CHAPTER 1. ASSIGNMENT OF REAL AND PERSONAL PROPERTY FOR THE BENEFIT OF CREDITORS
IC 32-18
ARTICLE 18. INTERESTS OF CREDITORS INPROPERTY
IC 32-18-1
Chapter 1. Assignment of Real and Personal Property for theBenefit of Creditors
IC 32-18-1-1
Assignment of all debtor's property in trust for creditors;fraudulent and void assignments; trustees
Sec. 1. (a) A debtor who is in embarrassed or failingcircumstances may make a general assignment of all the debtor'sproperty in trust for the benefit of all the debtor's bona fide creditors.
(b) Except as provided in this chapter, an assignment described insubsection (a) that is made after March 19, 1859, is consideredfraudulent and void.
(c) A debtor who is:
(1) in embarrassed or failing circumstances; and
(2) making a general assignment of all the debtor's property asprovided in this chapter;
may select the debtor's trustee. The trustee shall serve and qualify,unless creditors representing an amount of at least one-half (1/2) ofthe liabilities of the debtor petition the court for the removal of thetrustee and the appointment of another trustee. If the petition is filed,the judge of the circuit or superior court in which the debtor residesshall immediately remove the trustee and appoint a suitabledisinterested party to act as trustee in place of the removed trustee.
(d) This chapter may not be construed to prevent a debtor frompreferring a particular creditor by an assignment not made under thischapter that:
(1) conveys less than all of the debtor's property;
(2) is made for the benefit of less than all of the debtor'screditors; or
(3) is made by other means;
if the action is taken in good faith and not as a part of, or inconnection with, a general assignment made under this chapter.However, a corporation may not prefer any creditor if a director ofthe corporation is a surety on the indebtedness preferred or has beena surety on the indebtedness within four (4) months before thepreference.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-2
Filing indenture of assignment with county recorder; descriptionof property; oaths of assignor
Sec. 2. (a) An assignment under this chapter must be:
(1) by indenture; and
(2) signed and acknowledged before a person who is authorizedto take the acknowledgment of deeds. (b) The indenture must, within ten (10) days after the execution,be filed with the recorder of the county in which the assignor resides.The recorder shall record the indenture of assignment the same asdeeds are recorded.
(c) The indenture of assignment must:
(1) contain a full description of all real estate assigned; and
(2) be accompanied by a schedule containing a particularenumeration and description of all the personal propertyassigned.
(d) The assignor shall make oath before a person authorized toadminister oaths. The oath must:
(1) verify the indenture and schedule and contain a statement ofall the property, rights, and credits belonging to the assignor, orof which the assignor has knowledge, and that the assignor hasnot, directly or indirectly, transferred or reserved a sum ofmoney or article of property for the assignor's own use or thebenefit of another person; and
(2) indicate the assignor has not acknowledged a debt orconfessed a judgment to a person for a sum greater than wasjustly owing to the person, or with the intention of delaying ordefrauding the assignor's creditors.
(e) An assignment under this chapter may not convey to theassignee an interest in property assigned until the assignment isrecorded as provided in this section.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-3
Trustee; duties on execution of assignment; bond
Sec. 3. (a) Not later than fifteen (15) days after the execution ofthe assignment, the trustee shall file a copy of the assignment andschedule in the office of the clerk of the circuit court of the countyin which the debtor resides. The trustee shall state under oath, beforeexecution of the trust:
(1) that the trustee will faithfully execute the trust, and theproperty assigned has been actually delivered into the trustee'spossession for the uses declared in the assignment; and
(2) what the probable value of the assigned property is.
(b) The trustee shall, at the time the assignment and schedule isfiled under subsection (a), file with the clerk a written undertakingto the state with at least one (1) sufficient surety. The bond to beapproved by the clerk:
(1) must be in a sum double the amount of the value of theproperty assigned; and
(2) conditioned for the faithful discharge of the duties of thetrustee's trust.
The bond must be for the use of a person injured by the action of thetrustee.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-4 Circuit court clerk's recording of filing of indenture, schedule, andundertaking
Sec. 4. The clerk of the circuit court shall minute the filing of thecopy of indenture, schedule, and undertaking in the proper bookunder section 3 of this chapter.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-5
Trustee; removal upon petition of assignor or creditor
Sec. 5. (a) If the trustee fails to comply with the provisions ofsections 1 through 4 of this chapter, the judge of the circuit court orthe clerk of the circuit court may, at the instance of the assignor or acreditor, by petition:
(1) remove the trustee; and
(2) appoint another suitable person as trustee.
(b) A replacement trustee shall:
(1) comply with the requirements specified in this chapter;
(2) immediately take possession and control of the propertyassigned; and
(3) enter upon the execution of the trust, as provided in thischapter.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-6
Trustee; notice of appointment; inventory of property
Sec. 6. (a) Immediately after complying with the requirements setforth in this chapter, the trustee shall give notice of the trustee'sappointment by publication, three (3) weeks successively, in anewspaper printed and published in the county. If a newspaper is notprinted and published in the county, the trustee shall:
(1) place written notice in at least five (5) of the most publicplaces in the county; and
(2) publish notice in a newspaper printed and published in thenearest county, for the time and in the manner mentioned inreference to publication in the county where the assignorresides.
(b) The trustee shall, within thirty (30) days after beginning theduties of the trust, make and file, under oath, a full and completeinventory of all the property, real and personal, the rights, credits,interests, profits, and collaterals that the trustee obtains, or of whichthe trustee may have obtained knowledge as belonging to theassignor. If:
(1) any property not mentioned in an inventory comes into thetrustee's hands; or
(2) the trustee obtains satisfactory information of the existenceof property not mentioned in an inventory;
the trustee shall file an additional inventory of the property asdescribed in this section.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-7
Appraisers; oath required
Sec. 7. The trustee, not more than twenty (20) days after filing theinventory mentioned in section 6 of this chapter, shall cause theproperty mentioned in the inventory to be appraised by two (2)reputable householders of the neighborhood. The appraisers, beforeproceeding to discharge their duty, must take and subscribe an oaththat they will honestly appraise the property mentioned in theinventory filed by the trustee. The oath must be filed, together withthe appraisement, with the clerk of the circuit court.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-8
Appraisal of property
Sec. 8. The appraisers shall, in the presence of the trustee:
(1) appraise each article mentioned in the inventory at its truevalue; and
(2) set down opposite each article respectively the value fixedby them in dollars and cents.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-9
Appraisal; set off to resident household assignor
Sec. 9. (a) If the assignor is a resident householder of Indiana, theappraisers shall set off to the assignor articles of property or so muchof the real estate mentioned in the inventory as the assignor mayselect, not to exceed three hundred dollars ($300).
(b) The appraisers shall, in an appraisement, specify what articlesof property and the value of the property, or what part of the realestate and its value, they have set apart to the assignor.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-10
Sale of property; partition of land
Sec. 10. (a) The trustee, as soon as possible after an appraisementis filed, shall collect the rights and credits of the assignor. Except forproperty set off by the assignor as exempt, the trustee shall sell atpublic auction the appraised property after giving thirty (30) daysnotice of the time and place of sale:
(1) by publication in a newspaper printed and published in thecounty; or
(2) if a newspaper is not printed and published in the county, byposting written or printed notices in at least five (5) of the mostpublic places in the county.
(b) The trustee shall sell the appraised property to the highestbidder for cash, or upon credit, the trustee taking notes with securityto be approved by the trustee, waiving relief from valuation orappraisement laws, payable not more than twelve (12) months afterthe date, with interest.
(c) The trustee must make a full return, under oath, of the sale to
the clerk of the circuit court. The clerk shall file the return with theother papers in the case. However, a court may, upon the swornpetition of the trustee, a creditor, or the assignor, for good causeshown, extend the time for selling the property, or any part of theproperty, for as much time as the court determines will serve the bestinterests of the creditors. The court may extend the credit on sales fornot more than two (2) years.
(d) The court may, upon the sworn petition of the trustee or of amajority of the creditors showing that the property may deterioratein value by delay or that it will be beneficial to the creditors to havean early sale order the property sold upon notice of the time, place,and terms of sale, and in a manner the court determines is best.
(e) The court may authorize the property sold at private sale at notless than its appraised value if it is shown that a private sale wouldbe beneficial to the creditors of the assignor. The court shallsupervise the estate of the assignor and may make all necessaryorders in the interest of the creditors for its control and managementby the trustee before the sale. In the interest of all parties, the courtmay upon petition of the assignee, if the wife of the assignor is aparty to the petition, order partition of the land of the assignor,before sale, between the assignee and wife of the assignor. The courtshall set off to the wife her inchoate one-third (1/3) in the land beforesale. If the court finds that the land cannot be partitioned withoutdetriment to the interest of the creditors of the assignor, the courtmay make an order directing the sale of all the land conveyed to theassignee by the assignor, including the wife's one-third (1/3) inchoateinterest. The one-third (1/3) of the money for which the land is soldshall be paid to the wife of the assignor when collected. The assigneeshall, after sale, compel the trustee to report the money in thetrustee's hands for distribution, and shall compel the money to bepaid into court for distribution if the assets are shown to be sufficientto pay a ten percent (10%) dividend upon the indebtedness. Thedistribution may be ordered from time to time when, on applicationof any person interested, it is shown to the court that there issufficient funds in the hands of the trustee to pay the dividend of tenpercent (10%).
As added by P.L.2-2002, SEC.3.
IC 32-18-1-11
Report of trustee
Sec. 11. The trustee shall, within six (6) months after beginningthe duties of the trust, report to the judge of the circuit court, underoath:
(1) the amount of money in the trustee's hands from:
(A) the sale of property; and
(B) collections; and
(2) the amount still uncollected.
The trustee shall also, in the report, list all claims of creditors thathave been presented to the trustee against the assignor. The trusteeshall denote the claims that the trustee concludes should be allowed
and those that the trustee determines not to allow.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-12
Trial of disallowed claims
Sec. 12. The clerk of the court shall spread the report and listupon the appearance docket of the court. The clerk shall distinguishbetween the claims the trustee has determined to allow and theclaims the trustee has refused to allow. In all cases in which thetrustee has refused to allow a claim, and in which a creditor objectsto the allowance of the claim of another creditor, the judge may orderthe case to stand for trial at the next term of the court. The trial shallbe governed by the rules regulating the trials of similar actions in thecircuit court. If, after trial of the claim, the court is satisfied that theclaim is valid and just, the court shall order the claim to be allowedand paid as other similar claims are paid. The court shall also makean order with respect to costs as the court considers just.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-13
Lien or encumbrance on property sold
Sec. 13. (a) A part of the property assigned on which there areliens or encumbrances may be sold by the trustee subject to the liensor encumbrances.
(b) However, if the trustee is satisfied that the general fund wouldbe materially increased by the payment of the liens or encumbrances,the trustee shall make application, by petition, to the judge of thecircuit court for an order to pay the liens and encumbrances beforeselling the property. Before the holder of any lien or encumbrance isentitled to receive any part of the holder's debt from the general fund,the holder shall proceed to enforce the payment of the debt by sale,or otherwise, of the property on which the lien or encumbranceexists. For the residue of the claim, the holder of the lien orencumbrance shall share pro rata with the other creditors, if entitledto do so under Indiana law.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-14
Distribution of money in possession of trustee
Sec. 14. If the court confirms the report made as provided undersection 11 of this chapter and if no contested claims are standing onthe docket as provided under section 12 of this chapter, the courtshall order the trustee to pay all money in the trustee's hands to theclerk of the court. The clerk, after deducting the costs incident to theexecution of the trust, including an allowance to the trustee as thecourt considers just, shall:
(1) distribute the money among the creditors according to thischapter; and
(2) take receipts from each creditor.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-15
Examination of assignor or transferee
Sec. 15. (a) If a creditor or the trustee, by verified petition, asksthe court for the examination of the assignor or any person to whomany part of the person's property has been transferred within six (6)months before the assignment, the circuit or superior court may issuean order for the examination of:
(1) the assignor;
(2) a person or officer of a corporation to whom a transfer isbelieved to have been fraudulently made;
(3) a a person or officer of an association to whom a transfer isbelieved to have been fraudulently made; and
(4) a person alleged to have been concerned in the transfer.
(b) A person described in subsection (a) may be brought beforethe court and, on oath, be compelled to answer all questions put tothe person pertinent to the alleged transaction. The court may stayfurther transfers and subject property that has been fraudulentlywithheld or transferred to the operation of the general trust. Theassignor or person shall be interrogated or be compelled to answer allquestions concerning the disposition of the property of the assignor.The assignor may be interrogated and compelled to answer allquestions concerning the management of the assignor's business andaffairs for the six (6) months before the assignment. The assignorshall be compelled to produce all books, papers, and accounts inreference to the assignor's business affairs during the six (6) monthspreceding the assignment.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-16
Oath of persons filing claims
Sec. 16. A person who files a claim with the trustee must makeoath that the claim is just and lawful and no part of the claim is forusurious interest. If a claim or part of a claim is for usurious interest,it must be deducted from the claims before they are allowed. Thetrustee may administer an oath to a creditor in reference to thevalidity and justice of a claim.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-17
Debt or claim belonging to assignor; compounding orcompromising
Sec. 17. A trustee may compound or compromise a debt or claimbelonging to the assignor that cannot be otherwise recovered withoutendangering the recovery of the claim or debt.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-18
Trustee; final report; discharge from trust
Sec. 18. (a) The trustee shall, at the expiration of one (1) yearafter entering upon the duties of the trust or at the next term of the
court after the expiration of one (1) year after entering upon theduties of the trust, make a final report to the court.
(b) After a hearing and determination, if the judge is satisfied withand approves the report, the judge shall order the trustee to bedischarged from the trust. However, the judge may, for good causeshown, grant further time to the trustee to file a final account.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-19
Trustee; removal; vacancy
Sec. 19. (a) The judge of the circuit court may, upon the petitionof a creditor or the assignor, remove a trustee under this chapter forgood cause shown and appoint a successor.
(b) If a vacancy occurs by death, resignation, or removal of atrustee from Indiana, the judge may fill the vacancy and shall ordera trustee who is removed to surrender all property in the trustee'shands belonging to the trust to the successor. The court may requirea trustee removed under this section to pay to the clerk of the courtall money in the trustee's hands, and on or before the next term, thetrustee shall make and file a full and final report showing thecondition of the trust and the trustee's management of the trust whileunder the trustee's control. If the court is satisfied with the report andthe trustee has fully complied with this chapter and paid all moneyin the trustee's hands to the clerk of the court, the court maydischarge the trustee.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-20
Right to appeal
Sec. 20. This chapter may not be construed to prevent a partyaggrieved by an order or decree of the court under this chapter fromhaving an appeal as in other civil actions.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-21
Fees allowed clerk of court; compensation of appraisers andtrustee
Sec. 21. (a) For whatever services the clerk of the circuit court isrequired to perform under this chapter, the clerk is allowed the samefees as are allowed the clerk by law for similar services in other civilproceedings.
(b) The appraisers under this chapter are entitled to one dollar($1) per day each for their services.
(c) The judge shall remunerate the trustee for the trustee's servicesin executing the trust out of the general fund as the judge considersjust and proper.
As added by P.L.2-2002, SEC.3.
IC 32-18-1-22
Power of surviving partner to make assignments Sec. 22. A surviving partner of a firm doing business in Indianahas full power to make assignments under this chapter.
As added by P.L.2-2002, SEC.3. Amended by P.L.1-2003, SEC.80.