What is a Receivership?

A receivership is used to help enforce court judgments. A court can appoint an unbiased third party to be a receiver, and this person or entity is then charged with carrying out a court’s orders. Establishing a receivership is only one of many options to enforce a judgment, but they are particularly useful in cases involving management of a corporation, small business, or income-producing real property.

The purpose of a receivership is to enforce an order in a way that avoids conflicts of interest and properly represents the court’s wishes. Receivers are often asked to file reports with the court to make sure they are operating in a transparent manner.

One way a receivership can be utilized is when a court decides that a business owes a creditor a certain amount of money. Upon winning this judgment, a creditor’s attorney may motion the court to appoint a receiver to enforce the judgment and ensure that the business debtor acts quickly to pay the creditor and does not attempt to hide or liquidate assets, particularly if the case involves fraudulent transfers, Deed of Trust foreclosures, and certain other white collar crimes.

Similarly, receivers are also often appointed to manage real property. Sometimes property is used to satisfy a creditor’s claims, and a receiver can be appointed to manage the property in a way that generates income, or the receiver may be asked to sell the property and distribute the funds.

Regardless of the matter involving the receiver, parties should ensure that the court order directing the receiver contains clear instructions and guidance as to the receiver’s responsibilities, as well as the responsibilities of the defendant and plaintiff in the case.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law concerns.

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