(1) DEFINITIONS. As used in this section, unless the context or subject matter requires otherwise: (a) “Creditor’s sale” includes any sale effected by the secured creditor by judicial process or otherwise under the terms of his or her contract or the applicable law for the purpose of realizing upon his or her security. (b) “Liquidation proceeding” includes all assignments for the benefit of creditors, whether voluntary or by operation of law; administration of insolvent decedents’ estates; liquidations of insolvent banks; equity receiverships where the subject under receivership is insolvent; and any other proceedings for distribution of assets of any insolvent debtor, whether a person, decedent’s estate, partnership, corporation or business association. (c) “Liquidator” means any person administering assets in any liquidation proceeding as defined in this section. (d) “Insolvent debtor” means any insolvent person, decedent’s estate, partnership, corporation or business association involved in a liquidation proceeding as defined in this section. (e) “Secured creditor” means a creditor who has either legal or equitable security for his or her debt upon any property of the insolvent debtor of a nature to be liquidated and distributed in a liquidation proceeding, or a creditor to whom is owed a debt for which such security is possessed by some endorser, surety, or other person secondarily liable. (2) SECURED CREDITOR’S CLAIM MUST DISCLOSE SECURITY. In a liquidation proceeding every secured creditor’s claim against the general assets shall disclose the nature of the security. When a decedent’s estate already in the course of administration is judicially declared insolvent or when in an equity receivership it is determined that the subject under receivership is insolvent, secured creditors having claims on file which do not comply with this subsection shall make disclosure within a time to be fixed by the court. (3) EFFECT OF CONCEALMENT. Any secured creditor who with intent to evade the provisions of this section fails to disclose the existence of the security shall not be entitled to receive or retain dividends out of the general assets, unless the creditor thereafter releases or surrenders to the liquidator the security which the creditor has failed to disclose, or unless the creditor procures such release or surrender if the security is in the possession of an endorser, surety, or other person secondarily liable for the insolvent debtor. (4) VALUE OF SECURITY CREDITED UPON CLAIMS. Dividends paid to secured creditors shall be computed only upon the balance due after the value of all security not exempt from the claims of unsecured creditors and not released or surrendered to the liquidator, is determined and credited upon the claim secured by it. (5) DETERMINATION OF VALUE BY SECURED CREDITOR. (a) By collection. When the asset constituting the security is an obligation for the payment of money, the secured creditor may determine the security’s value by collection or by exhausting his or her remedies against the security and then surrendering the obligation to the liquidator. (b) By creditor’s sale. When the asset constituting the security is something other than an obligation for the payment of money, the secured creditor may determine its value by creditor’s sale. (6) ALTERNATIVE DETERMINATIONS OF VALUE. Where valuation under sub. (5) is impracticable or would cause undue delay, the court, upon petition by either the secured creditor or the liquidator, may order the value of the security determined by any of the following methods: (a) By compromise, if the secured creditor and the liquidator agree upon a value. The liquidator may redeem such assets by payment of the agreed value, if authorized by the court. (b) By litigation, through proceedings in the liquidation proceeding. The liquidator may redeem such assets by paying the value so determined, if authorized by the court. (c) By liquidator’s sale of the assets which, when completed and approved by the court, shall pass to the purchaser good title, free and clear of all liens of the secured creditor, such liens to be transferred to the proceeds of the sale. The order of sale may be either conditional, requiring the sale to be made by the liquidator only if the secured creditor does not complete a determination by collection or creditor’s sale as set forth in sub. (5) within a time fixed by the court; or absolute, requiring the sale to be made by the liquidator within a time fixed by the court. This paragraph shall not apply to security upon real estate of insolvent decedents’ estates administered by the probate court. (7) EXEMPT SECURITY NOT CREDITED. When any creditor has legal or equitable security upon assets which are exempt from process for the satisfaction of unsecured debt and are duly claimed as exempt by the insolvent debtor, the value of such security shall not be credited upon the claim. Amounts realized by the creditor from such security after liquidation proceedings are begun shall be disregarded in computing dividends, unless the dividend so computed exceeds the sum actually owing upon the claim, in which event only the amount owing shall be paid. (9) UNIFORMITY OF INTERPRETATION. This section shall be so construed as to make uniform the law of those states which enact it. (10) SHORT TITLE. This section may be cited as Uniform Act Governing Secured Creditors’ Dividends in Liquidation Proceedings.
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