Illinois Administrative Code › Title 8 - AGRICULTURE AND ANIMALS › Part 3 - DEPARTMENT OF AGRICULTURE ACTING AS TRUSTEE ON BEHALF OF CLAIMANTS › Subpart B - PROCEDURE FOR THE COLLECTION, CONTROL AND DISTRIBUTION OF COLLATERAL FILED IN LIEU OF A SURETY BOND WITH THE DIRECTOR OF THE ILLINOIS DEPARTMENT OF AGRICULTURE ACTING ON BEHALF OF CLAIMANTS › Section 3.90 - Collateral

Current through Register Vol. 48, No. 28, July 12, 2024
a) Pursuant to the
				Acts listed in Section 40.23 of the Civil Administrative Code of Illinois and
				rules promulgated for the administration of such Acts, certain license holders
				or registrants are required to post a surety bond or are permitted to pledge
				collateral acceptable to the Department for the purpose of providing a fund to
				satisfy certain specific creditors in the event of a failure.
b) Collateral shall be made payable to the
				Illinois Department of Agriculture, Director, as Trustee. The collateral shall
				be kept in the custody of the Director. Only Certificates of Deposit issued by
				financial institutions that are members of the Federal Deposit Insurance
				Corporation or the Federal Savings and Loan Insurance Corporation will be
				accepted by the Department as collateral security. Letters of Credit shall be
				in accordance with Article V of the Uniform Commercial Code [810 ILCS 5 /Art.
				V]. Notice of request for cancellation and return of the collateral shall be
				sent by the licensee/registrant by certified mail to the Director, Illinois
				Department of Agriculture, P.O. Box 19281, Springfield, Illinois 62794-9281.
				The notice shall contain the name and address of the principal, the amount of
				the collateral and reason for requesting the return of the
				collateral.
c) In the event the
				amount of the collateral is changed, the licensee/registrant shall submit new
				collateral acceptable to the Department. The date the new collateral is to be
				effective shall be set by the Department and any liability accruing under the
				prior collateral will be transferred to the new collateral. The effective date
				of the new collateral shall be set whereby there is no lapse of time that
				claimants are not protected by pledged security. The Department will release
				the original collateral upon receipt of the new collateral.
d) The financial institution shall pay
				directly to the purchaser that amount of interest that will enable the
				Certificate of Deposit to be withdrawn at full face value at any time. In the
				event the business fails, the Trustee shall liquidate the Certificate of
				Deposit and any interest accrued will be paid to the Trustee. When the Trustee
				liquidates the Certificate of Deposit, the financial institution will be
				notified in writing of such action by certified or registered mail or by
				personal demand by an authorized representative of the Department.
e) In the event of a failure of any licensee
				or registrant and where the Department's investigation reveals claims against
				the collateral, the Department of Agriculture shall liquidate the collateral to
				the extent necessary to satisfy claimants. The Department shall establish and
				deposit funds received from a liquidated collateral into an interest-bearing
				trust account in a federally insured financial institution until payment to
				claimants is made. The funds in a trust account shall be paid to claimants with
				valid claims by check written by the Department. An accounting of the funds
				which are deposited in the trust account shall be maintained by the Department
				on a separate accounting record for each trust account, identifiable as to the
				source of such funds, and any accrued interest shall be prorated among the
				identified funds in amounts equal to the same percentage as each identified
				fund is to the total trust account. Accrued interest from funds in a trust
				account shall be available for payment of valid claims. In determining the type
				of account in which to deposit trust funds, the Department shall consider
				interest rates, the anticipated period of time before payment to claimants with
				valid claims will be made, maturity dates and any other factors which could
				affect the maximization of funds for the benefit of claimants. Reports shall be
				made to the Comptroller of funds held in such accounts in accordance with the
				State Comptroller Act. When requested, the Trustee will provide a breakdown of
				how the trust account was distributed.
f) In the event of a failure of a
				licensee/registrant and where the Department's investigation reveals no valid
				claims against the collateral, the procedure as set forth in Section
				3.140
				shall be followed.