2023 Illinois Compiled Statutes › Chapter 240 - WAREHOUSES › 240 ILCS 40/ - Grain Code. › Article 25 - Claims Procedures

(240 ILCS 40/Art. 25 heading)
ARTICLE 25.  
		CLAIMS PROCEDURES
(240 ILCS 40/25-5)
Sec. 25-5. Adjudication of claims. When a licensee has
experienced a failure, the Department shall process the claims in
the following manner:
(a) The Department shall publish once each week for 3
successive weeks in at least 3 newspapers of general circulation within the
county of
the licensee, and shall mail or deliver to each claimant whose
name and post office address are known or are reasonably
ascertainable by the Department, a notice stating:
(1) That the licensee has experienced a failure and     the date of that failure.
(2) The place and post office address where claims     may be filed.
(3) The procedure for filing claims, as determined by     rule.
(4) That a claimant's claims shall be barred if not     filed with the Department on or before the later of:
(A) the claim date, which shall be 90 days after         the date of failure of the licensee; or
(B) 7 days from the date notice was mailed to a         claimant if the date notice was mailed to that claimant is on or before the claim date.
(b) Time of notice.
(1) The first date of publication of the notice as     provided for in subsection (a) of this Section shall be within 30 days after the date of failure.
(2) The published notice as provided for in     subsection (a) of this Section shall be published in at least 3 newspapers of general circulation in the area formerly served by the failed licensee.
(3) The notice as provided for in subsection (a) of     this Section shall be mailed by certified mail, return receipt requested, within 60 days after the date of failure to each claimant whose name and post office address are known by the Department within 60 days after the date of failure.
(c) Every claim filed must be in writing, verified, and signed
by a person who has the legal authority to file a claim on
behalf of the claimant
and must state information sufficient to notify the Department of the
nature of the claim and the amount sought.
(d) A claim shall be barred and disallowed in
its entirety if:
(1) notice is published and given to the claimant as     provided for in subsections (a) and (b) of this Section and the claimant does not file a claim with the Department on or before the claim date; or
(2) the claimant's name or post office address is not     known by the Department or cannot, within 60 days after the date of failure, be reasonably ascertained by the Department and the claimant does not file a claim with the Department on or before the later of the claim date or 7 days after the date notice was mailed to that claimant if the date notice was mailed to that claimant is on or before the claim date.
(e) Subsequent notice.
(1) If, more than 60 days after the date of failure     but before the claim date, the Department learns of the name and post office address of a claimant who was previously not notified by the Department by mail, the Department shall mail by certified mail, return receipt requested, the notice to the claimant as provided for in subsection (a) of this Section.
(2) The notice mailed as provided for in item (e)(1)     of this Section shall not extend the period of time in which a claimant may file its claim beyond the claim date. A claimant to whom notice is mailed under item (e)(1) of this Section, however, shall have the later of the claim date or 7 days after the date notice was mailed to file a claim with the Department.
(f) The Department shall determine the validity, category,
and amount of each claim within 120 days after the date of failure of
the licensee and shall give written notice within that time period
to each
claimant and to the failed licensee
of the Department's determination as to the validity, category, and
amount of each claim.
(g) A claimant or the
failed licensee may request a hearing on the Department's
determination within 30 days after receipt of the written
notice and the hearing shall be held
in the county of the location of the principal office or place of business, in Illinois, of the failed licensee and
in accordance with rules.
Under no circumstances shall payment to claimants who have not requested a
hearing be
delayed by reason of the request for a hearing by any unrelated claimant.
(h) Within 30 days after a failure of a licensee, the Director shall
appoint an Administrative Law Judge for the hearings.  The Director shall
appoint a person licensed to practice law in this State; who is believed to be
knowledgeable with regard to agriculture and the grain industry in Illinois;
who has no conflict of interest; and who at the time of his or her appointment
is not working for or employed by the Department in any capacity whatsoever.
(i) For the purposes of this Article, the "reasonably
ascertainable" standard shall be satisfied when the Department
conducts a review of the failed licensee's books and records and an
interview of office and clerical personnel of the failed licensee.
(j) It is the intent of this Act that the time periods and deadlines in
this Section 25-5 are absolute, and
are not to be tolled, or their operation halted or delayed.
In the event of a bankruptcy by a licensee,
the Director shall seek to have commenced any
proceedings that are necessary and
appropriate to lift the automatic stay or make it otherwise inapplicable to the
actions
of the Department with regard to the claims determination process. In all other
cases, the Department shall seek to have commenced the proceedings necessary to
expeditiously remove or lift any order of any court
or administrative agency that might attempt to delay the time periods and
deadlines contained in this Section 25-5.
(Source: P.A. 96-464, eff. 8-14-09.)
(240 ILCS 40/25-10)
Sec. 25-10. 
		Claimant compensation. 
		Within 30 days after the day on which a
claim becomes a valid claim, a claimant shall be
compensated to the extent of its valid claim as provided in this Section.
It is the express intent of this legislation that each undisputed portion
of
a claim shall be paid in accordance with the deadlines of this Code, even if
there are disputed portions of the claim. For example, the amount of a valid
claim calculated
for an "unpriced obligation" shall be paid to the claimant despite the fact
that claimant additionally seeks the amount for a "priced obligation".
Each claimant shall be compensated in accordance with the following
provisions:
(a) Valid claims filed by warehouse claimants shall be paid
100% of the amount determined by the
Department out of the net proceeds of the liquidation of grain assets as set
forth in this subsection (a).  To the extent the net proceeds are insufficient,
warehouse claimants shall be paid their pro rata share of the net proceeds of
the liquidation of grain assets and, subject to subsection (j) of this Section,
an additional amount per claimant
not to exceed the balance of their respective claims out of the Fund.
(b) Subject to subsection (j) of this Section, if the net
proceeds as set
forth in subsection (a) of this Section
are insufficient to pay in full all valid claims filed by warehouse claimants
as
payment becomes due, the balance shall be paid out of the Fund
in accordance with subsection (b) of Section
25-20.
(c) Valid claims filed by producers who:
(1) have delivered grain within 21 days before the     date of failure, or the date of suspension if the suspension results in a failure, for which pricing of that grain has been completed before date of failure; or
(2) gave written notice to the Department within 21     days of the date of delivery of grain, if the pricing of that grain has been completed, that payment in full for that grain has not been made;
		shall be paid, subject to subsection (j) of this Section, 100% of
the amount of
the valid
claim determined by the Department.  Valid claims that are included in
subsection (c) of this Section
shall receive no payment under subsection (d) of this Section, and
any claimant
having a valid claim under this subsection (c) determined by the
Department to
be in excess of the limits, if any, imposed under subsection (j) of
this
Section shall be paid only sums in excess of those limits to the
extent additional money is available under subsection (d)(2) of Section 25-20.
(d) Valid
claims that are not included in subsection (c) of this Section that
are filed
by producers where the later date of completion of
delivery or pricing of
the grain is
within
160 days before the date of failure shall be paid
85% of the amount of the valid claim determined by the
Department or $250,000, whichever is less, per claimant.
In computing the 160-day period, the phrase "date of completion of delivery"
means the date
of the last delivery of grain to be applied to the quantity requirement of the
contract, and the phrase "the later date" means the
date closest to the date of failure.  In addition,
for claims filed by producers for grain sold on a
contract, the later of the date of execution of the
contract or the date of delivery of the grain
covered by the price later contract must not be more than 365 days
before the date of failure in order for the claimant to receive
any compensation.
In computing the 365-day period, the phrase "the later of the date" means the
date closest to the date of failure,
and the phrase "date of delivery" means the date of the last delivery of
grain to be applied to the quantity requirement of the price later contract.
(e) Valid claims filed by producers for grain sold on a price
later contract, for which the final price has not been established,
shall be paid 85% of the amount of
the valid
claims determined by the Department or $250,000, whichever is
less,
per claimant, if the later of the date of execution of the
contract or the date of delivery of the grain
covered by the price later contract occurred not more than 365 days
before the date of failure.
In computing the 365-day period, the phrase "the later of the date" means the
date closest to the date of failure, and the phrase "date of delivery" means
the date of the last delivery of grain to be applied to the quantity
requirement of the price later contract.
The execution of subsequent price
later contracts by the producer and the licensee for grain
previously covered by a price later contract shall not extend the
coverage of a claim beyond the original 365 days.
(f) The maximum payment to producers under
subsections (d) and (e) of this
Section, combined, shall be $250,000 per claimant.
(g) The following claims shall be barred and disallowed in
their entirety and shall not be entitled to any recovery from the
Fund or the Trust Account:
(1) Claims filed by producers where both the date of     completion of delivery and the date of pricing of the grain are in excess of 160 days before the date of failure.
(2) Claims filed by producers for grain sold on a     price later contract if the later of the date of execution of the contract or the date of delivery of grain in reference to the grain covered by the price later contract occurred more than 365 days before the date of failure. In computing the 365-day period, the phrase "the later of the date" means the date closest to the date of failure, and the phrase "date of delivery" means the date of the last delivery of grain to be applied to the quantity requirement of the price later contract.
(3) Claims filed by any claimant that are based upon     or acquired by fraudulent or illegal acts of the claimant.
(h) To the extent moneys are available, additional pro rata
payments may be made to claimants under subsection (d) of Section
25-20.
(i) For purposes of this Section, a claim filed in connection
with
warehouse receipts that are possessed under a collateral pledge of a producer,
or that are subject to a perfected security interest, or that were acquired by
a secured party or lien holder under an obligation of a producer,
shall be
deemed to be a claim filed by the producer and not a claim filed by the secured
party or the lien holder, regardless of whether the producer is in default
under that collateral pledge, security agreement, or other obligation.
(j) The
maximum payment out of the Fund for claimants under subsection (a), (b) of
this Section shall be $1,000,000 per claimant and the maximum payment out of
the Fund for claimants under subsections (c), (d), and (e)
of this Section, combined, shall be $1,000,000 per claimant.
(k) The amounts to be paid to warehouse valid claimants and grain dealer
valid claimants shall be calculated according to the following:
(1) Valid claimants who have warehouse claims, or who     have grain dealer claims for grain sold, delivered but unpriced as of the date of failure, shall have "unpriced obligations", and to determine the per bushel value of these valid claims the Department shall use an average of the cash bid prices on the date of failure from grain dealers located within the market area of the failed licensee, and the cash bid price offered by the failed licensee on the date of failure, less transportation, handling costs, and discounts applicable as of that date.
(2) Valid claimants who have grain dealer claims for     grain sold, delivered, and priced as of the date of failure shall have "priced obligations", and the price per bushel to be used in calculating the compensation due these valid claimants shall be that which has been agreed upon by the failed licensee and the claimant, less applicable discounts. For purposes of this item (2), a person has "priced" his or her grain if he or she has done those things necessary under the agreement to set, choose, or select a price for any portion of the grain under the agreement, without regard to whether he or she has received a check in payment for the grain, or could have received a check in payment for the grain, prior to the failure.
(l) Arrangements whereby a producer agrees with a licensee to defer
receipt of payment of amounts due from the sale of grain are covered by this
Code and are not to be considered loans by the producer to the licensee,
despite payments to the producer as an inducement for the leaving of moneys
with the licensee, unless the licensee has executed and delivered to the
producer a promissory note covering those amounts.
(Source: P.A. 93-225, eff. 7-21-03.)
(240 ILCS 40/25-15)
Sec. 25-15. 
		Equity asset secured party or lien holder. 
		To the extent an
applicable secured party or lien holder consents to the Department liquidating
and collecting upon an equity asset under subsection (f) of Section 20-15, the
secured party or lien holder shall submit to the Department a request for
payment, to the extent of its security interest or lien.  The Department shall
make payment to the secured party or lien holder within 60 days after the
equity asset has been liquidated and collected upon.  The Department or the
secured party or lien holder may bring a civil action in the Circuit Court in
Sangamon County or in the Circuit Court of the county where the failed
licensee is domiciled or has its principal operating office for a
determination of any dispute between the Department and the secured party or
lien holder as to payment of the security interest or lien.
(Source: P.A. 89-287, eff. 1-1-96.)
(240 ILCS 40/25-20)
Sec. 25-20. Priorities and repayments.
(a) All valid claims shall be paid from the Trust Account, as
provided in Section 25-10, first from the proceeds
realized from
liquidation of and collection upon the grain assets relating to the failed
licensee, as to warehouse
claimants, and the equity assets as to a secured party or lien holder who has
consented to the Department liquidating and collecting upon the equity asset as
set forth in subsection (f) of Section 20-15, and the remaining equity assets,
collateral, and guarantees
relating to the failed licensee, as to grain dealer claimants.
(b) If the proceeds realized from liquidation of and collection upon the
grain assets, equity assets, collateral, and guarantees relating to the failed
licensee are insufficient to pay all valid claims as provided in
Section 25-10
and subsection (a) of this Section as payment on those claims becomes due, the
Director shall request from the Board sufficient funds to be transferred from
the Fund to the Trust Account to pay the balance owed to claimants as
determined under Section 25-10.  If a request is made by the Director for a
transfer of funds to the Trust Account from the Fund, the Board shall act on
that request within 25 days after the date of that request.  Once moneys are
transferred from the Fund to the Trust Account, the Director shall pay the
balance owed to claimants in accordance with Section 25-10.
(c) Net proceeds from liquidation of grain assets as set forth in subsection
(a) of Section 25-10 received by the Department, to the extent not already paid
to warehouse claimants, shall be prorated among the fund and all
warehouse claimants who have not had their valid claims paid in full.
(1) The pro rata distribution to the Fund shall be     based upon the total amount of valid claims of all warehouse claimants who have had their valid claims paid in full.  The pro rata distribution to each warehouse claimant who has not had his or her valid claims paid in full shall be based upon the total amount of that claimant's original valid claims.
(2) If the net proceeds from the liquidation of grain     assets as set forth in subsection (a) of Section 25-10 exceed all amounts needed to satisfy all valid claims filed by warehouse claimants, the balance remaining shall be paid into the Trust Account or as set forth in subsection (h).
(d) Subject to subsections (c) and (h):
(1) The proceeds realized from liquidation of and     collection upon the grain assets, equity assets, collateral, and guarantees relating to the failed licensee or any other assets relating to the failed licensee that are received by the Department, to the extent not already paid to claimants, shall be first used to repay the Fund for moneys transferred to the Trust Account.
(2) After the Fund is repaid in full for the moneys     transferred from it to pay the valid claims in reference to a failed licensee, any remaining proceeds realized from liquidation of and collection upon the grain assets, equity assets, collateral, and guarantees relating to the failed licensee thereafter received by the Department shall be prorated to the claimants holding valid claims who have not received 100% of the amount of their valid claims based upon the unpaid amount of their valid claims.
(e) After all claimants have received 100% of the amount of their
valid
claims, to the extent moneys are available interest at the rate of 6% per annum
shall be assessed and paid to the Fund on all moneys transferred from the Fund
to the Trust Account.
(f) After the Fund is paid the interest as provided in subsection (e) of
this Section, then those claims barred and disallowed under items (1) and (2) of subsection (g) of
Section 25-10 shall be paid on a pro rata basis only to the extent that moneys
are available.
(g) Once all claims become valid claims and have been paid in
full and all interest as provided in subsection (e) of this Section is paid in
full, all claims are paid in full under subsection (f), and all payments are made as required under Section 20-20(d),
any remaining grain assets, equity assets, collateral, and
guarantees, and the proceeds realized from liquidation of and
collection upon the grain assets, equity assets, collateral, and
guarantees relating to the failed licensee,
shall be returned to the
failed licensee or its assignee, or as otherwise directed by a
court of competent jurisdiction.
(h) If amounts in the Fund are insufficient to
pay all valid claims,
the Corporation shall transfer from the Reserve Fund to the Fund amounts
sufficient to satisfy the valid claims, and to the extent the amounts thus
transferred are insufficient to pay all valid claims,
the General Assembly shall appropriate to the
Corporation amounts sufficient to satisfy the valid claims.  If
for any reason the General Assembly fails to make an
appropriation to satisfy outstanding valid claims, this Code
constitutes an irrevocable and continuing appropriation of all
amounts necessary for that purpose and the irrevocable and
continuing authority for and direction to the State Comptroller and
to the State Treasurer to make the necessary transfers and
disbursements from the revenues and funds of the State for that
purpose.  Subject to payments to warehouse claimants as set forth in
subsection (c) of Section 25-20, the State shall be first reimbursed, and
the Reserve Fund shall thereafter be reimbursed to the extent needed to
restore the Reserve Fund to a level of $2,000,000 of principal (not including
income on the assets in the Reserve Fund)
as soon as funds become available for any amounts paid under subsection (g) of
this
Section upon replenishment of the Fund from assessments under subsections
(d), (f), and (g) of Section 5-30 and collection upon grain assets, equity
assets,
collateral, and guarantees relating to the failed licensee.
(i) The Department shall have those rights of equitable subrogation which
may result from a claimant receiving from the Fund payment in full of the
obligations of the failed licensee to the claimant.
(Source: P.A. 93-225, eff. 7-21-03; 94-54, eff. 1-1-06.)