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90 Second Lesson: California Receiverships

Editors’ Note: this is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to info@dailydac.com and we will try to answer it.

90 Second Lesson: California Receiverships

QUESTION:

Jeffrey B. asks:  where is a good starting place to understand California receiverships?

ANSWER:

The California receivership statutory scheme, encompassed in California Code of Civil Procedure (“CCP”) sections 564 to 570 and California Rules of Court sections 3.1175 to 3.1184, is comprehensive. While the provisions of the CCP governing a receiver’s powers and duties are broadly worded, CCP section 564 specifies the exclusive circumstances under which a receiver may be appointed. Among other things, receivers can be appointed to enforce an assignment of rents provision in a deed of trust, when property is in danger of being lost, removed, or materially injured, or when necessary to preserve the property rights of a party. In general, a receiver has the powers listed under CCP section 568 as well as the specific powers set forth in the appointment order entered by the court. Accordingly, because the statutory scheme provides broad powers to the Court directing the receiver’s activities, the order should be as specific and comprehensive as reasonably practicable in describing the receiver’s powers and should clearly indicate the objective of the receivership.

This overview is from a much broader treatment on the subject by Alan M. Feld, Richard W. Brunette, Jr., Kyle K. Mathews, David J. McCarty and M. Reed Mercado of Sheppard Mullin Richter & Hampton LLP, which you can read here.

Note: This 90 Second Lesson is based, in substantial part, in material reprinted from Commercial Bankruptcy Litigation 2d and Strategic Alternatives for and Against Distressed Businesses, with permission of Thomson Reuters. For more information about these publications, please visit www.legalsolutions.com.

About The DailyDAC Editors

The editors and editorial board of DailyDAC include preeminent restructuring and insolvency professionals, journalists, and editors. They are devoted to providing reliable and plain English education and deal intelligence about assignments, corporate bankruptcy, receiverships, out-of-court workouts an similar topics.

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