Court Appointed Receiver Duties Should Clarify Past Hotel Obligations

The initial order that outlines many of the court appointed receiver duties normally includes certain aspects such as taking possession and operating the lodging property so that the receiver has broad authority to accomplish their task. However, it is also important to insert certain provisions into the court order so that the receiver is not bound to any prior obligations and actions by the Defendant. In particular are those past responsibilities surrounding payment of prior taxes, utilities and payroll expenses that are often in arrears and must be paid at some point. In order to insure that a hotel receivership is not burdened with any past encumbrances, it is important to clarify and add certain provisions to the court appointed receiver duties similar to the following: – Shall not be responsible for payment of any real property taxes, utility bills, unpaid payroll expenses or other unpaid invoices for services or utilities incurred by Defendants, or for the benefit of the Collateral or the Property prior to the Receiver’s taking possession of the Property. No utility or other vendor may terminate service or the provision of other goods or services to the Property as a result of the non-payment of pre-receivership obligations, without prior order of the Court; – Shall have no responsibility for filing federal and state income tax returns or federal or state payroll tax returns and shall not be responsible for paying any unpaid federal and state payroll taxes and expenses of Defendants. The responsibility for such filings and payments lie exclusively with Defendants and their agents, servants, employees and representatives; – Further, the court receiver shall not be obligated to upgrade the Property or make any improvements unless and until ordered to do so by the entitled Court. In addition to the above court appointed receiver duties, including a stipulation that a receiver will not be obligated to contribute personal funds further protects them and the receivership in the performance of their duties as well.