Senate File 2213 - Introduced SENATE FILE 2213 BY SWEENEY A BILL FOR An Act providing for an assignment of assets for the benefit of 1 creditors, exempting the related tax on the transfer of real 2 estate, and including effective date provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5531XS (4) 91 da/jh

S.F. 2213 DIVISION I 1 PRINCIPAL PROVISIONS 2 Section 1. NEW SECTION . 681A.1 Title. 3 This chapter may be cited as the “Uniform Assignment for 4 Benefit of Creditors Act” . 5 Sec. 2. NEW SECTION . 681A.2 Definitions. 6 As used in this chapter, unless the context otherwise 7 requires: 8 1. “Affiliate” means any of the following: 9 a. A person that directly or indirectly owns, controls, 10 or holds, with power to vote, twenty percent or more of the 11 outstanding voting interests of another person, other than a 12 person that holds the interests as any of the following: 13 (1) In a fiduciary or agency capacity without sole 14 discretionary power to vote the interests. 15 (2) Solely to secure a debt, if the person has not in fact 16 exercised the power to vote. 17 b. A person with twenty percent or more of the person’s 18 outstanding voting interests directly or indirectly owned, 19 controlled, or held, with power to vote, by another person. 20 c. A person whose business is operated under a lease 21 or operating agreement by another person, or a person 22 substantially all of whose assets are controlled by the other 23 person. 24 d. A person that operates the business or substantially 25 all the assets of another person under a lease or operating 26 agreement. 27 2. a. “Asset” means a legal or equitable interest in 28 property of an assignor, regardless of the person holding or in 29 possession, custody, or control of the property or where the 30 property is located. 31 b. “Asset” does not include any of the following: 32 (1) A legal or equitable interest in property restricted 33 from assignment if the restriction is effective under other 34 law, unless the other law permits assignment with the consent 35 -1- LSB 5531XS (4) 91 da/jh 1/ 30

S.F. 2213 of another person and the person consents to the assignment in 1 a manner permitted by the other law. 2 (2) If the assignor is an individual, a legal or equitable 3 interest in property to the extent it is exempt from legal 4 process under other law. 5 3. “Assigned asset” means an asset transferred under an 6 assignment. 7 4. “Assignee” means a person to which assets are transferred 8 under an assignment. 9 5. “Assignment” means a transfer by a person of all the 10 person’s assets to another person for the benefit of the 11 transferor’s creditors. 12 6. “Assignment agreement” means an agreement that transfers 13 or provides for a transfer of all the assignor’s assets. 14 7. “Assignment estate” means the assets held at a given time 15 by the assignee under an assignment. 16 8. “Assignor” means a person whose assets are transferred 17 under an assignment. 18 9. “Claim” means a creditor’s right to payment or to an 19 equitable remedy, regardless of whether the right is reduced to 20 judgment, liquidated, unliquidated, fixed, contingent, matured, 21 unmatured, disputed, undisputed, legal, equitable, secured, or 22 unsecured. 23 10. “Cohabitant” means each of two individuals not married 24 to each other who live together as a couple after each has 25 reached the age of majority or been emancipated. 26 11. “Creditor” means a person that has a claim against an 27 assigned asset or the assignor. 28 12. “Electronic” means relating to technology having 29 electrical, digital, magnetic, wireless, optical, 30 electromagnetic, or similar capabilities. 31 13. “Good faith” means honesty in fact and the observance of 32 reasonable commercial standards of fair dealing. 33 14. “Insider” includes any of the following: 34 a. In the case of an individual, any of the following: 35 -2- LSB 5531XS (4) 91 da/jh 2/ 30

S.F. 2213 (1) A relative of the individual. 1 (2) A partnership or limited liability company in which the 2 individual is a general partner or managing member. 3 (3) An organization of which the individual is a director, 4 officer, or person in control. 5 b. In the case of an organization, any of the following: 6 (1) A director, officer, manager, or other person in control 7 of or with controlling equity interest in the organization. 8 (2) A partnership or limited liability company in which the 9 organization is a general partner or managing member. 10 (3) A general partner or managing member of the 11 organization. 12 (4) A relative of a general partner, managing member, 13 director, officer, manager, or other person in control of or 14 with controlling equity interest in the organization. 15 c. An affiliate. 16 d. A managing agent of an organization. 17 15. “Lien” means an interest in an asset that secures 18 payment or performance of an obligation. 19 16. “Organization” means a person other than an individual. 20 17. “Perfected lien” means a lien on any of the following: 21 a. Real property other than fixtures on which a bona fide 22 purchaser of the property cannot acquire an interest superior 23 to the interest of the lienholder. 24 b. Fixtures or property other than real property on which a 25 creditor cannot acquire a lien by attachment, levy, or the like 26 that is superior to the interest of the lienholder. 27 18. a. “Person” means an individual, estate, business 28 or nonprofit entity, government or governmental subdivision, 29 agency, or instrumentality, or other legal entity. 30 b. “Person” includes a protected series, however 31 denominated, of an entity if the protected series is 32 established under law that limits, or limits if conditions 33 specified under law are satisfied, the ability of a creditor 34 of the entity or of any other protected series of the entity to 35 -3- LSB 5531XS (4) 91 da/jh 3/ 30

S.F. 2213 satisfy a claim from assets of the protected series. 1 19. “Proof of claim” means a record a creditor submits to an 2 assignee to evidence the creditor’s claim. 3 20. “Record” means information that is any of the following: 4 a. Inscribed on a tangible medium. 5 b. Stored in an electronic or other medium and retrievable 6 in perceivable form. 7 21. “ Relative” means an individual related by affinity or 8 consanguinity within the third degree or a cohabitant. 9 22. “Security interest” means a lien created by an 10 agreement. 11 23. “Send” , in connection with a record or notification, 12 means any of the following: 13 a. To deposit in the mail, deliver for transmission, or 14 transmit by any other usual means of communication, with 15 postage or cost of transmission provided for, addressed to any 16 address reasonable under the circumstances. 17 b. To cause the record or notification to be received within 18 the time it would have been received if properly sent under 19 paragraph “a” . 20 24. “Sign” means, with present intent to authenticate or 21 adopt a record by doing any of the following: 22 a. To execute or adopt a tangible symbol. 23 b. To attach to or logically associate with the record an 24 electronic symbol, sound, or process. 25 25. a. “State” means a state of the United States, the 26 District of Columbia, Puerto Rico, the United States Virgin 27 Islands, or any other territory or possession subject to the 28 jurisdiction of the United States. 29 b. “State” includes a federally recognized Indian tribe. 30 26. “Transfer” means disposing of or parting with an 31 asset or with an interest in an asset, regardless of whether 32 the disposition or parting is indirect, conditional, or 33 involuntary. 34 Sec. 3. NEW SECTION . 681A.3 Scope. 35 -4- LSB 5531XS (4) 91 da/jh 4/ 30

S.F. 2213 This chapter applies to an assignment made by an assignor 1 that is any of the following: 2 1. An organization whose principal place of business is in 3 this state. 4 2. An organization whose internal affairs are governed by 5 other law of this state. 6 3. An individual whose principal residence is in this state. 7 4. An organization wholly owned, directly or indirectly, by 8 an assignor that satisfies subsection 1, 2, or 3. 9 5. An organization, if all of the following apply: 10 a. It is partly owned, directly or indirectly, and 11 controlled by an assignor that satisfies subsection 1, 2, or 3. 12 b. It has no place of business or employees. 13 c. It relies on the services the organization receives from 14 an assignor that satisfies subsection 1, 2, or 3. 15 Sec. 4. NEW SECTION . 681A.4 Requirements for assignee and 16 assignment agreement. 17 1. An assignee must be all of the following: 18 a. A person that is not a creditor, affiliate, or insider of 19 the assignor. 20 b. A person that is not an affiliate or insider of a 21 creditor of the assignor. 22 c. A person that does not have a claim against the 23 assignment estate, other than a claim for fees and expenses to 24 be paid under the assignment agreement. 25 d. A person that does not have a material financial interest 26 in the outcome of the assignment, other than a claim for fees 27 and expenses to be paid under the assignment agreement. 28 e. A person that does not hold an equity interest in the 29 assignor other than a noncontrolling interest in a publicly 30 traded company. 31 f. A person that is not an affiliate of a person that fails 32 to satisfy paragraph “a” , “b” , “c” , “d” , or “e” . 33 2. A person that satisfies subsection 1 is not precluded 34 from being an assignee merely because the person performed 35 -5- LSB 5531XS (4) 91 da/jh 5/ 30

S.F. 2213 services for the assignor before the assignment. 1 3. An assignment agreement must be in a record signed by 2 the assignor and the assignee. The record must do all of the 3 following: 4 a. State the name and address of the assignor and of the 5 assignee. 6 b. Transfer or provide for a transfer of all the assignor’s 7 assets. 8 c. Describe the assigned assets in sufficient detail to 9 identify the assets. 10 d. Provide for the distribution of the assignment estate. 11 e. Describe the fees to be charged by the assignee in 12 connection with the assignment, including the basis on which 13 they are to be calculated. 14 f. Include a representation by the assignor, under penalty 15 of perjury, that the assignor is assigning all the assignor’s 16 assets. 17 4. If an assignee relies in good faith on the assignor’s 18 representation made under subsection 3, paragraph “f” , all 19 the assignor’s assets are deemed to be assigned, even if the 20 representation is inaccurate. 21 Sec. 5. NEW SECTION . 681A.5 Effect of assignment —— when 22 assignment agreement effective. 23 1. An assignee obtains the rights, title, and interests of 24 the assignor in the assigned assets. 25 2. If the assignor is an organization, an assignee obtains 26 the rights, title, and interests of the assignor in assets 27 acquired after the assignment. 28 3. Except as provided in section 681A.10, subsection 2, 29 paragraph “l” , an assignee takes each assigned asset subject to 30 an existing interest in the asset held by another person. 31 4. An assignee holds the assigned assets subject to the 32 assignee’s duties under section 681A.9. 33 5. An assignment is subject to other law under which the 34 assignment may be fraudulent or otherwise voidable. 35 -6- LSB 5531XS (4) 91 da/jh 6/ 30

S.F. 2213 6. The effective date of an assignment agreement is the 1 date the agreement is signed by the last party to the agreement 2 that is required to sign the agreement unless a later date is 3 identified in the agreement as the effective date. 4 Sec. 6. NEW SECTION . 681A.6 Filing, recording, and title 5 transfer requirements. 6 1. In this section, “financing statement” has the same 7 meaning as defined in section 554.9102, subsection 1. 8 2. An assignee of a legal or equitable interest in personal 9 property may file a financing statement in the filing office 10 of any of the following: 11 a. This state established for purposes of section 554.9501, 12 subsection 1, paragraph “b” . 13 b. Any other state in which any of the following apply: 14 (1) The assignor would be located under section 554.9307 if 15 the assignor were a debtor for the purpose of that section. 16 (2) An asset of the assignment estate may be located. 17 3. A financing statement filed under subsection 2 must 18 indicate that it is filed in connection with an assignment. 19 4. When filing a financing statement under subsection 2, the 20 assignee must do any of the following: 21 a. Attach a copy of the assignment agreement to the 22 financing statement. 23 b. State on the financing statement that a copy of the 24 assignment agreement is available on request to the assignee. 25 5. A financing statement filed under subsection 2 may do any 26 of the following: 27 a. Designate the assignor as “debtor” and the assignee as 28 “secured party”. 29 b. Use the terms “assignor” and “assignee” or words of 30 similar import. 31 6. The filing of a financing statement under subsection 2 is 32 not itself a factor in determining whether an asset secures an 33 obligation. The rights of the assignee under the assignment 34 are not affected if the assignee does not file a financing 35 -7- LSB 5531XS (4) 91 da/jh 7/ 30

S.F. 2213 statement under subsection 2. 1 7. An assignee of a legal or equitable interest in real 2 property shall record the assignment of the interest or notice 3 of the assignment under the real estate recording law of the 4 jurisdiction where the property is located. 5 8. An assignee shall comply with other law governing the 6 transfer of title to an asset. 7 9. By signing an assignment agreement, the assignor 8 authorizes the assignee to take the actions required by this 9 section. 10 Sec. 7. NEW SECTION . 681A.7 Notification to creditors. 11 1. Unless a creditor waives in a signed record the right 12 to notification, an assignee shall send a notification of the 13 assignment to each creditor known to the assignee within a 14 reasonable time not to exceed thirty days after the effective 15 date of the assignment agreement. 16 2. The notification must satisfy all of the following 17 requirements: 18 a. Be in a record signed by the assignee. 19 b. Include the assignee’s name, address, and other contact 20 information reasonably necessary to communicate with the 21 assignee. 22 c. Provide reasonable instructions for submitting a proof 23 of claim using the method established by the assignee under 24 section 681A.9, subsection 2, paragraph “e” . 25 d. Identify the date established under section 681A.9, 26 subsection 2, paragraph “f” , by which each creditor whose claim 27 is not otherwise allowed without a timely proof of claim under 28 this chapter must submit a proof of claim. 29 3. An assignee shall use reasonable means to provide the 30 information in subsection 2 to unknown creditors, including 31 by any means the assignor regularly used to do any of the 32 following: 33 a. Provide information to the assignor’s creditors. 34 b. Communicate information about the assignor, other than 35 -8- LSB 5531XS (4) 91 da/jh 8/ 30

S.F. 2213 advertising, to the public. 1 Sec. 8. NEW SECTION . 681A.8 Duties of assignor. 2 1. Subject to section 681A.23, an assignor has a duty 3 to take all reasonable actions necessary for the assignee 4 to administer the assignment, the assigned assets, and the 5 assignment estate. 6 2. In furtherance of the duty under subsection 1, the 7 assignor shall do all of the following: 8 a. Preserve and turn over to the assignee the assigned 9 assets in the assignor’s possession or control. 10 b. Provide to the assignee information reasonably necessary 11 to administer the assignment, the assigned assets, and the 12 assignment estate. 13 c. Sign any record reasonably necessary to transfer an 14 assigned asset and comply with any notarization required under 15 other law. 16 d. Designate, and provide the assignee with the name, 17 address, and other contact information reasonably necessary to 18 communicate with, an appropriate person willing and able to 19 act as a representative on behalf of the assignor as may be 20 reasonably necessary to administer the assignment, the assigned 21 assets, and the assignment estate. 22 e. If the assignment includes a legal or equitable interest 23 in real property or titled personal property, cooperate with 24 the assignee in taking actions under section 681A.6. 25 f. On or as soon as practicable after the effective date of 26 the assignment agreement, provide the assignee with all of the 27 following: 28 (1) A list of all assets. 29 (2) A list of all the assignor’s employees, including 30 those whose employment is terminated in connection with the 31 assignment. 32 (3) A list of all the assignor’s known creditors, including, 33 for each creditor, the creditor’s address and other contact 34 information reasonably necessary to communicate with the 35 -9- LSB 5531XS (4) 91 da/jh 9/ 30

S.F. 2213 creditor. 1 g. A verification under penalty of perjury the accuracy of 2 the lists required under paragraph “f” . 3 h. With respect to a legal or equitable interest in property 4 restricted from assignment, cooperate with the assignee to 5 obtain consent from a person whose consent to assign the 6 interest is necessary under other law. 7 i. Provide assistance to the assignee as required by the 8 assignment agreement. 9 3. The duties in this section also apply to a representative 10 designated under subsection 2, paragraph “d” . 11 Sec. 9. NEW SECTION . 681A.9 Duties of assignee. 12 1. Subject to section 681A.23, an assignee has a fiduciary 13 duty to the assignment estate for the benefit of creditors to 14 do all of the following: 15 a. Provide a duty of loyalty, including the duty to manage 16 the assignment in good faith. 17 b. Use reasonable care to maximize distributions under 18 section 681A.15. 19 c. Wind up the assignment under section 681A.19 in a manner 20 compatible with the best interests of the assignment estate and 21 creditors. 22 2. Without limitation on the duties under subsection 1, and 23 subject to section 681A.23, the assignee also has a duty to do 24 all of the following: 25 a. Maintain a separate deposit account for funds related to 26 the assignment. 27 b. Collect on or dispose of each assigned asset, unless 28 the assignee determines it is more economically efficient to 29 abandon the asset. 30 c. Prepare and retain appropriate business records, 31 including a record of each receipt, disbursement, and 32 collection on or disposition of an assigned asset. 33 d. Pay administrative expenses of the assignment estate, to 34 the extent the assignment estate has sufficient unencumbered 35 -10- LSB 5531XS (4) 91 da/jh 10/ 30

S.F. 2213 assets. 1 e. Establish a method that is reasonably designed to permit 2 a creditor to submit a proof of claim. 3 f. Establish a single date by which creditors whose claims 4 are not otherwise allowed without timely proofs of claim under 5 this chapter must submit proofs of claim, which must be one 6 hundred twenty days after the effective date of the assignment 7 agreement. 8 g. Unless a claim would receive minimal or no distribution 9 without regard to the claim’s validity or asserted priority, 10 examine the validity and priority of claims against the 11 assignment estate and, if necessary, consult with the 12 representative designated by the assignor under section 681A.8, 13 subsection 2, paragraph “d” . 14 h. At least every six months, provide to each creditor 15 a summary of the assets, liabilities, and expenses of the 16 assignment estate. 17 i. Comply with all requirements of the United States 18 internal revenue service and state and local taxing 19 authorities. 20 j. Send a notification to each creditor of the assignee’s 21 compensation and any change in the method of determining 22 the assignee’s compensation from the method provided in the 23 assignment agreement. 24 k. Send a final accounting under section 681A.19, subsection 25 1. 26 l. Comply with the other requirements imposed on the 27 assignee under this chapter. 28 Sec. 10. NEW SECTION . 681A.10 Powers of assignee. 29 1. An assignee has the powers necessary or appropriate to 30 perform the assignee’s duties. 31 2. Unless the assignment agreement expressly provides 32 otherwise, the assignee has power to do any of the following: 33 a. Operate an existing business that uses an assigned asset, 34 including preservation of the asset and collection on, or the 35 -11- LSB 5531XS (4) 91 da/jh 11/ 30

S.F. 2213 sale, lease, license, or other disposition of, the asset. 1 b. Incur secured or unsecured debt and pay expenses 2 incidental to the exercise of the power under subsection 1. 3 c. Assert a right, claim, cause of action, or defense the 4 assignor could have asserted that relates to the assignment 5 estate. 6 d. Engage professionals, including a professional previously 7 engaged by the assignor, to give advice, to prosecute or defend 8 litigation, or for other purposes as the assignee considers 9 appropriate, and pay professionals reasonable fees for services 10 from the assignment estate. 11 e. Collect on, or sell, lease, license, or otherwise dispose 12 of, an asset of the assignment estate regardless of whether the 13 asset is subject to a lien or other encumbrance. 14 f. Exercise a right to redeem an asset of the assignment 15 estate that is subject to a mortgage, deed of trust, security 16 interest, or other encumbrance. 17 g. Settle a matter involving a debtor of the assignor. 18 h. Prosecute or defend a litigation pending on the effective 19 date of the assignment agreement in favor of or against the 20 assignor in the manner and with the same effect as the assignor 21 could have done if the assignment had not been made. 22 i. Recover an asset in the manner and with the same effect 23 as the assignor could have done if the assignment had not been 24 made. 25 j. Settle claims against the assignment estate. 26 k. Abandon an assigned asset. 27 l. Subject to subsections 3 and 5, avoid a transfer or the 28 incurrence of an obligation which a creditor that has filed 29 a proof of claim could have avoided under other law if the 30 assignment had not been made. 31 m. Invest funds, subject to applicable prudent investor 32 standards under other law. 33 3. The power under subsection 2, paragraph “1” , is exclusive 34 to the assignee with respect to a creditor that submits a proof 35 -12- LSB 5531XS (4) 91 da/jh 12/ 30

S.F. 2213 of claim. A recovery by the assignee in the exercise of this 1 power must be for the benefit of the assignment estate but may 2 not exceed the amount, asset, or other value the creditor could 3 have obtained by the avoidance. 4 4. For the purpose of exercising the assignee’s power under 5 subsection 2, paragraph “1” , exercising a voidable-transaction 6 remedy, or otherwise establishing the priority of the 7 assignee’s interest, an assignee has a lien on the assignment 8 estate and the status of all of the following: 9 a. A lien creditor under section 554.9102, subsection 1, 10 paragraph “be” , subparagraph (2), as to an asset that is a legal 11 or equitable interest in personal property or fixtures. 12 b. A bona fide purchaser as to an asset that is a legal 13 or equitable interest in real property, other than fixtures, 14 located in this state. 15 c. A bona fide purchaser under the law of another state 16 as to an asset that is a legal or equitable interest in real 17 property, other than fixtures, located in the other state. 18 5. An assignee’s power under subsection 2, paragraph 19 “1” , to avoid a transfer made before the effective date of 20 the assignment agreement, under or in connection with a swap 21 agreement, securities contract, commodity contract, forward 22 contract, repurchase agreement, or master netting agreement, 23 is limited to the extent a trustee would not have the power to 24 avoid the transfer under the federal bankruptcy code, 11 U.S.C. 25 §101 et seq., as amended. 26 6. An assignee shall exercise the powers under this section 27 consistent with the assignee’s fiduciary duty under section 28 681A.9, subsection 1. 29 Sec. 11. NEW SECTION . 681A.11 Allowed claim. 30 1. An assignee shall allow a creditor’s claim if all of the 31 following apply: 32 a. The creditor submits a proof of claim in compliance with 33 section 681A.13. 34 b. The assignee does not dispute the claim under section 35 -13- LSB 5531XS (4) 91 da/jh 13/ 30

S.F. 2213 681A.12 before final distribution. 1 2. An assignee may do any of the following: 2 a. Allow a claim, pay a known liquidated claim, or accept 3 a notice to the assignee of a claim received by the date 4 established by the assignee under section 681A.9, subsection 2, 5 paragraph “f” , even if the creditor does not submit a proof of 6 claim. 7 b. Allow and pay a claim evidenced by a late-filed proof of 8 claim, if the assignee determines there is a reasonable basis 9 for excusing the late filing. 10 3. Any unsecured portion of an allowed claim shall be valued 11 as of the effective date of the assignment agreement. 12 4. A creditor’s claim is allowed if the creditor succeeds in 13 a dispute under section 681A.12, subsection 2. 14 5. Subject to subsection 6, after expiration of the time 15 for submitting a proof of claim, the assignee shall create a 16 complete list of creditors that have submitted a proof of claim 17 in compliance with section 681A.13. For each creditor’s claim, 18 the list must state all of the following: 19 a. The amount of the claim, if the amount is known to the 20 assignee. 21 b. Whether the claim is secured or unsecured and, if 22 secured, describe the collateral for the claim. 23 6. If a class of creditors will receive no distribution on 24 account of allowed claims, the assignee shall send a notice 25 in a record to each creditor in that class that the creditor 26 will receive no distribution instead of the list required in 27 subsection 5. 28 7. If requested by a creditor or other party with an 29 interest in the assignment estate, the assignee shall provide 30 the list created under subsection 5 to the person making the 31 request to the extent permitted by privacy laws and subject 32 to any privacy safeguards the assignee determines in the 33 assignee’s business judgment are reasonably necessary. 34 Sec. 12. NEW SECTION . 681A.12 Disputed and disallowed 35 -14- LSB 5531XS (4) 91 da/jh 14/ 30

S.F. 2213 claims. 1 1. An assignee may dispute a creditor’s claim before final 2 distribution by sending notification in a record stating the 3 nature of the assignee’s dispute to the creditor. 4 2. If a dispute cannot be resolved consensually, the 5 assignee may commence a proceeding under section 681A.21 to 6 disallow the claim. The assignee must commence the proceeding 7 before final distribution under section 681A.15. If the 8 proceeding is not filed before final distribution, the assignee 9 shall allow the claim under section 681A.11. 10 3. An assignee shall create a dollar-for-dollar reserve 11 for the estimated amount of the potential distribution on a 12 disputed claim. 13 4. Subject to subsection 2, an assignee shall disallow a 14 claim for reimbursement or contribution of a person that is 15 liable with the assignor on, or that has secured, the claim, 16 to the extent: 17 a. The claim against the assignment estate is disallowed. 18 b. The claim for reimbursement or contribution is contingent 19 as of the time of allowance or disallowance. 20 c. The person asserts a right of subrogation to the rights 21 of a creditor. 22 5. A claim for reimbursement or contribution of a person 23 liable with the assignor on, or that has secured, the claim 24 that becomes fixed after the effective date of the assignment 25 agreement shall be determined, and shall be allowed or 26 disallowed, subject to subsection 2, as if the claim had become 27 fixed before the effective date of the assignment agreement. 28 6. An assignee may reconsider the assignee’s decision 29 to allow or disallow a claim for cause. If a reconsidered 30 claim is allowed under section 681A.11, before the assignee 31 makes additional payments or transfers to other creditors that 32 are equal or junior in priority under section 681A.15 to the 33 reconsidered claim, the creditor with the reconsidered claim 34 shall receive a payment or transfer in an amount proportionate 35 -15- LSB 5531XS (4) 91 da/jh 15/ 30

S.F. 2213 in value to the payments or transfers already received by 1 the other creditors. This subsection does not modify the 2 assignee’s right under other law to recover from a creditor 3 an excess payment or transfer made to the creditor. If a 4 reconsidered claim is disallowed, the assignee shall comply 5 with subsections 2 and 3. 6 Sec. 13. NEW SECTION . 681A.13 Proof of claim. 7 1. A proof of claim must do all of the following: 8 a. State the name, address, and other contact information 9 reasonably necessary to communicate with the creditor. 10 b. State the amount of the claim. 11 c. Briefly state the nature of the claim. 12 d. Identify any asset of the assignment estate securing the 13 claim. 14 e. Be signed by the creditor under penalty of perjury. 15 f. Include a copy of a record, if any, on which the claim is 16 based. 17 g. Be submitted using the method established under section 18 681A.9, subsection 2, paragraph “e” . 19 h. Be submitted by the date established by the assignee 20 under section 681A.9, subsection 2, paragraph “f” . 21 2. A proof of claim submitted in compliance with this 22 section is prima facie evidence of the validity and amount of 23 the claim. 24 3. The submission by a creditor of a proof of claim in 25 compliance with this section constitutes all of the following: 26 a. The creditor’s consent to the jurisdiction of the court 27 under section 681A.21. 28 b. Assignment to the assignee of any right of the creditor 29 to bring a voidable transaction action relating to the 30 creditor’s claim. 31 Sec. 14. NEW SECTION . 681A.14 Rights of transferees. 32 1. An assignee’s disposition of an asset does all of the 33 following: 34 a. Transfers to a transferee for value all of the assignee’s 35 -16- LSB 5531XS (4) 91 da/jh 16/ 30

S.F. 2213 rights in the asset. 1 b. Discharges the assignee’s lien and, to the extent 2 the assignment creates a security interest in favor of the 3 assignee, the assignee’s security interest. 4 c. Discharges any subordinate security interest or other 5 lien subordinate to the assignee’s lien. 6 2. A transferee that acts in good faith takes free of the 7 rights and interests described in subsection 1, even if the 8 assignee fails to comply with this chapter or the requirements 9 of a judicial proceeding. 10 3. If a transferee does not take free of the rights and 11 interests described in subsection 1, the transferee takes the 12 asset subject to all of the following: 13 a. The assignee’s rights in the assets of the assignment 14 estate. 15 b. The assignee’s lien and, if applicable, security 16 interest. 17 c. Any other security interest or other lien. 18 4. Unless otherwise provided in a record, any warranty 19 arising by operation of other law is disclaimed to the extent 20 permitted by other law. 21 5. If a subordinate security interest or other lien 22 is discharged under this section, the assignee may file 23 a record with the official or office responsible for 24 maintaining an official filing, recording, registration, or 25 certificate-of-title system covering the asset secured by 26 the security interest or other lien. The record must state 27 that the security interest or other lien is discharged as a 28 subordinate security interest or other lien in connection with 29 a disposition under an assignment for the benefit of creditors 30 of the assignor whose asset is subject to the security interest 31 or other lien. 32 Sec. 15. NEW SECTION . 681A.15 Distributions. 33 1. In this section, “protected secured creditor” means a 34 secured creditor, if all of the following apply to the secured 35 -17- LSB 5531XS (4) 91 da/jh 17/ 30

S.F. 2213 creditor’s lien: 1 a. It is a perfected lien. 2 b. It cannot be avoided by the assignee under section 3 681A.10, subsection 2, paragraph “l” . 4 c. It is not subordinate to the assignee’s lien. 5 2. Except as provided in section 681A.16, the assignee shall 6 pay claims from the assignment estate allowed under section 7 681A.11 in the order of priority stated in this section. 8 3. Unless otherwise agreed between the assignee and 9 a protected secured creditor, before distributions under 10 subsections 4, 5, 6, and 7, and in accordance with the 11 priorities of creditors with liens under other law, the 12 protected secured creditor shall receive the asset or the 13 proceeds from the collection on or disposition of the asset to 14 the extent of the value of the protected secured creditor’s 15 interest in the asset, less the assignee’s reasonable and 16 necessary expenses of preserving or disposing of the asset 17 to the extent the expenses benefit the protected secured 18 creditor and are incurred with the protected secured creditor’s 19 consent or acquiescence. The protected secured creditor has 20 an unsecured claim under subsection 7, paragraph “b” , for the 21 amount of the claim that remains after deducting the amount 22 or value of an asset the protected secured creditor receives 23 under this subsection. To the extent a claim is secured by an 24 asset the value of which, after the deductions provided under 25 this subsection, is greater than the amount of the claim, the 26 protected secured creditor may receive interest on the claim 27 and any reasonable fees, costs, or charges provided for under 28 the agreement or other law under which the claim arose. 29 4. After the distributions under subsection 3, the assignee 30 shall pay the necessary costs of the administration of the 31 assignment estate. The costs include all of the following: 32 a. Fees and reimbursements of the expenses of the assignee 33 and any professionals engaged by the assignee. 34 b. Post-assignment taxes incurred by the assignee. 35 -18- LSB 5531XS (4) 91 da/jh 18/ 30

S.F. 2213 c. Post-assignment rent incurred by the assignee in 1 occupying premises on which assets of the assignment estate are 2 located or the business of the assignor is conducted. 3 d. Post-assignment lease payments incurred by the assignee 4 in renting personal property used in the business of the 5 assignor. 6 e. Amounts required to be paid under the assignment 7 agreement for expenses of winding up the assignment under 8 section 681A.19. 9 5. After the distributions under subsections 3 and 4, the 10 assignee shall pay claims entitled to priority under federal 11 law including under 31 U.S.C. §3713, as amended, from the 12 assignment estate. 13 6. After the distributions under subsections 3, 4, and 14 5, the assignee shall pay claims from the assignment estate 15 for wages, salaries, or commissions earned not more than one 16 hundred eighty days before the earlier of the effective date 17 of the assignment agreement or the cessation of the assignor’s 18 business. Payment shall be limited to the greater of the 19 following: 20 a. The amount of the claim allowed as a priority claim 21 ahead of claims of other unsecured creditors under the federal 22 bankruptcy code, 11 U.S.C. §101 et seq., as amended. 23 b. The amount allowed as a priority claim ahead of claims of 24 other unsecured creditors under applicable nonbankruptcy law. 25 7. After the distributions under subsections 3, 4, 5, and 6, 26 each creditor shall receive a distribution of the assets of the 27 assignment estate in the following order of priority: 28 a. Unsecured claims entitled to priority ahead of claims of 29 other unsecured creditors under other law. 30 b. Unsecured claims not entitled to priority. 31 8. If the assets available for distribution to claims with 32 equal priority under subsection 7 are insufficient to pay the 33 total amount of the claims with that priority, each creditor 34 with a claim with that priority shall receive a pro rata 35 -19- LSB 5531XS (4) 91 da/jh 19/ 30

S.F. 2213 distribution of the available assets based on the proportion 1 the amount of the creditor’s claim bears to the total amount of 2 the claims with that priority. 3 9. If the claims entitled to the distribution under 4 subsections 3, 4, 5, 6, and 7 are paid in full, the residue 5 shall be distributed to allowed claims evidenced by a 6 late-filed proof of claim, other than a late-filed claim 7 allowed by the assignee under section 681A.11, subsection 2, 8 paragraph “b” , and, after the allowed claims evidenced by a 9 late-filed proof of claim have been paid in full, as provided 10 in the assignment agreement. 11 10. An assignee may make interim distributions after 12 considering future expenses and the reserves for disputed 13 claims established under section 681A.12, subsection 3. 14 Sec. 16. NEW SECTION . 681A.16 Claim subordination. 15 1. A subordination agreement is enforceable under this 16 chapter to the same extent the agreement is enforceable under 17 other law. 18 2. Subject to subsection 3, all of the following claims are 19 subordinate to a claim or interest that is senior or equal in 20 priority to a claim or interest represented by a security or 21 other equity interest in the assignor or an affiliate of the 22 assignor: 23 a. A claim arising from rescission of a purchase or sale of 24 the security or other equity interest. 25 b. A claim for damages arising from the purchase or sale of 26 the security or other equity interest. 27 c. A claim for reimbursement or contribution allowed on 28 account of the rescission or damage claim. 29 3. If the security is common stock or another common equity 30 interest, a claim subject to subordination under subsection 2 31 has the same priority as common stock or another common equity 32 interest. 33 Sec. 17. NEW SECTION . 681A.17 Liability. 34 1. An assignor is not personally liable for an act or 35 -20- LSB 5531XS (4) 91 da/jh 20/ 30