What is Involved with the Court Appointed Receiver Process?

In litigation proceedings, often one or both parties raise a concern about protecting the value of a business. This may come from a lender who wants to ensure collateral retains its value, or from members of an ownership team at odds on how to proceed with running the business. In these situations, one tool that may be implemented is a court appointed receiver. A court appointed receiver serves as a neutral manager who takes control of the business operations. While this individual needs court approval to sell assets, he or she otherwise takes a high level of control over the business operations. Identifying the Receiver No specific requirements have been established for a court appointed receiver. However, the person who serves as the receiver is usually nominated by one of the parties. The court may ask each party to make a nomination, or may look for the parties to agree on the right person. You will find different levels of experience in a receiver role among those available to take it on, so examining the experience and results may help you find the right person to manage your business in this position. The right person depends on your business needs. The best receiver for a restaurant may be different from the best for a hotel or resort. You may find that your needs differ if the litigation comes over an ownership dispute rather than litigation involving a lender. What the Receiver Does The receiver will often begin by taking inventory and identifying what assets exist for the business. The role also requires him or her to recover any property and take over collection on accounts. The duty is to protect the assets of the business, and his or her fee comes from the assets of the receivership. The time period in which this continues may vary depending on the litigation, but it usually functions as a temporary role. The court appointed receiver, at the conclusion of his or her duties, will generally provide to the court a final report and accounting.