that the ass adopts is really a bankruptcy law concepts such that if sale order that's been entered and approved by the court it gets reversed and the sale happens notwithstanding that reversal absent a stay pending appeal or some evidence and some evidence of bad faith on the part of the parties that sale will be upheld notwithstanding the reversal of a sale order one other thing that's worth noting is this ability to sell is a a right that Sambia lenders or trustees and securitized lending arrangements like because in a receivership through a receiver sale due to the laws that govern those kind of arrangements they're able to finance the fire of the property and keep that set in place through a receiver sale and one other thing I would just notice when dealing with tax credits types of transaction you'll always want to keep in mind whether there's anything about the receivership that might trigger a recapture and in most instances that shouldn't happen if the proper documents were in place but it's something to be sensitive to this was certainly one of the major changes that that we looked at and this was one of the main main reasons for looking at the receivership statute was to make clear that the receiver appointed by a Missouri state court had the power to sell property and and one one issue here is that getting insurance on on a sale owners policy on a sale from a receiver and and a Cheryl you have any thoughts on on that well that was one of the int concerns and fire law is that a receivership will get filed there was no consent of the owner to the sale that ownership Trump's the sail through the receivership even if it might bring better values and outside of a receivership sale and then you would turn to your title insurance company and say well you insure the sales we've got a court order and there was concern about that so now the F does propose a process and if you follow the process of proper notice to the creditors and get your title insurance company involved in reviewing the order the notice process and so on it seems that there should be no issue was with providing silence pterence I would say that you need to bring those folks queues of table the title insurers to the table early and often let them have the opportunity to say who you gave notice to let them look at the sale orders and get comfortable but the ask certainly given an opportunity for them to get comfortable so I in my view this is probably the most significant change that the new law makes it clarifies the ability of a receiver to present sell property of the receivership state and arguably even expands that right beyond what a debtor in possession or a trustee would have under the Bankruptcy Code because it seemingly permits a short sale over the over the opposition of a of an under secured creditor so this is I I think in practice the bulk of receiverships are filed because there is a desire to sell some or all of the of the underlying assets and so this is tremendously significant an improvement under the old law immeasurably in my view and I suspect we'll see develop over the course of time a practice in receiverships not unlike bankruptcies where bid procedures are considered and approved on an expedited basis and sales are conducted pursuant to those procedures that are approved in advance certainly the receivership they'll give some flexibility and those kind of procedures Davis describes where you can have competitive bidding as in diligence packagers are provided in advance and so forth which is much different than foreclosure law which now the receivership law says there's an alternative to foreclosure it's one other powers if the receivership is authorized with under the M CRA is the power to assume reject contracts this is similar to 365 with the Bankruptcy Code although I mean I have to say it as a lengthier section is certainly not as lengthy as 365 of the Bankruptcy Code there are limitations to the ability to assume and reject that that aren't otherwise that might you might have available under the Bankruptcy Code but the purpose here I think was to provide a receiver with a tool to use with respect to contracts it does specifically authorize the receiver to do items just assume and reject contracts now in assuming a contract or rejecting the contract that has to be approved on just improper terms under the circumstances so I mean the court could condition assumption on obviously pure that would be typical under 365 skiros and inadequate adequate assurance of future performance or some other terms that might be necessary for a receiver a receivership court to approve that certain contracts can't be assumed these are similar to the Bankruptcy Code these would be items that would contracts with which the counterparty to the contract would not be required to perform to another person and would be excused under the law contracts for extension of credit or simply the contract is no longer exact Victorian that the terms have expired in addition one important limitation here I think is that anti-assignment provisions in a contract are still enforceable so if you're wanting to try to get value out of a contract by signing it you're going to have to have the consent and cooperation of the counterparty to that contract that's that's one limitation under the MC RF versions that that would certainly leave the Bankruptcy Code provisions would be would be stronger but that is one thing out there I did want to note too that there is a automatic rejection of contracts with the state within 60 days after the filing of the receivership so a receiver is if there are state contracts that are part of them that are important to the debtors business that's something that the receiver does have to pay attention to very quickly one feature of the Act is a temporary automatic stay that arrives on the appointment of the receiver and this applies only in the general receivership type of case it's limited in scope at the beginning of the case there's a 60-day stay against actions to continue or commence actions against the debtor or to obtain property of the receivership estate or execute on judgments against receivership property one thing worth noting is that you get the advantage of this temporary automatic stay if there's litigation in a court outside of the receivership Court then there needs to be a transcription in the other court relative to the receivership appointment so there are some steps that might need to be taken to assure that this stay is is enforced for your benefit as you may need it the receivership stay does not stay all action for example set-off one can set off again property of the debtor that they're holding or money's that they're holding against the claim that they have which is a bit different than the bankruptcy process while bankruptcy right be nice is set off and your rice is set off the stay is really there's a status flow and bankruptcy that arises and before setting off in bankruptcy really should get relief from the automatic stay you can hold the money on a temporary freeze but you can't set off and the receivership act does not have that sort of a status quo one can set off directly and immediately other sorts of actions that aren't estate or what you might expect criminal for stating certain domestic relations types of proceeding regulatory proceedings certain types of perfections of liens type of situations mechanic's lien and the a party can move for relief from this temporary stay and the court can grant that relief for cause and also the court can enlarge or restrict the stay as as may be appropriate after the 60 days expires there still of a permanent stay with respect trying to collect against the better you can liquidate your claim but you can't collect and you try to enforce liens against property of these days that type of a stay remains in place throughout the receivership I think I think that it's the protection of the receivership property that continues and when the December Ares stay is primarily designed to permit the receiver time to get control get an understanding of the debtor situation indicate control over assets once the receivership has control over those assets those assets are under the jurisdiction of the court and and the receiver the receivership assets are still going to be protected I think after the 60-day stay is up you could certainly proceed forward against the debtor as much as you wanted to although especially in the instance of a general receiver I'm not sure what good that's going to do you I mean if the receivership has the assets substantially all of the assets of the debtor your your attempt to liquidate a claim and fight the claim against to the debtor is going to be a fairly limited use when the woman's properties in the receiverships obsession' afraid it's a concept similar to bankruptcy court give us some breathing room but also respect the rights of the other parties who liquidate their claim certainly so one one thing that was talked about a lot when we were discussing the MC ra was the impact on third parties and what kind of notices we wanted to provide third parties of a receivership and and you know what how do you bring them into the court if they want to come to the court and one thing that and I discussed some of these notice provisions earlier but in the context of third parties you know right here then when I'm talking about third parties I was I'm talking about not a party to the action so one creditor decides that a receiver is appropriate and files an action and a receivers appointed against the debtor a third these are obviously those that aren't parties to the action but might otherwise have an interest in the in the debtor they might be a creditor of the debtor or some other interested party a receiver is required to send notices to all parties in interest in ten days and again that can be kind of a challenge to do but the debtor is required to cooperate with the receiver and there are requirements for what the notice is supposed to require also general receiver is required to publish notice in the county or counties where the receivership property is located again this is designed to give parties especially unknown parties notice of the fact that a receiver has been appointed over the over the property any party an interest that wants to can certainly appear in a receivership action they can ask for notices from the receivership court and after they're asked for notices they are entitled to get notices of most of the major actions that take place in the receivership proceeding and creditors and parties interests are entitled to participate much like in a a bankruptcy court date a third party can certainly weigh in on any action as though receiverships taking and any request with the receiver or other parties might make of the receivership court I will note that the provisions of the receivership asked to do impose that you know once they were a creditor receives notice or otherwise participates in the case or files a claim with the receiver that the orders of that court with respect to the property of the receivers that are that are placed in the receivership are going to be binding on those parties so obviously if you are getting a notice of this the third party might want to pay attention to a receivership action so as Brian was saying third parties can be impacted and we and have certain rights and benefits and obligations in a receivership the receiver is to give notice to all no creditors and in a general receivership there's a claims administration process very similar to bankruptcy for essentially the general receiver will give notice to known creditors and and parties that have made the receiver knows has made themself notes of the receiver those parties in response to a notice to file claim which typically would require 30 days response time will need to file what's called a proof of claim under the ass and that proof of claim needs to be so designated and include the amount thus to do that creditor as well as supporting document patient and it will get served to the general receiver as I said usually 30 days after a notice of a claim Starr days so creditors also to file a notice of claim with the receivership court and that will not include all of the supporting documentation but will evidence that they have in fact served and notify the the receiver of their claim so as noted before the general receiver serves the function of marshaling assets selling assets is appropriate operating the business and so on and as that receiver collects the of receivership proceeds if you will sales of assets and so forth will then distribute those assets in accordance with a process and a distribution scheme that's laid out in the Missouri commercial receivership acts and this priority scheme for distribution of proceeds of the receivership is very similar to what you would expect and was is seen in Bankruptcy Code for example the holders of validly perfected liens will have the proceeds of their collateral paid over to them in the order of the prior or 30 of their liens and then after that the proceeds will be distributed to the cost of the receivership of state those are administrative type claims then the third in priority is what's called a secured and unprotected class and that's the different than what you would see in bankruptcy typically the veteran possession or the trustee was come in that place they would from any secured and unprotected creditor but under the commercial receivership acts a party who has a security interest that son perfected could come ahead of others in the priority scheme and not be at the bottom o the heap as a general unsecured creditor there are other layers if you will of distributions wages certain kinds of deposits certain maritals as governmental taxes unsecured claims with the residue of any to the debtor and I should have noted earlier that is part of the receivers administration of claims the receiver is going to look at the different claims that are filed in the case and is going to determine whether to object to those claims and those matters will be litigated in accordance with the process that's set forth in the ass the filing of a proper filing of a proof of claim is prima facie or basic evidence that your claim is good so the receiver will have the burden then after the claim is filed to object to that claim and show that it's not a valid and proper claim and I wanted to note that with respect to the party that might be filing the claim the provisions relating to distribution from a receivership to include a requirement that the person who filed the claim may very well be responsible for the expenses of the receivership estate so you know the priority scheme does it lists secured creditors first and this suggests that that the secured creditor would would be the likely filer of the case but any any part of the files case may be required to pay the freight of the case so that's certainly one issue I wanted to highlight with respect to their priorities I think that might have been the practice in the past that the secured creditor is a movement Burt receivership was provide a carve-out or somehow enable the receiver to get paid it's now part of the statute that whoever moves for the receiver is going to need to pay the phrase somehow I think that the most receivers aren't going to serve unless they know that there's sorts to be paid so and it is a practical issue as well but but in this case there's there's provisions for the receivership to be the receivership expenses to be paid by a party who's the property administered at least with respect to the expenses of it administering on those on those assets the Act does provide for a way to wind down the receivership and result in the discharge of the receiver and basically once the receivers completed its gathering of the assets and an objection of claims and distribution in accordance with the distribution scheme in the in the ass then the receiver will apply for termination of the receivership before their order terminating the receiver and discharging the receiver and is fund from from its of status then the court must first review a final report in accounting from the receiver so a condition of the receivers discharge is that that final report in accounting be filed and be provided for parties and interest to review and essentially abstract to once the court review that that final report in accounting approved it then the court is in a position to enter an order terminating the receivership and discharging the receiver and once that orders enters the receiver is released from any further duties and the bond that the receiver is posted which is part of the ass the Act requires receiver's a point as opposed some some banda security su assurance performs his duties Stefan can then be released as well and that brings about the the end of the case the receiver also needs to file a copy of the order and the real estate records for any lives condoms has been filed to evidence that that was penances released so going forward looking at what we can expect now that the MC RA is is going to be laws soon as the governor signs it sending the governor signed it what what can we expect Sharyl as far as that going forward and one of our first bullet points we put on here was document update obviously I think it's important to you know review you know standard form documents to make sure that they're updated it what would I what ideas you have one specific document updates earlier that you're thinking of if I were a lender in my loan documents I would want to update my documents to Pressley upon the lenders at the lenders option that there were that a receivership can be pursued and a sail through receivership can be pursued typically lenders don't want to allow bettors to take advantage of receivership that would be a default but at the option of a lender that a receivership could be pursued assails or the receivership pursued and the owner of the property the the mortgage or the grant or under the data trust consents to that I would still say it would be appropriate practice in your orders appointing the receiver to authorize them specifically to do what the app allows the receiver to do including the sale of assets free and clear of liens I think that makes sense and your in your orders I think the point is to to make sure that even though the statute may authorize it to make sure that as between the parties the you know the receiver the debtor is consenting to a receiver selling property to make sure I think it gives comfort to third parties as well that you can point to the contractual agreement you can also point to the fact that the order literally adopts the statutory powers and authorities when you go to your title company or whoever else your buyer to get them comfortable they'll see those things there and it just speeds up the process and provides that additional support and comfort for it I think I think one of the the hopes here is that having a more robust remedy and providing for a receivership well there will be a greater use of receivership where where the cost warrants and words where the relief that's provided under FCRA is appropriate for the circumstance I think that that is probably one thing that I think we can expect I do also expect that there will be significant and creativity and with this statute and and I'm sure there will be very creative attorneys that will fashion on fashion arguments but that's what happens when you have a new statute like this there are always opportunities to be creative and to use the the MC ra in situations that are that are unique or maybe even using it in circumstances that people never anticipated so I think we will see some some of that David so we have about 10 minutes left we have a number of good questions that we received through the chat room we'll try to address as many of them as we can a couple of general observations however this statute is not going to be a complete substitute by any means of bankruptcy this statute won't work in my view in with a company that has assets in a number of different states and jurisdictions it will just be too cumbersome and bankruptcy will remain the preferred remedy there are certain sorts of contracts that I would never try to deal with in a state court receivership like a CBA or a rejection of a you know a some sort of employee benefit contract I think that might have it Rissa implications on the other hand I can see at least one opportunity and that is the Bankruptcy Code prohibits the filing of an involuntary against a farmer and there is no such prohibition against filing a receivership against a farmer although you cannot sell farmland of a without the consent but if you have a farmer who's out of trust on livestock or otherwise has but perhaps some made some fraudulent conveyances this may be a way to deal with that that's unavailable in the Bankruptcy Code so some of the questions one question was can a municipality be the subject of a receivership under the new statute and the statute itself does not mention a municipality I would and I'm doing this from memory but as I recall there was a case in the 30s that essentially said that Congress had preempted the field of municipal bankruptcy that is not incidentally the issue that was decided by the court yesterday in the Puerto Rico case but I think if you go back you'll find that New Jersey's statute in the 30s authorizing some sort of municipal receivership was struck down it a question about I understand one party that you cannot file a receivership against is a is a party that is regulated by the Public Service Commission so utility I think is something you couldn't file a receivership against in a statute and also say that the statute does is not intended to replace receivership provisions and receivership practices with respect to other numerous like insurance covers with the Berkeley out okay it's like insurance numerous other entities or types of receiverships that are provided for otherwise and in the Missouri and the Missouri have certain sorts of health care facilities also have their own receivership statute we had a question about what happens outstanding checks when the case is filed and I think it's probably safe to say that the statute doesn't deal with that is that correct I I don't believe it does off the top of my head I can't say that it does and I've studied the statute a long time so I don't recall that it does deal with outstanding checks I don't there's there's nothing that would prohibit it clearing the bank Cheryl yeah all that being Delos I guess it depends on of the stay is that that would be the only argument maybe they spend on well suffice it to say I think if the lender once those checks do not clear it needs to include it and sorter I said the lender the plaintiff if it doesn't want those checks to clear should include it in sorter a direction to the depository bank to return any checks unsatisfied otherwise I would suspect that they would in fact clear I see a question about the selling of a residence and how that is really relevant to the receivership acts and the questioner is suggesting that it doesn't appear those ashes of relevance to anything other than commercial parties but when you look at the definition of better and the ad it does say that as better as any person and then person would include potentially natural person so there's I see no limitation on a better being a debtor subject to the act being a natural person certainly the Act does do a lot spend a lot of time contemplating somebody in a commercial situation in which they're in which they're operating a business that doesn't necessarily prohibit a personal residence from coming into a receivership and and I wanted to family one one instance in which the it would be appropriate for the appointment of a receivership may very well be like a situation in which there's a fraudulent transfer I mean that has been appropriate and receivers authorized to recover a fraudulent transfer and if persons personal residence was acquired with the fraudulent transfer I can easily see how a residence could get in there I'm not saying that's going to be the common circumstance but it certainly we seen it there's a very large personal residence a very expensive home purchased with money about a fortress of funds and that would be perfectly safe or going to be perfectly decent targeted with me I was I will say that a personal residence can't be sold without the person's permit under under the static array and the act really is best suited I think for as David said at the outset of the program your single asset real estate type of situation it doesn't cure every jurisdictional question or problem but it certainly provides a bit of a framework for your receivership and then we also have another question about marshalling of assets and the statute itself does not deal directly with marginal assets whether when they're and just for for some on the call that aren't familiar with marshalling just very quickly typically that means there are two creditors with claims against two different sets of assets and and some of those assets might overlap so there's two creditors creditor a and B have have both have an interest or security interest in an asset and the first asset and only one of them has an interest a security interest in a second asset whether you can make that person with more collateral go after the it's it's it's collateral that it solely has an interest in before it can seek that I think that's going to be governed under what's what's otherwise available under under common law in Missouri there's certainly nothing in the statute that deals with that specifically although I think it would be it seems like an abstraction and the receivership seemed like it was it would seem like it would be an appropriate subject to take to the receivership court and ask the court to determine you know what what interest parties have with respect to you know either proceeds or in collateral and if the receiver should be subject to some order of payment out of one set of collateral versus the other you may find creditors coming to the receivership for for kind of determination one interesting question is this whole darn statute unconstitutional because of the contracts clause in the in the Constitution typically those that hasn't been applied or there's been a recognized exception for in the case of insolvent entities I think that's been that arguments essentially been made in other context with regard to state receiverships interesting issue I I don't I don't think it will be raised anytime soon and if it is it will have to be dealt with with it I suspect the better reasoning would be that this is not an unconstitutional alteration of a pre-existing contract the Missouri statute was modeled after a few other state statutes as well there are just a few a handful of states that have tried to flush out that receivership law by statute and when we put together the Missouri statute we tried to follow the lead of other states that have looked at these issues and now this doesn't go directly that question I will say that throughout the drafting of the statute and the preparation of it issues of preemption were discussed regularly relating to I mean relating to whether or not the Bankruptcy Code might prompt some of the some of the provisions here I mean one thing that we didn't we one thing that we didn't mention before there is no preference statute here there are obviously some states that do have state preference laws we decided not to include preference and it was very it was discussed but it was very quickly and unanimously determined that having a preference statute under here would not be a good idea in it then actually having a preference inclusion could actually go far so far as to to cause some preemption issues as well but we did include the empower the receiver to pursue uniform fries I'll transfer act actions but not but not preferences a technical question was asked as to whether rule 68 point o2 will which is the current rule dealing with the appointment of receivers will somehow supplant or supersede that new statute I'm not sure how since it really doesn't have any specific procedures in it it just says a court can appoint a receiver it made it they out there I mean I mean it really doesn't provide for anything that's in here so I mean it doesn't provide an alternative procedure from what's in the statute if it did then I could say that there could be an issue especially with respect to procedural issues the the rules have been known to the superseded statute but here a the statute was enacted after the rule B the rule does not provide any specific procedures with respect to how things should be accomplished so it really is it really doesn't supersede the statute there I mean there is no notice that you know the ex field ex parte at first EDD lenders would March and look for without any prior notice the statute specifically speaks that the rule doesn't but it doesn't necessarily conflict I think it judge is not going to look at the statute and try to see if you've given some notice of the action before you seek an order of appointment well we're at the 60 minute mark thank you everyone for attending I hope this has been helpful and if you have any other questions about CLE credit or anything feel free to contact any of the participants and we'll our presenters and we'll try to get an answer for you thank you very much