Receiverships by Mitchell Lieberman. Presented at GreenPearl Events' Distressed Real Estate Summit Chicago on May 13, 2010.

1. RECIEVERSHIPS
Mitchell A. Lieberman

2. RECEIVERSHIPS
• 735 IMFL 5/15-1701(b)(2)
Mortgagee is entitled to be placed in possession
prior to judgment if:
- Mortgage provides for possession
- There is reasonable probability that mortgagee will
prevail at hearing.
• What constitutes a reasonable probability of success:
- Real Estate Taxes
- Maturity
- Payment default
- Due on sale violation

3. Receivership Continued…
• Petition must be verified
• Service Issues
• Statutory presumption in favor of Mortgagee
• Mortgagor must overcome statutory
presumption in favor of Mortgagee and show
good cause to remain in possession.

4. Good Cause
• Traveler’s Insurance Company v. LaSalle National Bank as Trustee,
200 Ill. App. 3d 139, 558 N.E. 2d 579,
146 Ill. Dec. 616 (2d Dist. 1990)
• Centerpoint Properties Trust v. Olde Prairie Block Owner LLC 2010
Ill. App. LEXIS 91 (1-09-1481) (1st Dist. February 10, 2010)
• Management issues
• Pending Affirmative Defenses

5. Mortgagee’s Burden
• First Federal Saving’s Loan Association v. National Boulevard
Bank, 104 Ill. App. 3d 1061, 433 N.E. 2d 1036, 60 Ill. Dec 798
(1st Dist. 1982)
• Mellon Bank N.A. v. Midwest Bank & Trust as Trustee under
Trust No. 85-02-4652, 265 Ill. App. 3d 859, 638 N.E. 2d 640,
202 Ill. Dec 772 (1st Dist. 1993)
• Traveler’s Insurance as Trustee, 200 Ill. App. 3d 139, 558 N.E.
2d 579, 146 Ill. Dec. 616 (2d Dist. 1990)

6. RECEIVER BOND
• Discretionary
• Calculation of amount
– Percentage of principal amount
– Mathematical computation regarding gross
income

7. POWERS OF A RECEIVER
• 735 ILCS 5/15-1704
– Employment of third parties
• Standard/ Prudent Person
• Disbursements
– Insurance
– Taxes
– Building expenses
– Repairs
• Court Authority

8. Powers Continued:
• Submission of Bids
• Building Condition/ Status Quo
• Fees and Costs
• Income deficient to cover operating expenses
• Debt Retirement
• Receiver’s Certificate
– Paul Gaskill et al.,v. Earl Dean Gordon et al., 1993 WI 64642 (N.D. Ill)

9. Powers Continued:
• When is an attorney necessary:
- Upon petition with notice
- Lease Issues
- Condo Issues
- Possession Issues
- Document Turnover
- Rent Turnover

10. RECEIVER’S AUTHORITY
• From the court and statute
• Receiver is an officer of the court
• Custodial officer
• Leases : Acceptance/ Rejection
United States Fidelity & Guaranty Co. v. Old Orchard Plaza Limited
Partnership, 333 Ill. App. 3d 727, 776 N.E. 2d 812, 267 Ill. Dec. 440
(1st Dist. 2002)
735 ILCS 5/15-1702 (g)
Comerica Bank Illinois v. Harris Bank Hinsdale, 673 N.E. 2d 380, 284
Ill. App. 3d 1030, 220 Ill. Dec. 468

11. MORTGAGEE IN POSSESSION
• Powers and Duties Distinguished
from a Receiver
– Collection of rents and application
- Appointment not for the benefit of all parties

12. CONDOMINIUM PROJETS
• Condo Board
• What is collateral
• What duties does receiver have in
conjunction with the condominium
management
• Shared Expenses

13. RECEIVER’S LIABILITY
• 735 ILCS 5/2-415
• Effect of Order Approving Reports
• Res Judicata Effect