Wisconsin Statutes 16.63 – Sale of state’s rights to tobacco settlement agreement payments
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Terms Used In Wisconsin Statutes 16.63
- Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
- Contract: A legal written agreement that becomes binding when signed.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Following: when used by way of reference to any statute section, means the section next following that in which the reference is made. See Wisconsin Statutes 990.01
- Joint committee: Committees including membership from both houses of teh legislature. Joint committees are usually established with narrow jurisdictions and normally lack authority to report legislation.
- Lien: A claim against real or personal property in satisfaction of a debt.
- 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: includes all partnerships, associations and bodies politic or corporate. See Wisconsin Statutes 990.01
- Plaintiff: The person who files the complaint in a civil lawsuit.
- Property: includes real and personal property. See Wisconsin Statutes 990.01
- Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
- State: when applied to states of the United States, includes the District of Columbia, the commonwealth of Puerto Rico and the several territories organized by Congress. See Wisconsin Statutes 990.01
- Year: means a calendar year, unless otherwise expressed; "year" alone means "year of our Lord". See Wisconsin Statutes 990.01
(1) In this section:
(a) “Purchaser” means any person who has purchased the state‘s right to receive any of the payments under the tobacco settlement agreement.
(b) “Tobacco settlement agreement” means the Attorneys General Master Tobacco Settlement Agreement of November 23, 1998.
(c) “Tobacco settlement revenues” means the right to receive settlement payments arising from or pursuant to the tobacco settlement agreement and all direct or indirect proceeds of that right.
(2) Before July 1, 2009, the secretary may sell for cash or other consideration the state’s right to receive any of the payments under the tobacco settlement agreement.
(3) The secretary may organize one or more nonstock corporations under ch. 181 or limited liability companies under ch. 183 for any purpose related to the sale of the state’s right to receive any of the payments under the tobacco settlement agreement and may take any action necessary to facilitate and complete the sale.
(3m)
(a) If the secretary sells the state’s right to receive any of the payments under the tobacco settlement agreement, the secretary shall require, as a condition of the sale, that the purchaser notify the secretary if any bonds or other obligations are issued that are secured by any of the payments and provide the secretary with all information on the distribution of the bond or obligation proceeds.
(b) The secretary shall submit a report to the joint committee on finance that includes all of the information provided to the secretary by the purchaser under par. (a).
(4)
(a) Tobacco settlement revenues may not be considered proceeds of any property that is not tobacco settlement revenues.
(b) Except as otherwise provided in this subsection, the creation, perfection, and enforcement of security interests in tobacco settlement revenues are governed by ch. 409. Notwithstanding ch. 409, with regard to creating, perfecting, and enforcing a valid security interest in tobacco settlement revenues:
1. If this state or the Wisconsin Health and Educational Facilities Authority is the debtor in the transaction, the proper place to file the required financing statement to perfect the security interest is the department of financial institutions.
2. The required financing statement shall include a description of collateral that describes the collateral as general intangibles consisting of the right to receive settlement payments arising from or pursuant to the tobacco settlement agreement and all proceeds of that right. The required financing statement may include any additional description of collateral that is legally sufficient under the laws of this state.
3. The tobacco settlement revenues are general intangibles for purposes of ch. 409.
4. A security interest perfected under this paragraph is enforceable against the debtor, any assignee or grantee, and all 3rd parties, including creditors under any lien obtained by judicial proceedings, subject only to the rights of any 3rd parties holding security interests in the tobacco settlement revenues previously perfected under this paragraph. Unless the applicable security agreement provides otherwise, a perfected security interest in the tobacco settlement revenues is a continuously perfected security interest in all tobacco settlement revenues existing on the date of the agreement or arising after the date of the agreement. A security interest perfected under this paragraph has priority over any other lien created by operation of law or otherwise, which subsequently attaches to the tobacco settlement revenues.
5. The priority of a security interest created under this paragraph is not affected by the commingling of proceeds arising from the tobacco settlement revenues with other amounts.
(c) The sale, assignment, and transfer of tobacco settlement revenues are governed by this paragraph. All of the following apply to a sale, assignment, or transfer under this paragraph:
1. The sale, assignment, or transfer is an absolute transfer of, and not a pledge of or secured transaction relating to, the seller’s right, title, and interest in, to, and under the tobacco settlement revenues, if the documents governing the transaction expressly state that the transaction is a sale or other absolute transfer. After such a transaction, the tobacco settlement revenues are not subject to any claims of the seller or the seller’s creditors, other than creditors holding a prior security interest in the tobacco settlement revenues perfected under par. (b).
2. The characterization of the sale, assignment, or transfer as an absolute transfer under subd. 1. and the corresponding characterization of the purchaser’s property interest is not affected by any of the following factors:
a. Commingling of amounts arising with respect to the tobacco settlement revenues with other amounts.
b. The retention by the seller of a partial or residual interest, including an equity interest, in the tobacco settlement revenues, whether direct or indirect, or whether subordinate or otherwise.
c. The sale, assignment, or transfer of only a portion of the tobacco settlement revenues or an undivided interest in the tobacco settlement revenues.
d. Any recourse that the purchaser or its assignees may have against the seller.
e. Whether the seller is responsible for collecting payments due under the tobacco settlement revenues or for otherwise enforcing any of the tobacco settlement revenues or retains legal title to the tobacco settlement revenues for the purpose of these collection activities.
f. The treatment of the sale, assignment, or transfer for tax purposes.
3. The sale, assignment, or transfer is perfected automatically as against 3rd parties, including any 3rd parties with liens created by operation of law or otherwise, upon attachment under ch. 409.
4. Nothing in this subsection precludes consideration of the factors listed in subd. 2. a. to e. in determining whether the sale, assignment, or transfer is a sale for tax purposes. The characterization of the sale, assignment, or transfer as an absolute transfer under subd. 1. may not be considered in determining whether the sale, assignment, or transfer is a sale for tax purposes.
(5) If the secretary sells the state’s right to receive any of the payments under the tobacco settlement agreement, the state pledges to and agrees with any purchaser or subsequent transferee of the state’s right to receive any of the payments under the tobacco settlement agreement that the state will not limit or alter its powers to fulfill the terms of the tobacco settlement agreement, nor will the state in any way impair the rights and remedies provided under the tobacco settlement agreement. The state also pledges to and agrees with any purchaser or subsequent transferee of the state’s right to receive any of the payments under the tobacco settlement agreement that the state will pay all costs and expenses in connection with any action or proceeding brought by or on behalf of the purchaser or any subsequent transferee related to the state’s not fulfilling the terms of the tobacco settlement agreement. The secretary may include this pledge and agreement of the state in any contract that is entered into by the secretary under this section.
(6) If the secretary sells the state’s right to receive any of the payments under the tobacco settlement agreement, the state pledges to and agrees with any purchaser or subsequent transferee of the state’s right to receive any of the payments under the tobacco settlement agreement that the state will not limit or alter the powers of the secretary under this section until any contract that is entered into under this section is fully performed, unless adequate provision is made by law for the protection of the rights and remedies of the purchaser or any subsequent transferee under the contract. The secretary may include this pledge and agreement of the state in any contract that is entered into by the secretary under this section.
(8) This subsection and subs. (8m) and (9) shall govern all civil claims, suits, proceedings, and actions brought against the state relating to the sale of the state’s right to receive any of the payments under the tobacco settlement agreement. If the state fails to comply with this section or the terms of any agreement relating to the sale of the state’s right to receive any of the payments under the tobacco settlement agreement, an action to compel compliance may be commenced against the state.
(8m) If the recovery of a money judgment against the state is necessary to give the plaintiff in an action under sub. (8) complete relief, a claim for the money damages may be joined with the claim commenced under sub. (8).
(9) Sections 16.007, 16.53, and 775.01 do not apply to claims against the state under sub. (8) or (8m). If there is a final judgment against the state in such an action, the judgment shall be paid as provided in s. 775.04 together with interest at the rate of 10 percent per year from the date such payment was judged to have been due until the date of payment of the judgment.