State Court Receivership 101: Closing Out a Receivership

This is an important part of the receivership process. We’re focusing on four main points as a part of this discussion, planning ahead, termination vs discharge, final reporting, and a discharge order.

Planning Ahead

Always looking through your order and statutes to understand what is expected of you to wrap up your case. Make sure you understand all these requirements so that you do not have to scramble or recreate the wheel while you are trying to close out the case. The two best reference points here are your own appointment order and the state statutes.

Termination vs Discharge

Termination terminates the receivership itself, cutting off the receivership entirely at that specific time. This essentially creates two entities, pre- and post- the date of the termination.

A discharge ends the receiver’s liability to the court.

While these two options can happen simultaneously, it’s most likely to begin with termination while the receiver wraps up any remaining efforts to reach discharge. Remaining efforts might include final payments, collection of final receivables, etc.

Ultimately, someone needs to seek both termination and discharge, it may be the plaintiff or the receiver.

Final Report Accounting

Not all statutes require an accounting of the receivership, but many do. A receiver should desire an approval of their final accounting, even if not mandated by statute. This is essentially the court’s approval of the payments made by the receiver.

Make sure you are comprehensive in your final report accounting, error on providing more information than less in an effort to make sure no one can come back and review your efforts with questions.

Make sure that you’re aware of who is receiving service of your final efforts. By serving everyone who has interacted with the case with notice of the completion of the receivership you are providing finality to the efforts in the case.

Discharge Order

You want the blessing of the court to wrap up the case and that all the receiver’s conduct was in good faith and they have accomplished everything they were supposed to do. Also, you want the court to set clear expectations once the receivership is terminated and the discharge occurs. The order needs to direct everyone to how issues will be handled. Ultimately, the order needs to have a clear plan for the unadministered assets.

The discharge order should bring finality and anticipate issues.

This article and it’s accompanying video are part of the Receivership 101 series, created in partnership with the Commercial Receivership Association.