May 30, 2013

The Purpose of a Receiver

Related Service Tax & Business

The Purpose of a Receiver Tax & Business

A receiver is an impartial person appointed by a court to preserve a business and its assets pending ongoing legal proceedings. A crisis likely exists where the business and its assets are at risk of being lost, removed or injured. Not simply risk, but a risk so great that it would compel a Court to order removal of control over the business and its assets from its owner(s).

A Court may insert a receiver on its own volition; but typically a party who believes that their interest in the business and its assets are at risk of being lost, removed or injured will petition the court to appoint a receiver to prevent that from happening. A petitioner will present its case for the appointment of a receiver, likely under significant opposition. A petition to appoint a receiver will likely fail unless evidence is presented, so compelling, that the court agrees that the business and its assets are at grave risk of rapid deterioration which will result in irreparable harm to those with an interest in that business and its assets. Use of legal counsel skilled and knowledgeable of the process to properly present such a petition to the court is critical toward achieving the desired appointment.

The petition seeking a receiver must clearly demonstrate the risk of loss, removal or injury to the business or asset(s) in which the interested party is seeking the receiver appointment. The petitioner together with its counsel must also consider the ramifications of seeking such an appointment, and the fact that the cost of a receiver can be substantial. The petitioner and their legal counsel must strategize and define a scope of duties and objectives which will serve as a guide through successful execution of the receivership.

Every component involved in obtaining a court order appointing a receiver and setting up a receivership is meaningless absent the selection of a qualified receiver. As with any service provider, the selection of the receiver must be based upon verified skills, qualifications, and experience in managing businesses and asset(s) across a broad range of industries. Additionally, the receiver must possess the necessary back office resources to get the job done.

In summary, demonstrate imminent loss, removal or injury to a business or its assets; strategize and define the purpose of the receivership and execute with a qualified receiver and assure a high probability of meeting receivership goals.