Rhode Island General Laws 10-21-16. Use or transfer of receivership property not in the ordinary course of business
(a) In this section, “good faith” means honesty in fact and the observance of reasonable commercial standards of fair dealing.
Terms Used In Rhode Island General Laws 10-21-16
- Court: means the superior court. See Rhode Island General Laws 10-21-2
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Lien: A claim against real or personal property in satisfaction of a debt.
- Lien: means an interest in property which secures payment or performance of an obligation. See Rhode Island General Laws 10-21-2
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: means an individual, estate, partnership, association, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal entity. See Rhode Island General Laws 10-21-2
- Proceeds: means the following property:
(i) Whatever is acquired on the sale, lease, license, exchange, or other disposition of receivership property;
(ii) Whatever is collected on, or distributed on account of, receivership property;
(iii) Rights arising out of receivership property;
(iv) To the extent of the value of receivership property, claims arising out of the loss, nonconformity, or interference with the use of, defects or infringement of rights in, or damage to the property; or
(v) To the extent of the value of receivership property and to the extent payable to the owner or secured party, insurance payable by reason of the loss or nonconformity of, defects or infringement of rights in, or damage to the property. See Rhode Island General Laws 10-21-2
- Property: means all of a person's right, title, and interest, both legal and equitable, in real and personal property, tangible and intangible, wherever located and however acquired. See Rhode Island General Laws 10-21-2
- Receiver: means a person appointed by the court as the court's agent, and subject to the court's direction, to take possession of, manage, and, if authorized by this chapter or court order, transfer, sell, lease, license, exchange, collect, or otherwise dispose of receivership property. See Rhode Island General Laws 10-21-2
- Receivership: means a proceeding in which a receiver is appointed. See Rhode Island General Laws 10-21-2
- Receivership property: means the property of an owner which is described in the order appointing a receiver or a subsequent order. See Rhode Island General Laws 10-21-2
(b) With court approval, a receiver may use receivership property other than in the ordinary course of business.
(c) With court approval, a receiver may transfer receivership property other than in the ordinary course of business by sale, lease, license, exchange, or other disposition. Unless the agreement of sale provides otherwise, a sale under this section is free and clear of a lien of the person that obtained appointment of the receiver, any subordinate lien, and any right of redemption. However, unless the holder of a senior lien consents, such a sale:
(1) Is subject to the senior lien and to the rights and remedies of the holder of the senior lien under law other than this chapter; and
(2) Does not affect the obligation secured by the senior lien.
(d) A lien on receivership property which is extinguished by a transfer under subsection (c) of this section attaches to the proceeds of the transfer with the same validity, perfection, and priority the lien had on the property immediately before the transfer, even if the proceeds are not sufficient to satisfy all obligations secured by the lien.
(e) A transfer under subsection (c) of this section may occur by means other than a public auction sale. A creditor holding a valid lien on the property to be transferred may purchase the property and offset against the purchase price part or all of the allowed amount secured by the lien, if the creditor tenders funds sufficient to satisfy in full the reasonable expenses of transfer and the obligation secured by any senior lien extinguished by the transfer.
(f) A reversal or modification of an order approving a transfer under subsection (c) of this section does not affect the validity of the transfer to a person that acquired the property in good faith or revive against the person any lien extinguished by the transfer, whether or not the person knew before the transfer of the request for reversal or modification, unless the court stayed the order before the transfer.
History of Section.
P.L. 2022, ch. 107, § 1, effective June 20, 2022; P.L. 2022, ch. 108, § 1, effective June 20, 2022.