In Wisconsin, there are three main types of receivership:
Many other states identify two primary types of receiverships:
In all states there are commonalities that should be undertaken and considered:
General receiverships are being updated to be a state law alternative to bankruptcy. Takes control of all assets of the debtor. The receivers’ duty is to all creditors and parties as they are a representative of the court and not of any individual or group. General receiverships can be voluntary or involuntary. In Wisconsin, a general receiver always sells the assets to maximize the return to creditors. It is worth noting this is not true in all states. However, in Wisconsin the receivership can sell the property back to interested parties bringing the action closer to a restructuring that can be done in bankruptcy or in other states receiverships.
Selfish receiverships are receiverships that are started to collect a judgement before a judgement creditor. The receivers’ duty runs directly to the judgement creditor. Once the receiver liquidates enough assets to pay off the judgement creditor the receivership is over.
Receivers appointed during litigation, commonly appointed in foreclosure actions. Receivers job is to prevent waste, collect rents, make sure everything is turned over to lienholder, manage property while receivership and litigation is going forward. Can be appointed in shareholder dispute actions or divorces. The goal is to maintain everything in the receivership, but the receiver may have additional responsibilities appointed by court.
Every state has different structures and appointments, which makes it important to follow the three commonalities of reviewing the state and federal laws, reviewing the order, and the receiver following their fiduciary duties to the court.
Rebecca R. DeMarb joined Development Specialists, Inc. as a Senior Managing Director after nearly 25-years practicing law. DeMarb has extensive experience in Chapter 11s, workouts, restructuring, receiverships and assignments. Ms. DeMarb works diligently to meet the needs of the stakeholders. She is hands-on, responsive, and focuses on bringing diverse interests together to reach acceptable solutions…
State Court Receivership 101: Closing Out a Receivership
State Court Receivership 101: How to Get a Receiver Appointed
State Court Receivership 101: Representing the Defendant
State Court Receivership 101: What is a Receivership
State Court Receivership 101: Representing a Receiver
State Court Receivership 101: Costs in a Receivership
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