Illinois Receivership Act will be a valuable tool for creditors

On January 1, 2026, the Illinois Receivership Act (the Act) takes effect. The Act builds upon a patchwork of laws in Illinois to create a broad framework for creditors and other parties in interest for the appointment of a receiver over most types of real property, personal property and businesses. Here are six important things to know about the Act.

1.  A receiver may be appointed as a primary remedy, pre-judgment and post-judgment, in cases involving: (a) lien enforcement where property is at risk of waste or impairment; (b) fraud; (c) a company with deadlocked management; and (d) a company that is insolvent or not paying its debts.

Notably, the Act does not modify a mortgagee’s rights under the Illinois Mortgage Foreclosure Act to seek the appointment of a receiver. Rather, the new Act expands the circumstances under which a receiver can be appointed and formalizes the processes and broadens the powers associated therewith.

2.  The court may appoint a receiver without notice if circumstances warrant.

3.  Once a receiver is appointed, the court has exclusive jurisdiction: (a) over all receivership property wherever it is located; and (b) over all controversies related to or arising from the receivership and its property.

4.  The receiver has broad powers over receivership property, including to: (a) collect, manage and protect it; (b) operate a business by, among other things, incurring debt and paying expenses; (c) assert a claim or defense for the owner; (d) compel a party to produce records and/or be examined under oath; (e) engage professionals such as attorneys and accountants; and (f) transfer it by sale, lease or other disposition.

5.  Upon notice from the receiver, creditors are required to timely file a claim against the receivership and if they fail to do so, the claim may be waived.

6.  The court may order a receiver’s fees and expenses to be paid from: (a) the receivership property; (b) the person requesting appointment; or (c) a person whose conduct justified the appointment such as the owner.

In sum, Illinois receivers will soon have powers that could benefit secured and unsecured creditors in a variety of tricky situations.

If you have a matter that may warrant the appointment of a receiver, contact Michael W. Debre or another member of Chuhak & Tecson’s Financial Services team.

Client alert authored by Michael W. Debre (312 855 4603), principal.

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.