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BMO Harris Bank, N.A. v. McM, Inc.

United States District Court, D. Minnesota

August 8, 2017

BMO Harris Bank, N.A., Plaintiff,
v.
McM, Inc. and Ronald G. McMartin, Jr., Defendants.

          ORDER APPOINTING RECEIVER OVER THE ASSETS OF DEFENDANT MCMARTIN JR.

          DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE

         Plaintiff BMO Harris Bank N.A. (the “Bank”), has filed a Motion to Appoint Receiver over the Assets of Defendant McMartin Jr. (“Defendant McMartin”) and for related expedited relief (the “McMartin Jr. Receiver Motion”). Having reviewed Plaintiff's Complaint (Doc. No. 1); the McMartin Jr. Receiver Motion and accompanying Memorandum of Law, the Declaration of Laureen K. Mueller (Doc. Nos. 24-26) and the Affidavit of Phillip L. Kunkel (Doc. No. 12) filed in support thereof; and having considered the record of this proceeding and the arguments of the parties.

         IT IS HEREBY ORDERED that[1]:

         1. The McMartin Jr. Receiver Motion (Doc. No. [24]) is GRANTED.

         2. Phillip Kunkel is appointed as the receiver (“Receiver”) over the assets of Defendant McMartin Jr. in which McMartin Jr. granted to the Bank valid liens and security interests pursuant to that certain Security Agreement dated as of July 31, 2012, and Addendum dated as of April 30, 2014, executed by Defendant McMartin Jr. in favor of the Bank (the “McMartin Jr. Security Agreement”). “Receivership Property” as used herein shall mean all personal property of Defendant McMartin Jr., wherever located, including, but not limited to all Goods, Accounts, Chattel Paper, Inventory, Equipment, Instruments, Investment Property, Documents, Deposit Accounts, Letter of Credit Rights and General Intangibles, all as defined in Minnesota Uniform Commercial Code, Minn. Stat. § 336.9-101, et seq., or in the McMartin Jr. Security Agreement, and those additional assets described in Exhibit A to the McMartin Jr. Security Agreement.

         3. Defendant McMartin Jr. and his current or former agents, representatives and/or any entities in which Defendant McMartin Jr. holds an interest (excepting McM, Inc. which is a debtor in Case No. 17-B-30061, United States Bankruptcy Court for the District of North Dakota, and the chapter 7 trustee thereof) - and all employees, agents, officers, directors, members, partners, and/or representatives thereof - are directed to cooperate with the Receiver in the Receiver's performance of his duties and responsibilities by making themselves reasonably available to assist the Receiver as requested. In addition, they shall make immediately available for turnover to the Receiver, if requested, all of their records concerning Defendant McMartin Jr. and the Receivership Property so that the Receiver may adequately account for any funds collected or owing through the date the Receiver is appointed.

         4. Immediately upon entry of this Order, the Receiver has the sole authority to take possession of the Receivership Property. Defendant McMartin Jr., and his current or former agents, representatives and/or any entities in which Defendant McMartin Jr. holds an interest (excepting McM, Inc. which is a debtor in Case No. 17-B-30061, United States Bankruptcy Court for the District of North Dakota, and the chapter 7 trustee thereof) - and all employees, agents, officers, directors, members, partners, and/or representatives thereof - shall fully cooperate with the Receiver and shall take all necessary steps to comply with this Order and other orders of the Court, and with all applicable law and/or rules, and are enjoined from interfering with, secreting, removing, damaging or disabling the use, management, possession and control of the Receivership Property.

         5. Upon the request of the Receiver, the United States Marshal Service or any state, county, or local policing authority, as the case may be, in any judicial district, is hereby ordered to assist the Receiver in carrying out his duties to take and secure possession, custody and control of, or identify the location of, any assets, records or other materials that are Receivership Property under this Order.

         6. Defendant McMartin Jr. and any third-parties receiving notice of this Order shall surrender to the Receiver all Receivership Property, including any money held in accounts maintained by Defendant McMartin Jr. at any financial institution.

         7. All banks, commodity firms, brokerage firms, financial institutions, and other persons or entities, which have possession, custody or control of any Receivership Property in the name of Defendant McMartin Jr., that receive actual notice of this Order by personal service, electronic mail or otherwise shall not:

(a) Liquidate, transfer, sell, convey or otherwise transfer any Receivership Property in the name of Defendant McMartin Jr. except upon instructions from the Receiver;
(b) Exercise any form of set-off, alleged set-off, lien, or any form of self-help whatsoever, or refuse to transfer any Receivership Property to the Receiver's control without the permission of this Court; Further, all such institutions shall:
(c) Within five (5) business days of receipt of notice, serve on the Receiver a certified statement setting forth, with respect to each such Receivership Property, the balance in the account or description of the assets as of the close of business on the date of receipt of the notice; and
(d) Cooperate expeditiously in providing information and transferring Receivership Property to the Receiver or at the direction of the Receiver.

         AUTHORITY OF RECEIVER

         8. Immediately upon entry of this Order, and continuing until expiration or termination of the receivership, the Receiver is authorized to take any actions that the Receiver, in his discretion, deems reasonable and appropriate to take possession of, to exercise full control over, to prevent waste of, and to preserve, manage, maintain, secure, and safeguard the Receivership Property. Without limiting the generality of the foregoing, the Receiver may, in his discretion:

(a) Take all action determined by the Receiver to be necessary or appropriate to take possession, safeguard, and preserve all tangible and intangible assets comprising the Receivership Property;
(b) Allow the Plaintiff and its counsel access to the Receivership Property at reasonable times to inspect the Receivership Property and all books and records related thereto;
(c) Collect any or other obligations owed to Defendant McMartin Jr.;
(d) Investigate and thereafter assert any rights, claims, causes of action, or defenses that comprise Receivership Property;
(e) Make payment from funds received by or on behalf of the Receiver of all of the following (collectively the “Operating Expenses”): (i) all premiums of hazard, liability and other insurance policies upon the Receivership Property for the term of the receivership, and (ii) any other expenses determined necessary by the Receiver;
(f) Have general power and authority to sue for and collect debts, demands, and receivables comprising Receivership Property and to compromise and settle such as are of doubtful value, including but not limited to processing, submitting and collecting on insurance claims, including crop insurance claims;
(g) Have access to and control of any deposit accounts, commodity accounts, brokerage accounts or similar accounts comprising Receivership Property which are maintained by Defendant McMartin Jr. at any financial or other institution, and this Order shall constitute direction to any such institution(s) to grant the Receiver full and complete access to all accounts;
(h) Have authority to open and close bank, commodity, brokerage or other accounts or other depository accounts in the name of the Receiver;
(i) Receive and endorse checks pertaining to the Receivership Property either in the Receiver's name or in Defendant McMartin Jr.'s name;
(j) Have authority to abandon or dispose of any Receivership Property or records that are not necessary for the administration of the Receiver's duties or are burdensome to the receivership;
(k) Have the power to direct Defendant McMartin, Jr. to sell Receivership Property upon ...

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