Topic Receiver TopicsReceiverAppointment

The courts have sometimes struggled with the issue of a receiver appointed pursuant to a charging order. Section 503(b)(1) states that the court may "appoint a receiver of the distributions subject to the charging order, with the power to make all inquiries the judgment debtor might have made . . .." Frequently, creditors attempt to have the receiver appointed for the entity itself, and take over the control and operations of the entity.

Thus, the receiver has essentially two powers: (1) receive distributions, and (2) obtain information from the entity.

The first power (receive distributions) is an oddity, because the distributions should be going from the entity directly to creditor anyway, and it is difficult to image situations where it would be beneficial to interpose the receiver in the middle.

The second power (obtain information from the entity) is the more practical purpose of the receiver, since the creditor is entitled to whatever information about the entity that the D/M is entitled, but the D/M may be less than cooperative in seeking that information or in providing it to the creditor.

The proper workings of the receiver could be better spelled out in an expanded Comment.